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EDAS AGM & Conference

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Building New Local Economies in Scotland: Lessons from the United StatesIn partnership with

Neil McInroy & Matthew JacksonCentre for Local Economic Strategies (CLES)Neil McInroy and Matthew JacksonCLESCentre for Local Economic Strategies

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

4What i CLES?

Economic AND social growthPlanners, Geographers, EconomistsAction on Ground, Policy, Consultancy

Leading UK member and research organisationAbout CLESIndependent charity.

30th Anniversary

Scottish national economic strategy is the right startNational and local economies caught between Keynesian stimulus and fiscal stability/austerityRemind ourselves - Even in good times, growth and its benefits were illusive for someMust avoid seeing local economic development as being synonymous with economic growth

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CLESs principles for local economic development

We need to build economic and social growthBuild economic resilienceHow we harness existence wealth betterThe 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 economiesAnchor institutions with a key stake in place are significantAssessors, 6School of economic thoughtEconomies change through..Local places...BIG policyEconomic development policy (i.e)ClassicalInvestment..sites for investmentFree marketNo need for it!Neo classicalIndividual choices..where consumers areFree market with limited dose of interventionismLimited. Setting basic public goods (transport). tax reductionsInstitutionalistIndividuals within institutions..imbue how institutions operateNo strong positionInvest in public, social and commercial institutionsKeynesianMany things. Technology/capital/ labour..where people are economic actorsExpansionist fiscal and monetary policy and redistributionHarness local wealth for capital, labour and TFP.DevelopmentalDeveloping productive capabilities..where collective elements come together for developmentGovernment protection/ interventionWider social development (health, education)MarxistClass struggle, capital build up and tech progress..where the struggle between capital and labour takes placeSocialist revolution and central planningPower to Labour. Harness Private capitalPost-capitalistFundamental flaws in capitalism..where people self organise and actForget about economic growth-happinessWell-being and working within environmental limits Plural set of local economic development choicesEffective public services, improve lives and reduces demand. Public sector reform Economic developmentSocial progress/justiceSocial progress as an OUTCOME OF, and INPUT TO, economy successImproving economy reduces demand System approaches8Lessons from United States: PurposeExplore 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 changeTo visit 4 cities and catch up with thinkers and organisations we have relationships with. Cleveland the collaborative cityLessons LearntCollaborationA blend of resource Not just economic growthIt takes time

Cleveland the collaborative cityLessons LearntCollaborationA blend of resource, including philanthropic capitalNot just economic growthIt takes time

Pittsburgh the liveable cityLessons LearntTake advantage of industrial legacy, as an assetLocal tax raising/levy + redistributionBIDs

Philadelphia the innovative cityLessons 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 LearntNatural awareness of cross sector working due to scaleStrong social enterprise infrastructureAnchor leadership to make a changeCulture of creativity

Overarching lessonsCollaboration is keyWe need to advance anchor institution strategyPhilanthropy has a significant stakeWe need to harness existing wealthBusiness need to become citizensSocial sector are embedded in collaborative approaches

Overarching lessonsThe local state is an enablerLocal government needs to be the core enabler of local economic developmentNeeds to calibrate intervention carefullyPlaces can shape markets from withinWe need to be innovative in service design and procurement of servicesInequality must be addressedWe must balance economic growth and social growthIn conclusion: new local economic strategies in ScotlandNational economic strategy is excellent frameChallenge to operationaliseRole of public, social and commercial institutional anchors are importantThink 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 developmentSystems: Public service reform, economic and social growth17Centre for Local Economic Strategies

Email. neilmcinroy@cles.org.uk or matthewjackson@cles.org.ukWebsite. www.cles.org.uk Magazine. Twitter. @nmcinroy, @mattjackson170, @clestweet or @newstartmagPhone. (0044) 161 236 7036

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Building New Local Economies in Scotland: Lessons from the United StatesIn partnership with

David McPhee Scottish Government

Scottish Economic Strategy: Inclusive Growth

David McPhee, Office of the Chief Economic Adviser30 October 201521Scotlands Economy

Economic Growth and Labour Market

22Real Wages and Employment Opportunities

23But Deep Inequalities existScotland would rank 20th out of the 34 countries in the OECD for income inequality

Recognition of inequalities - 24

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 - Income27Health Inequalities

Education Inequalities

Justice Inequalities

1 in 7Strong foundations but more do do?This slide is an extra - I would only use it if you wanted to shorten the presentation and replace slides 4 and 9-12 with this.31Scotlands Economic Framework

From data to a strategy:

This signals a new approach to a Strategy.

32Inequality and GrowthInequality is harmful for long-term sustainable growthOECD: 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 worlds 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)33So 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, environmentalSustainable 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 thisUnderstanding synergies and trade-offs, short-term and long-term impactsDelivered in partnership public sector, third sector, trade unions, businesses and communities

34International Approaches

OrganisationDimensionEuropean CommissionRaising employment rate (focused on women, young people, older workers)Improving opportunity through skills and trainingEnsuring benefits of growth reach all parts of the EU.OECDDimensions should vary across countries, depending on circumstances and conditionsEquality of opportunity to contribute to growth, and equality of outcomeEconomic dimensions of well-being (such as GDP per capita) Opportunity (e.g. labour market status) Outcome (e.g. health status)World Economic ForumPillars of inclusive growth: education, employment, asset building, financial intermediation, rents, services and infrastructure, transfers. Key performance indicators on growth, income-related equity, intergenerational equity.Scotlands Economic Strategy

36Development of a Policy Tool

Thinking about policy design - 37Programme for GovernmentScottish 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 workAddress regional disparities in economic performanceInvest in skills to promote a high-skill, high-wage economyDevelop the fair work agenda to improve the quality of work, progression prospects and productivityDesign new, devolved employability programmes that support those otherwise unable to return to the labour marketSupport social enterprise and the social economyOther Relevant WorkCity DealsWork with STUC on Locally