Key Issues in Economic Development
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The document discusses key issues in economic development as presented at the EDAS and SLAED conference in Aberdeen on December 1, 2016, focusing on the changing priorities and rationales for policy intervention in regional development. It highlights the importance of addressing spatial disparities in the UK and the evolving landscape of governance and deal-making in local economic strategies amidst a backdrop of austerity. The presentation emphasizes the need for innovative funding mechanisms and collaborative governance structures to foster economic growth and resilience in local areas.
Key Issues in Economic Development
- 1. Key issues in economic development EDAS and SLAED Conference, Aberdeen, 1 December 2016 Andy Pike Henry Daysh Professor of Regional Development Studies andy.pike@ncl.ac.uk
- 2. Outline • What’s it all for? New economic development priorities and paths • Changing rationales for policy intervention • Institutions and governance • Deals and deal-making • Austerity and the new municipal entrepreneurialism • Economic development futures…
- 3. What’s it all for? New economic development priorities and paths
- 4. Spatial disparities in the UK in context, 1995-2012 Source: Cambridge Econometrics
- 5. Divergent growth amongst major UK cities, GVA per capita 1981-2013 (PUAs) 10 15 20 25 30 35 40 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 GVAperCapita(£000s) London Edinburgh Bristol Leeds Cardiff Glasgow Manchester Liverpool Nottingham Birmingham Newcastle Sheffield Source: Cambridge Econometrics
- 6. Divergent Growth amongst Major UK Cities, Employment, 1971-2013 (1971=100)(PUAs) 60 70 80 90 100 110 120 130 140 150 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Employment1971=100 Bristol Cardiff Nottingham Edinburgh Leeds London Manchester Sheffield Newcastle Glasgow Birmingham Liverpool Source: Cambridge Econometrics
- 7. “…need to rebalance the economy across sectors and areas in order to spread wealth and prosperity around the country” (Theresa May, Speech to the Conservative Party Conference, 5 Oct 2016)
- 8. Evolving geographies and institutions…
- 9. The ‘hourglass’ labour market Source: UKCES (2014) The Labour Market Story: An Overview, UKCES: Rotherham
- 10. Inclusive growth
- 11. Changing rationales for policy intervention
- 12. Conventional – correcting market failures • Efficiency • Equity
- 13. New and emergent rationales… • Economic potential and revenue streams • Low skills equilibrium • Co-ordination failures • Resilience • ‘Industrial strategy’ • Demand complementarities
- 14. Demand and supply-side Supply-side Production Push Aggregate supply (Dis)connecting Demand-side Consumption Pull Aggregate demand (Mis)matching
- 16. Multiple and competing goals of decentralisation
- 17. Source: Pike, A. (2010) Understanding and Measuring the Governance of Local Development Policy, OECD: Paris. Forms of decentralisation Centre Region Powers Resources Reserved Shared Decentralised Central control Negotiated Regional discretion
- 18. Average number of metropolitan governance bodies created or reformed in OECD countries per decade Source: Kim, S-J., Schumann, A. and Ahrend, R. (Forthcoming) “What governance for metropolitan areas?” OECD Regional Development Working Papers, OECD: Paris.
- 19. Share of metropolitan governance bodies active in policy field Source: Ahrend, R., Gamper, C. and Schumann, A. (2014) “The OECD metropolitan governance survey: a quantitative description of governance structures in large urban agglomerations” OECD Regional Development Working Papers, No. 2014/04, OECD: Paris.
- 20. Pendulum swings in economic development governance in England
- 21. Evolving economic development landscape in England Source: NAO (2014)
- 23. City Deals
- 24. Waves 1, 2 and 3… Source: Deputy Prime Minister’s Office and Cabinet Office Wave 1 Wave 2 Wave 3… Greater Birmingham The Black Country Glasgow and Clyde Valley Bristol Region Bournemouth Aberdeen Greater Manchester Brighton and Hove Inverness Leeds City Region Greater Cambridge Cardiff Capital Region Liverpool City Region Coventry and Warwickshire Stirling Nottingham City Region Hull and Humber Edinburgh? Newcastle Region Greater Ipswich Tay Cities? Sheffield City Region Leicester and Leicestershire Swansea Bay City Region? Milton Keynes Greater Norwich Oxford and Central Oxfordshire Thames Valley Berkshire Plymouth Preston and Lancashire Southampton and Portsmouth Southend Stoke and Staffordshire Sunderland and the North East Swindon and Wiltshire Tees Valley
- 25. City Deal geographies, 2016 Source: O’Brien, P. and Pike, A. (2016) ‘Deal or no deal?’ Governing urban infrastructure funding and financing in the UK City Deals, Draft Paper, CURDS, Newcastle University
- 26. Population in City Deal ‘areas’, 2016 32,128,398, 51% 30,622,502, 49% City Deal areas Rest of GB Source: O’Brien, P. and Pike, A. (2016) Deal or no deal? Governing urban infrastructure funding and financing in the UK City Deals, Draft Paper, CURDS: Newcastle University.
- 27. Gross Value Added (GVA) of City Deal ‘areas’, 2016 675,648, 45% 816,815, 55% City Deal areas Rest of GB Source: O’Brien, P. and Pike, A. (2016) Deal or no deal? Governing urban infrastructure funding and financing in the UK City Deals, Draft Paper, CURDS: Newcastle University.
- 28. New funding per capita (£) in City Deals, 2016 800 556 385 346 145 60 53 51 34 26 23 3 3 0 100 200 300 400 500 600 700 800 900 Source: O’Brien, P. and Pike, A. (2016) ‘Deal or no deal?’ Governing urban infrastructure funding and financing in the UK City Deals, Draft Paper, CURDS, Newcastle University
- 29. Governance models in the City Deals Governance Example Elected Mayor Liverpool City; Bristol City Combined Authority West Yorkshire (Leeds City Region)? Elected ‘metro mayor’ and Combined Authority Greater Manchester; Sheffield City Region?; Liverpool City Region; North East/North Tyne?; Tees Valley; Greater Birmingham and Solihull Private sector-led Nottingham Source: Authors’ research; Marlow, D. (2012) City Deals – Implications for Enhanced Devolution and Local Economic Growth, Policy Briefing, LGiU: London.
- 30. 38 (Final) Devolution Deal Proposals, Sept 2015 Source: Local Government Chronicle
- 32. • Local-centre conduit • Local ‘empowerment’, central delegation • Local-centre quid pro quo • Vision and strategy-making • Encouragement and promotion of innovation • Project and programme integration and outcome focus • Local governance reform device ‘Deals’ and ‘deal-making’ - positives
- 33. • Austerity backdrop, the fiscal squeeze and capacity constraints • Asymmetric information • Centre as supporter and appraiser • Negotiating power resides centrally • Lack of accountability, transparency and scrutiny • Uneven outcomes of political haggles • Slippage from announcement to implementation, innovation diluted • Limited evaluation ‘Deals’ and ‘deal-making’ - negatives
- 34. Austerity and the new municipal entrepreneurialism
- 35. Source: National Audit Office (2014) Financial Sustainability of Local Authorities, NAO: London Change in Local Authority spending power and Government funding, 2010/11-2015/16
- 36. Temporality Type Examples Established, ‘Tried and tested’ Newer, Innovative Taxes and fees Special assessments; User fees and tolls; Other taxes Grants Extensive range of grant programmes at multiple levels Debt finance General obligation bonds; Revenue bonds; Conduit bonds Tax incentives New market/historic/housing tax credits; Tax credit bonds; Property tax relief; Enterprise Zones Developer fees Impact fees; Infrastructure levies Platforms for institutional investors Pension infrastructure platforms; State infrastructure banks; Regional infrastructure companies; Real estate investment trusts Value capture mechanisms Tax increment financing; Special assessment districts; Sales tax financing; Infrastructure financing districts; Community facilities districts; Accelerated development zones Public private partnerships Private finance initiative; Build-(own)-operate-(transfer); Build-lease-transfer; Design-build-operate-transfer Asset leverage and leasing mechanisms Asset leasing; Institutional lease model; Local asset- backed vehicles Revolving infrastructure funds Infrastructure trusts; “Earn Back” funds Funding and financing practices
- 37. Changes in % of taxes raised locally, 1975 and 2012
- 38. Tax and Spending in UK Cities 2013/14 (£billion) 134.6 19.8 9.5 12.5 8.8 14.2 19.7 98.2 30.6 18.6 22.7 15.1 23.4 30 0 20 40 60 80 100 120 140 160 London Manchester Liverpool Newcastle Sheffield Glasgow Birmingham Taxes generated Public spending Source: Centre for Cities (2015) Mapping Britain’s Public Finances, London, Centre for Cities.
- 40. Growing Places Fund allocations per capita by LEP area, 2012 Source: Author’s calculations from CLG data 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 ThamesValleyBerkshire WestofEngland Coventry&Warwickshire Cheshire&Warrington SheffieldCityRegion Swindon&Wiltshire Gloucestershire GreaterManchester Hertfordshire Oxfordshire Leicester&Leicestershire Cumbria EnterpriseM3 Lancashire NorthEast LiverpoolCityRegion TeesValley HeartoftheSouthWest Dorset BlackCountry Derby,Derbyshire,… TheMarches Buckinghamshire SouthEast LeedsCityRegion CoasttoCapital Cornwall&theIslesofScilly GreaterCambridge Solent GreaterBirmingham&… NewAnglia SouthEastMidlands StokeonTrent&… Worcestershire Humber GreaterLincolnshire Northamptonshire York&NorthYorkshire London
- 41. Greater Manchester: from ‘cost centre’ to ‘net contributor’ to the national economy £- £5 £10 £15 £20 £25 £30 2008 2009 2010 2011 2012 2013 2014 £bn Total GM spend (incl. proportion of national spend) Total GM Tax income Source: Greater Manchester Combined Authority and Greater Manchester LEP
- 42. Multi-actor and multi-level governance Global — WTO, World Bank Supranational — EU, NAFTA, ASEAN National — Nation-states Sub-national — Regions, City-regions Sub-regional — Cities, Localities Community, Neighbourhood
- 43. Acknowledgements This research has been undertaken in collaboration with David Bailey (Aston University), Emil Evenhuis (Cambridge University), Ben Gardiner (Cambridge Econometrics), Louise Kempton, David Marlow, Ron Martin (Cambridge University), Anja McCarthy, Peter O’Brien, Andrés Rodríguez-Pose (LSE), Peter Sunley (Southampton University), John Tomaney (Bartlett School, UCL) and Peter Tyler (Cambridge University). Structural Transformation, Adaptability and City Economic Evolutions