Economic false hopes hinder a better future
I suggested to a north east colleague last week that his area was not going to get growth in the foreseeable future. He said ‘You don’t get economic growth unless you sing out loud for it – shy bairns get nee sweets’.
So because ‘shy bairns get nee sweets’ we see the local enterprise partnerships (Leps) talking up their prospects even in areas where growth is very unlikely. As our economy slumps along, credit ratings get threatened and deficit reduction rules over stimulus, Leps talk is ‘boosterist’. Their area is ‘ripe for growth’, there is ‘investment potential’, ‘vibrant local labour markets’, ‘innovation culture’. They have ‘advanced manufacturing aims’, ‘export market strategies’.
Nevertheless, it is blindingly obvious to many in the economic development field that Leps are work in progress, and in many cases ill-equipped to deal with the huge challenge of delivering economic growth in some areas.
Many of us know that this boosterist positive language is often masking some grim local realities. A reality, where there is an under-skilled workforce, poor infrastructure, little capital and a shrinking business base. Growth, in this situation, will at best be very patchy and will favour a few or won’t happen at all. After all, some areas never achieved growth even in the good times.
The harsh reality that many areas face and which they must confront is that they are competing with many areas across the world with better growth potential. The reality is that England’s economy favours the haves, and that they are the have-nots. The reality is that that capital investment is risk averse in poorer areas. The reality is that the wider European and global economic picture is uncertain. The reality is that sustainable growth for some places is at best a generation away.
However, despite this reality many consultancies and think tanks just spout what some areas (and the government) desperately want to believe – that growth is merely a lifting of a restriction or a nudge away. Of course there is no advantage in just talking things down, that will just make it worse. But I am tired and dismayed at hearing and reading reports from consultancies and think tanks trotting out wobbly economic development thinking – ‘knowledge economies’ and ‘innovation strategies’ for places which, in reality are in some cases filled with aged infrastructure and a local citizenry who are more geared toward a workshop economy. It’s as if they think the whole of England is Silicon Valley or Cambridge!
The arch boosterists, neo liberal ideologues and the deluded ever-hopeful will no doubt disagree with this. However, for many of England’s poorest places it is the reality. Growth, or at least growth which is sustainable, is built on solid foundations and inputs – capital flowing, labour skilled and being upskilled, creative and innovation culture, place based factors, networks and a dose of alchemy and serendipity. Rome wasn’t built in a day and neither is growth.
Therefore, while attempts to avert some areas from years of unemployment and misery may require some loud positive words, we also need to confront this short and medium term reality. That is why part of our work at CLES focuses on rethinking economic futures and alternative economic strategies and in particular resilience and growth. Working with a range of places, we are looking at activities which shield places from the worse effects of economic decline, but also look at the basic traditional key inputs which create conditions for economic growth – capital, labour, place. However, most importantly we also seek to create a new growth future for places which is not predicated on economic growth alone. In this we seek to grow social capital, culture, identity, environment and individual health and wellbeing.
Therefore, in some areas, we need a fundamental rethink. We must deal with realities of place, people and potential for economic growth. At the same time we need a consideration of a transition to different non-economic forms of growth.
Unless we have this change in thinking, the damage could be much worse. False hopes, resources and local energy, driven by boosterist language and wobbly economic development thinking, will just deliver even more despair and hinder a better future.
Economic development has always been about boosting local credibility and image with business and potential investors on the one hand, and dealing with some very significant underlying problems on the other. Any big city such as Manchester or Glasgow has followed this approach.
The big problem is obviously if its all boosterism, with no underlying approach looking at the foundations of the economy.
However – given the current lack of government investment in local economic development, attracting external investment is a really credible strategy. To do this you need positive language, boosterism, and confidence.
I think that what you see is less about delusion, but more about pragmatism.
Thanks for the comment Glenn. Two further thoughts some to mind.
Firstly, any approach, needs to build on local conditions with due appreciation of wider economic context. Arguably in the good times, the urban entrepreneurialist and boosterist strategies of say Glasgow, were built in a context of global economic buoyancy. The boosterism then set the conditions for investment, which did (in part) work, for some people and some parts of the city. In the present state of affairs, in the absence of this buoyancy, we need to look much deeper at the local base conditions.
Secondly, I think there is a need for a rethink of the traditional principles of economic development. In prevailing principles, attracting external investment (in areas which did not do even that well out of this approach in the good times) may be seen as pragmatic, but perhaps it is because economic development is devoid of thinking any other way?
At CLES, we are not rejecting the principles of old, but are augmenting them with new ideas about how we shape place, economy and society. In this, diverse approaches where steady state, no growth, social growth and resilience sit alongside traditional growth.
‘Given the current lack of government investment in local economic development, attracting external investment is a really credible strategy. To do this you need positive language, boosterism, and confidence’.
Sorry, I have to disagree with the previous comments. Boosterism is a really thin veneer, which investors can see through and only serves to paper over the long ingrained cracks in a local economy.
What places do need is a long hard look at their economies and to be honest about what they need to do to: a) capitalise/squeeze their local assets to the full; and b) take long-term positions on addressing underlying weaknesses in their economies (housing, skills, education, land and property offer) and c) look at how they can open up the future strategic direction of their economy with input from the commercial, public and social sectors.
For too long we have seen many places and agencies around the UK promising much and delivering far to little little. A dose of honesty and pragmatism about what places can achieve, I would say, have been in all too short a measure. Closing the regional GVA gap with the national average, anyone?
I agree Neil. There are too many people around still waiting for the ‘economic development bus’ on a route that ceased years ago, in some cases decades. They’re telling everyone ‘it’ll be here soon’ but it’s never going to arrive.
When I look at this pragmatically – I ask myself if I were a business, would I invest in a place which said it was a basket case? probably not.
I agree that local places should look to themselves more for the answers and actions, and that boosterism can be a thin veneer. Informed investors will see though claims which lack credibility.
But I also think that business thrives on confidence. Now – we should probably do more to build local confidence from the bottom up, rather than try and impose some false marketing gimmicks.
But still – you can’t sell something if you tell all the prospective customers that it doesn’t actually work.
I also disagree about the ‘global’ doom and gloom. 85% of the global economy (the bit outside of Europe) is doing quite well, with good growth prospects.
The key thing about the global prognosis is the shift to Asia and Latin America. Nations such as Nigeria are also set for strong growth.
The UK currently exports more by value to Ireland than the BRICS combined.
Neil, please explain to a non-economist what you mean by “we need a consideration of a transition to different non-economic forms of growth”? My hope is that we can attract investment in skills development and in appropriate (perhaps new) business enterprises that are appropriate for the region, e.g. Mary Portas’s knicker factory.
Fascinating discussion. I think it demonstrates two equally valid angles.
For some fortunate places (including where Glenn works) you can probably never talk up the investment case and strengths enough because they are among the best the UK has to offer. And when that investment arrives, lever it for all it’s worth to help those who have not seen the economic benefits of investment in the past, do so now. Because there are plenty of people who have missed out completely wherever you are in the country.
But for those areas that do not have the same strong investment case, boosterism must be a waste of resources at best. As has been said – a thin veneer. Business is unlikely to invest if the investment case is weak, regardless of whether someone talks the place up or not. In these areas Economic Development resources ought to concentrate on the areas Angus outlines above and the foundations and social factors Neil describes. It is these that have formed the basis of the strong investment offers.
And yet how much is spent on inward investment in the areas with strong investment offers vs those with weak investment offers?
Aye, its a good discussion.
Jill, as regards ‘non economic forms of growth’. In this I am talking about about breaking out of the notion that a place is only a success if it is economically growing. We must think about growing quality of life, educational performance, social capital, natural habitats etc.
Of course some of this ‘growth’ may in itself be useful in setting favourable conditions for economic growth i.e. investors attracted by educated population. However, what I am talking about is appreciating that these forms of ‘growth’ are valid in their own rights as part of a strategy for the development of a place.
Andrew, I think that sums it up. We must allow room for a wide spectrum of economic development approaches. Including non economic growth. I am tired of singular boosterism as a panacea.
When you’re talking about external investment into an area, does this mean money like European Regional Development Fund grants, and/or investment from companies outside the region? Calderdale’s Energy Future plans on attracting external investment into the area, but doesn’t say what this means.
Jenny,
I am talking in this context about external (non public) investment. But of course these public funds are important part of the investment mix.