Institutional and policy approaches to major economic shocksMajor Economic Shocks Workshop, What Works Centre for Local Economic Growth, London, February 2020

Andy Pike

Henry Daysh Professor of Regional Development Studies

andy.pike@ncl.ac.uk

What is an economic shock?

Short, medium and long-term responses

The ‘Task Force’ model

Key issues

Outline

What is an economic shock?

Shock events Slow-burn processes

Sudden Slow

Local firm closure Local natural disaster

Gradual loss of local industrial competitiveness

National Recession Global financial crisis

Persistent adverse national policy

Global climate change

Local

Globall

SPEED

SCAL

E

Technological Disruption

Threshold Effects?

Brexit?

Source: Martin, R. (2017) The Resilience of Cities to Economic Shocks, Presentation Slides.

Possible reactions of an economy to a shock

5

1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435363738394041 1 2 3 4

Employmen

torO

utpu

t

Time

NegativeHystereticResponse:LoweredGrowth PathandSlowerGrowth

NegativeHystereticResponse:LoweredGrowth PathandResumptionofPre-ShockGrowthRate

BounceBacktoPre-ShockGrowthPathandGrowthRate

PositiveHystereticResponse:BounceForwardtoRaisedGrowthPathand ResumptionofPre-ShockGrowthRate

PositiveHystereticResponse:BounceForwardtoRaisedGrowthPathandRaisedGrowthRate

b

c

d

e

f

g

h

i

Shock

a

j

Source: Martin, R. (2017) The Resilience of Cities to Economic Shocks, Presentation Slides.

Short, medium and long-term responsesShort-term Medium-term Long-term

Local economy: assess immediate/likely impacts

Business: refinancing, new owners, receivership

Employees and labourmarkets: redeployment, redundancy pay, employment and financial information and guidance, job shops, outplacement, self-employment advice, subsistence allowances

Equipment, facilities and sites: sale, re-use, mothballing

Supply chains: capacity and employment retention support

Local economy: new FDI, support for expansion of growing sectors

Business: refinancing, new owners, exiting receivership

Employees and labourmarkets: counselling and psychological support, education and (re)training, self-employment and entrepreneurship support

Equipment, facilities and sites: sale, re-uses, changes of use

Supply chains: diversification

Local economy: re-assess ED strategy with focus on economic adaptation and identification of new growth pathways, monitoring and evaluation of responses and local business dynamics

Business: diversification, innovation support, tax breaks

Employees and labourmarkets: education and (re)training, entrepreneurship and enterprise support

Equipment, facilities and sites: sale, re-uses, changes of use

The ‘Task Force model’

Multi-agent selected membership

Strategic, co-ordination and/or implementation roles

Temporary, task-limited lifespan

Non-statutory

Employer, sectoral and/or territorial

Flexible, ‘rapid response’

Examples of task force aims by type

Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739

Task forces, North East England, 2001

Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739

Potential benefits

Responsive and regenerative

Focus, co-operation and co-ordination mechanism

Adaptable (‘context-sensitive’)

Innovative

Multiple, hybrid varieties and evolution

Transition to proactive and developmental

Varieties I: Dissolution

Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739

Varieties II: One-stage evolution

Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739

Varieties III: Two-stage evolution and formalisation

Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739

Varieties IV: Two-stage evolution and consolidation

Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739

Issues

Reactive over-use and proliferation

Contingent establishment criteria: shock, crisis, slow-burn…?

Fragmented and limited (new) funding

Public sector reliance

Lacking accountability and transparency

Limited evaluation

Highly uneven evidence base

What would have happened without these (under-evaluated) interventions?

National and local political-economic imperatives: no strong evidence = no policy response?

Tension: shorter-term, direct and narrow outcomes versus longer-term, indirect and wider outcomes

Key issues I

Source: Adapted from Neil MacCallum, Office of Project Advice and Training, London, UK; OECD LEED Evaluation Workshop, Trento, 2006.

Measuring the difference: from inputs to impact

ImpactGVA

OutcomesBusiness R&D,

Productivity

OutputsCompanies assisted,

Spin-offs, etc.

ActivitiesR&D support, manufacturing advice,

marketing support, export networks, etc.

InputsStaff, project finance, etc.

Mor

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sure

Long

term

Man

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fluen

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Easi

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mea

sure

Shor

t ter

mC

lear

attr

ibut

ion

Evolving adaptive pathways to economic resilience: enhanced, steady state/neutral or denuded…

Moments of intervention in unfolding economic restructuring processes – slowing down > speeding-up for adaptation

Policy mixes tailored to local contexts

Time-limited or standing institution(s) of adaptation?

Connecting to broader strategy amidst the firefighting

Locus of leadership, co-ordination and accountability

What kind of economic restructuring and for whom?

Key issues II