Presentation delivered by Prof Mike danson to the STUC's Decent Work, Dignified Lives Conference on 15 October. Presentation considers history of regional development institutions, imperatives for change and distinct nature of Scottish institutions.
1. “REGIONAL ECONOMIC
DEVELOPMENT”
Mike DANSON, Professor of Enterprise Policy, Heriot-Watt University
Decent Work, Dignified Lives
Hilton Glasgow Hotel
Wednesday 15 October 2014
2. • I was struck by the statement yesterday by Graeme Smith of
the STUC. I suspect he captured the feelings of many people
in Scotland.
• “The vast civic movement for meaningful and progressive
change that has built up in the last two years is impatient for
change and will not accept minimalist proposals developed in
a pre-referendum context handed down on a take them or
leave them basis…
• “They are not going to be passive participants in the process
or tolerate political obfuscation or compromise. The sooner
the politicians recognise this and get down to working with
civil society and the communities and people of Scotland
to deliver a comprehensive new devolution settlement the
better.'
• First Minister Alex Salmond, Scottish Parliament, Edinburgh,
Tuesday, September 23, 2014
3. Why and how promote regional
economic development?
• ‘Most’ unequal OECD economy; 2nd highest levels of low
pay; massive and unsustainable private and public debt
• But Scotland’s strengths, its globally recognised research,
development and innovation, its universities and skills
offers a brighter sustainable future.
• Done properly, regional economic development policies
work. If Scotland is content to continue with an
unproductive, low-pay economy, doing nothing would be
an effective strategy. If we want a high-pay productive
economy we must accept the need for a democratic
intervention.
4. Principles of a regional economic
policy
Three key aims of a Common Weal economy :
• to create and sustain high wage, high quality jobs
• to produce socially useful goods and services
• to create sustainable industry sectors which achieve
these two goals without social or environmental harm
• There is no trade off between democratic participation
and economic growth [FM, today]
5. Why a Sector Focus?
• More accurate reflection of the specialism of need in each
sector and which can differentiate different kinds of social
and economic outcomes
• Balance and coherence
• Smart specialisation
• Innovation sector-specific and often enterprise-specific –
almost always driven by employee innovation
6. How regional economic development
policy developed?
• Sector forums – collective, inclusive, plans
• MNEs, SMEs, supply chain industries, employee
representatives and trade unions, universities and
research experts, vocational education providers, and
many more
• Build into set of national strategic plans and requirements.
• Local, regional and national balances
7. UNIDO and EURADA ~ SE/HIE;
OECD ~ SDS;
EU ~ partnership;
THE ~ Universities
Triple helix
8. Economic Development Agencies
• Scottish RDAs ~ “models” for everywhere (UN and
EURADA)
• SDS ~ “global leader” (OECD)
• European Partnership ~ model for integrated approach
across EU
• Need to recognise expertise and experience and to
recapture strategic leadership
• Democratically accountable, hub and spoke
9. Core theories and policies
• Clusters (Porter)
• Creative and cultural capital (Florida)
• Institutional capacity and thickness
• Endogenous growth
• Triple helix
• Agglomeration economies, proximity, ..
• Social capital, strong and weak ties
• Capital and core regions – appropriate for periphery and
margins?
• Shadow towns and places; backwaters; laggards?
10. Learning, regions and institutions
• Learning organisation : learning region
• Performance, Best Practice, Best Value ~ benchmarking
• Institutional thickness and capacity
• Catalyst and cooperation
• Networking ~ 1980s, external, passive
• Partnership ~ 1990s, internal, active engagement,
formalised, routinised
11. Research and knowledge
• Expect focus should be on business networks
• Much of academic literature is theoretical or rarefied
• A few case studies – but mostly in high tech, media or
sectors dominated by MNEs
• Strong research and policy lead from Nordic countries, and
latterly certain Asian economies
• Lot of articles, policies and prescriptions about institutions,
especially around 2000
• Fashions and models
• Similar to employer engagement?
12. EU Member States’ innovation performance
Innovation leaders: Denmark, Finland, Germany, Sweden all show a performance well
above that of the EU27 average
15. Thinking on regional economic development
Strategies and policies informed by and consistent with:
• ‘territorial innovation models’ (Moulaert and Sekia 2003)
• ‘learning regions’ (Morgan 1997; Rutten and Boekema
2007) and
• ‘regional innovation systems’ (Braczyk et al. 1998; Cooke
et al. 2004)
• Institutional thickness and capacity (Jones and Macleod,
1999; Danson and Lloyd, 2012)
• RDAs across Europe and beyond. Scotland and Ireland
led and offered the ‘model agency’ goal for regions and
agencies (EURADA)
• => integrated and indispensable organisational vehicle for
bottom-up regional development policies across Europe?
16. RDA: a ‘Model Agency’
• based in region and is in a semi-autonomous position vis-à-
vis its sponsoring political authority
• supports mainly indigenous firms by means of ‘soft’ policy
instruments
• a multifunctional and integrated agency, the level of which
may be determined by the range of policy instruments it
uses.
Halkier and Danson, 1997
17. The Broken Model
• But by early 2000s, policy-makers no longer looking
towards large integrated arm’s-length bodies as their
preferred way of organising economic development
policies at the regional level, and thus the model had
been broken (Danson et al. 2005).
• a temporary ‘institutional fix’ (MacLeod and Jones 1999)
that for nearly two decades has been useful both in
guiding policy activities and for creating the analytical
ideal types underlying much previous academic work on
RDAs (Halkier et al. 1998; Danson et al. 2000).
18. Drivers for Change
• globalisation processes and new knowledge economy
(Castells 2000; Cooke and Laurentis 2010) => international
linkages and access to knowledge sources paramount
(Crevoisier and Jeannerat 2009; Halkier et al. 2010): cf.
regionally based policy practices focused on mobilisation of
intra-regional resources and networks (Lagendijk and
Cornford 2000; Asheim et al. 2006).
• new multi-level patterns of governance, from above [EU
Structural Funds] (Bachtler 1997; Halkier 2007), and from
below [cities and local authorities] in economic development
(Deas and Ward 2000; Healy 2009) => RDAs not sole bodies
and need partnerships (Cameron and Danson, 2005).
19. Institutional Capture and Narrowing
• public and private actors both involved so ‘clients’ of
RDAs have become ‘partners’ (Östhol and Svensson
2002; Jones 2003) so embedding semi-public RDAs more
firmly among the private economic actors of the region,
private co-funding of regional policy activities, partnership
working => RDAs captured by vested economic
interests and not objective? (cf. Ireland)
• Decentralisation and devolution - political accountability,
environmental sustainability, and social inclusiveness
[Europe 2020 strategy for ‘smart inclusive growth’, EC
2010)] – narrowing scope of RDAs to decide on strategic
matters
20. Research Institutes
e.g SABRIs
Universities
Colleges
Upgrading &
Innovative
Institutions
Training Providers
Fish
Farming
Auction
Marts
Farmers
Critical linkage - strong
Critical linkage - weak
No presence
Weak
Medium
Strong
Feed
Basic
Imported Commodities/
Processing
Customers
Key driver
End Users
Raw Materials
Value Added
Fish Processing
Markets
Consumers
Infrastructure/services
Fish
Red
Meat
Dairy
Vegetables
Legislation Marketing/
Market
Design
Intelligence
Bodies Industry
Equipment
Suppliers
Transport and
Distribution
Packaging
Rendering/
By Products
Scotland’s Food &
Drink Cluster
1999
Abattoirs
Specialist
Growers
Multiple
Retailers
Food
Brokers
Food
Service
In Mkt
Agents/
Distrib’s
Specialist
Consultants
Overseas
Value Added Markets
Ingredients
Cereals
Prepared
Meats & Fish
Ready
Meals
Gourmet
Foods
Snacks
Bakery &
Confectionary
Non-Alcoholic
Drinks
Beer
Whisky
Fishing
Industry
Breeding
Co’s Poultry
Wholesalers
Distributors
Discounters
Independent/
Speciality
Retailers
Further
Processing
Outwith
Scotland
Critical linkage - medium
21. Conference and Publication
• Pressure on typical
RDA to become more
international, more
knowledge oriented,
more networked, more
than just enterprising
engines of growth
within its region.
22. Revisiting the Next Generation of RDAs:
Success
• continuity, substantial diffusion, articulation and
consolidation of RDA approach. RDA presence is
pervasive, much beyond traditional aim of reducing
territorial disparities. RDAs take responsibility for
transformative agendas within regions adding to (or
substituting for) agendas based on disparities between
regions (Hall)
• positive role: regional innovation agencies (Fiore et al.),
investment promotion agencies (Levi Sacerdoti et al.).
European response to crisis (Budd) need for regional
intermediation in policy delivery
23. New Aims, Delivery Modes,
Organizational Patterns and Governance
• Main drivers for change => complexities and uncertainties
(even in definitions) of regional policies
• Tools that good or bad - ability to be instrumental in
developing strategies and political grand designs, as well
as to steer successful adaptations to these global
challenges (Rončević).
• No clear new model emerging. Fit for purpose.
24. RDA Activities ~ knowledge and
innovation
• add relevant knowledge to regional learning (Estensoro &
Larrea).
• practise knowledge-explicit policies - software and
orgware of the territorial economies (Halkier)
• deliver knowledge dynamics in contemporary territorial
economies (Dahlström et al.)
• ‘open innovation’ platforms and competitive advantages
(Asheim, et al. 2011) impact on role of RDAs’ policy
practice. Platform governance requires matrix
management and RDAs must play new kind of
intermediary role, focused on aggregating related
varieties (Cooke & Porter).
25. Innovation
• Open networks => RDAs ‘gatekeepers’ for regional
economies. Outward orientation more important and
engaged in managing the difficult balance between
threats and opportunities of opening their regional
economies (Steiner).
• decline of multi-functionality (large, general purpose,
stand alone agencies) but sometimes rebuilt from core
businesses, through evolutionary paths (Bramanti &
Rosso)
• end of the monopoly of the meso (i.e. regional) level =>
need for a bottom-up approach to guarantee specificity,
proximity and ‘capillarity’ in policy delivery and =>
experimenting and innovating (Teräs & Alatossava;
Estensoro & Larrea)
26. Decline and Undermining
• England out of step – again (Pike & Tomaney).
• Efficiency in designing and managing multilevel modes of
governance (Halkier)
• Return to local dimension of development policies outlines
a ‘post-regionalist’ perspective - collaborative,
entrepreneurial and mostly metropolitan localism
(Herrschel), threatening marginalization and exclusion for
spaces and agendas ‘in between’ [rural areas, small cities
etc.] when these are not supported by ad hoc (regional?)
actions (Herrschel 2012).
• Partnership or even looser modes of networking
substitute for formal organizations such as RDAs (Larsen,
and Johansson & Rilander).
27. Funding, Resources and Power
• instrumental role played by RDAs now subject to
revision, leading to different outcomes (Bramanti
& Rosso)
• Captured in regressive coalitions of established
interests and power relations and policies locked-in
both politically and cognitively?
• Alternatively RDAs might evolve towards some
kind of ‘in-house’ status [Wales]?
28. Scotland
• Global respect for Scottish approach to economic
development
• Networks and partnerships
• Elements of triple / quadruple helix
• Inclusive, innovative and competitive => TUs, SMEs,
consumers, Business for Scotland ...
• Industrial forum for key sectors : all sectors
(http://www.allofusfirst.org/the-key-ideas/industry-sector-forums/)
• National investment bank
• Food & Drink – exports 43% in 5 years
29. Conclusions
• Need to think about the economic and business concepts
and theories underpinning successful economy/society in
location
• Institutions, players, industrial structures and ownership
• Sustained effects but limited (RDAs, EZs, ...)
• Need public sector intervention to plan and develop
strategy, package, resource, market and promote,
encourage supply chain and support linkages
• Manufacturing and high value added employment
(ubiquitous). (renewables – quadruple helix issues)
• Different approaches to recognise different environments
e.g. market v integrated, coherent and aligned with
economic strategy?