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Building New Local Economies in Scotland: Lessons from the United States

In partnership with

Neil McInroy & Matthew JacksonCentre for Local Economic

Strategies (CLES)

Neil McInroy and Matthew JacksonCLES

Centre for Local Economic Strategies

BUILDING NEW LOCAL ECONOMIES IN SCOTLAND: LESSONS FROM THE UNITED STATES

What i CLES?

Economic AND social growth

Planners, Geographers, Economists

Action on Ground, Policy, Consultancy

Leading UK member and research organisation

About CLES

Independent charity.

30th Anniversary

CLES’s principles for local economic development

We need to build economic and social growth

Build economic resilience

How we harness existence wealth better

The local state is important steward, enabler and democratic coordinator of local economic development;

Think about economic relationships across the spheres of public, commercial and social economies

Anchor institutions with a key stake in place are significant

School of economic thought

Economies change through..

Local places... BIG policy Economic development policy (i.e)

Classical Investment ..sites for investment

Free market No need for it!

Neo classical Individual choices ..where consumers are

Free market with limited dose of interventionism

Limited. Setting basic public goods (transport). tax reductions

Institutionalist Individuals within institutions

..imbue how institutions operate

No strong position Invest in public, social and commercial institutions

Keynesian Many things. Technology/capital/ labour

..where people are economic actors

Expansionist fiscal and monetary policy and redistribution

Harness local wealth for capital, labour and TFP.

Developmental Developing productive capabilities

..where collective elements come together for development

Government protection/ intervention

Wider social development (health, education)

Marxist Class struggle, capital build up and tech progress

..where the struggle between capital and labour takes place

Socialist revolution and central planning

Power to Labour. Harness Private capital

Post-capitalist Fundamental flaws in capitalism

..where people self organise and act

Forget about economic growth-happiness

Well-being and working within environmental limits

Plural set of local economic development choices

Effective public services, improve lives and reduces demand.

Public sector reform

Economic development

Social progress/justice

Social progress as an OUTCOME OF, and INPUT TO, economy success

Improving economy reduces demand

System approaches

Lessons from United States: Purpose

Explore other ways of doing economic and social development

How are American Cities responding to economic decline and social opportunity?

Are they adopting approaches which lead to a torrent of benefit as opposed to being framed by trickle down?

What is the role of different spheres of the economy in instigating change

To visit 4 cities and catch up with thinkers and organisations we have relationships with.

Cleveland – the collaborative city

Lessons Learnt

Collaboration

A blend of resource

Not just economic growth

It takes time

Cleveland – the collaborative city

Lessons LearntCollaborationA blend of resource, including philanthropic capitalNot just economic growthIt takes time

Pittsburgh – the liveable city

Lessons LearntTake advantage of industrial legacy, as an assetLocal tax raising/levy + redistributionBIDs

Philadelphia – the innovative city

Lessons LearntA strong local state has a role in enablingMayoral leadership for economic and social growthImportant to grow economy from withinA need to take risks

Providence – the creative cityLessons Learnt

Natural awareness of cross sector working due to scale

Strong social enterprise infrastructure

Anchor leadership to make a change

Culture of creativity

Overarching lessons

Collaboration is key

We need to advance anchor institution strategy

Philanthropy has a significant stake

We need to harness existing wealth

Business need to become ‘citizens’

Social sector are embedded in collaborative approaches

Overarching lessons

The local state is an enabler

Local government needs to be the core enabler of local economic development

Needs to calibrate intervention carefully

Places can shape markets from within

We need to be innovative in service design and procurement of services

Inequality must be addressed

We must balance economic growth and social growth

In conclusion: new local economic strategies in Scotland

National economic strategy is excellent frame

Challenge to operationalise

Role of public, social and commercial institutional anchors are important

Think plural. Economic and social growth, and borrow from lots of schools of thoughts.

Think growth, green growth, non growth, steady state and new forms of place development

Systems: Public service reform, economic and social growth

Centre for Local Economic Strategies

Email. neilmcinroy@cles.org.uk or matthewjackson@cles.org.uk

Website. www.cles.org.uk

Magazine.

Twitter. @nmcinroy, @mattjackson170, @clestweet or @newstartmag

Phone. (0044) 161 236 7036

Building New Local Economies in Scotland: Lessons from the United States

In partnership with

David McPhee Scottish Government

Scottish Economic Strategy: Inclusive Growth

David McPhee, Office of the Chief Economic Adviser30 October 2015

Scotland’s EconomyEconomic Growth and Labour Market

Real Wages and Employment OpportunitiesUK - Nominal and Real Wage Growth

Real Wage Annual Growth (AWE, CPI)

Nominal Wage Growth (AWE)

Ann

ual G

row

th (

%)

-4

-3

-2

-1

0

1

2

3

4

5

M S J M S J M S J M S J M S J M S J M S J M S J M2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Macrobond

But Deep Inequalities exist

• Scotland would rank 20th out of the 34 countries in the OECD for income inequality

Income Inequality – Income Distribution

• The distribution of income is skewed by a small proportion of households with very high incomes

The bottom 40% of households have just

over 20% of household income in Scotland.

The middle 50% have approx. half of all income. This is the

case across time and internationally.

Inequality is driven by how the remaining 50% is divided

between the top 10% and the bottom 40%.

The top 10% of households have approx. 25% of

household income in Scotland.

Regional Inequalities in Output, GVA per head 2013

Regional Inequalities in Scotland - Income

East R

enfre

wshire

East D

unba

rtons

hire

Perth

& K

inros

s

Aberd

een

City

Wes

t Lot

hian

Edinbu

rgh

South

Ayr

shire

Renfre

wshire

South

Lan

arks

hire

Argyll

& B

ute

North

Lan

arks

hire

Fife

East A

yrsh

ire

North

Ayr

shire

Wes

t Dun

barto

nshir

e

Glasgo

w City

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Median Income

Lower Quartile Income

Median and Lower Quartile Income by Local Authority 2012, Scotland

Ho

use

ho

ld i

nco

me

(£)

Health Inequalities

Education Inequalities

Justice Inequalities

1 in 7

Strong foundations – but more do do?

Scotland’s Economic Framework

Inequality and Growth

• Inequality is harmful for long-term sustainable growth– OECD: Rising income inequality in the UK reduced GDP per capita growth by 9% between 1990

and 2010.– The Scottish Government estimated the cost of our inequality has been a total loss to the UK

economy of £100 billion – around £1,600 for every person in the country

• Tackling Inequality is a moral and social imperative

“The world’s 85 richest people have the same wealth as the poorest half of humanity” (Oxfam 2014)

(most recently been updated – 80 people now have the same wealth as the poorest half of humanity)

So what is Inclusive Growth?• Inclusive growth:

Growth that combines increased prosperity with greater equity; that creates opportunities for all and distributes the dividends of increased prosperity fairly.

• Characteristics of inclusive growth:– Multi-dimensional: social inclusion, well-being, participation,

environmental– Sustainable economic growth that tackles inequalities in outcomes but

also inequalities in opportunities – More equal growth across cities, regions and rural areas, and recognise

importance of place/community in delivering this– Understanding synergies and trade-offs, short-term and long-term impacts– Delivered in partnership – public sector, third sector, trade unions,

businesses and communities

International ApproachesOrganisation Dimension

European Commission

• Raising employment rate (focused on women, young people, older workers)

• Improving opportunity through skills and training• Ensuring benefits of growth reach all parts of the EU.

OECD

• Dimensions should vary across countries, depending on circumstances and conditions

• Equality of opportunity to contribute to growth, and equality of outcome

• Economic dimensions of well-being (such as GDP per capita) • Opportunity (e.g. labour market status) • Outcome (e.g. health status)

World Economic Forum

• ‘Pillars’ of inclusive growth: education, employment, asset building, financial intermediation, rents, services and infrastructure, transfers.

• Key performance indicators on growth, income-related equity, intergenerational equity.

Scotland’s Economic Strategy

Development of a Policy Tool

Programme for Government

• Scottish Government will:– Pursue an inclusive labour market by reducing barriers to employment to help

women, young people and other groups to overcome structural challenges to their participation in work

– Address regional disparities in economic performance– Invest in skills to promote a high-skill, high-wage economy– Develop the fair work agenda to improve the quality of work, progression prospects

and productivity– Design new, devolved employability programmes that support those otherwise

unable to return to the labour market– Support social enterprise and the social economy

Other Relevant Work

• City Deals• Work with STUC on Locally Traded Sectors• Community Empowerment Scotland Act (2015)• Economic Geographies• Development of Labour Market Strategy

Susan Love & Robert PollockEDAS

Building New Local Economies in Scotland: Lessons from the United States

In partnership with