Inclusive Growth: Lessons from Around the World

By Martin Wight, Scottish Enterprise 

Learning from Others

When you step forward, its always good to know you’re not alone.
So, when Scotland embarked on inclusive growth with the launch of Scotland’s Economic Strategy in 2015, it was heartening that others seemed be starting on a similar journey.

What can we learn from our fellow travellers?

In 2017, Glasgow hosted an international conference on inclusive growth that brought together key actors, including the OECD. Gabriela Ramos, with the wonderful multiple job titles of OECD Chief of Staff, Sherpa to the G20 and Co-ordinator of the Inclusive Growth Initiative, shared the OECD’s analysis and policy lessons. Among these:

• For early years interventions, support those that have been left behind or start with the greatest disadvantage

• Encourage policies which support small companies to access finance, technology and high-quality skills

• Regional and local development to address differences in income and wellbeing outcomes for people, within a coherent national approach

Capped off by the useful reminder not to cut-and-paste – the paths to inclusive growth must be set in the context of a country’s own challenges and ambitions.

Useful high-level guidance, but how do we ground in economic development practice?

Internationally, US-based policy and research centre, the Brookings Institute, has been at the forefront of helping regions build inclusive economies. Helpfully defining these as economies that maximise the participation of people, places and business in growth, “enabling people to be creators of opportunity, not just beneficiaries of growth”. Brooking’s diagnosis rings true for Scotland:

• The jobs rebound has helped but job quality matters even more. We need greater business dynamism leading to higher revenues and higher wages.

• Economic recovery has not reached all places equally. We need to connect people better to opportunities.

• Automation threatens to exacerbate inequality and economic exclusion. We need to equip people to adapt to disruptive change.

With a little translation, Brookings menu for inclusive growth would not look out of place in Scottish economic development.

MWblog

Real success comes where the interests of economic development and business growth are integrated with community development, skills & education and land-use planning.

Finally, how do we use inclusive growth to transform economic development?

Much closer to home, one of the most interesting inclusive growth journeys is happening in Wales. The Welsh Government (WG) are shifting the purpose of economic development in a similar way to Scotland. There is an opportunity to learn from each other. Wales has introduced an Economic Contract that requires applicants for business support to pre-qualify for funding by demonstrating their growth potential and contribution to fair work, promotion of health and skills and reducing carbon footprint. Very much in the territory of the Scottish Business Pledge, but with more teeth?

Any businesses that fail to qualify are referred to wider Welsh Government support, eg Business Wales (similar to Business Gateway), to help them progress towards making the commitments outlined above

Successful businesses then go onto a full application process, where they need to demonstrate that they will deliver against at least one of WG’s Calls to Action (decarbonisation; Innovation, entrepreneurship & headquarters; exports and trade; high quality employment, skills development and fair work; R&D, automation & digitalisation). All applications are then appraised for a single Economy Futures Fund – again interesting at a time when the Enterprise & Skills Review has set the goal of greater streamlining in Scotland.

It’s early days in Wales. The contract only came into effect this summer. Talking to colleagues at the Welsh Government, the “contract” is more of a conversation with businesses and the single fund is still transitioning from being an umbrella for existing funds, but there’s a clear determination to make it work as a way of prioritising limited funding and helping businesses make a positive contribution on the key elements of inclusive growth. Definitely one to watch.

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