Time to reset economic development

As the UK moves into recession, it’s worth pointing out that some local places never got out of recession in the first place! So forget the ‘W-shaped’ double dip, for some it’s an elongated ‘L-shape’! Surely it must be time to face the economic realities – growth for some areas for sure, but for many areas sluggish growth or no growth at all.

The sorry story at the moment is that most media, much policy debate and some local enterprise partnerships are hunkering down. ‘Traditional’ approaches to economic development dominate, which are ill-equipped to deal with the wider changes in society, environment and our economy. We are missing an opportunity.

We mustn’t go on with our creaking orthodox reading of economic development which is often remote from the economic local realities, the places we live in, the lives many people face and the worries they have. We must reset economic development, and embrace new ideas and approaches characterised by new forms of social inclusion and dealing with environmental change.

Take one side of the traditional economic development approach. This is characterised by a limp supply side voodoo economic development, a combination of Laffer curve-inspired tax breaks, and sweeteners. Beyond the voodooists, within this traditionality, we have the approaches of the stimulators. They recognise that in many places we still need significant and hefty economic development ‘demand side’ stimulus policies. They also correctly acknowledge that we need more public capital inputs to areas which have are lagging behind in terms of infrastructure, and more investment in human capital and skills beyond the too little too late regional growth fund, which is insufficient in scale and heft. In a limited way, many local enterprise partnerships institutionally reflect this traditional economic development approach – a bit of supply side voodoo here and a bit of stimulating demand there.

As an economic development practitioner, brought up on this traditionality, I am not saying we should not do traditional economic development at all. It has a role to play, especially if done with conviction. But we must also adopt new types of approaches to economic development and develop ideas by which local economy and its development is linked more to local social and economic realities.

So that is why we must bring in from the margins socially inclusive economic development ideas. So we must look at ‘pre-distribution’ policies associated with work and pay. In this, we need new relationships between the local state, unions, business and citizens – with a common goal of using the labour market as a means of tackling social issues. Locally we could have progressive labour market policy policies – such as a ‘living wage’, including living wage arrangements in public procurement, more pay transparency, and other ways of curbing pay excesses and thus creating more equitable wage levels. Economic development must also embrace co-production and social action. What would a co-produced set of economic development policies be like?

The third approach is economic development which is more aware of place and is not predicated on economic growth at all, but considers steady ‘local state’ economics. In this, we need to focus on elements on place and adopting approaches for environmental, social and cultural growth. In this the focus is on healthy place-based networks of collaboration, promoting adaptability and new forms of sustainable living. This is about economic development which looks to service local demand, and seeks to build social capital, and virtuous local communities.

A greater appreciation of the economic and socially realities demands a new generation of activity beyond that offered by some debate and what is emerging from some local enterprise partnerships. For this to occur we must stop equating ‘development’ with economic ‘growth’ and place greater emphasis on social inclusion as a goal for economic development. We need a reset.