Rurality: Renaissance economics

Jamie MacAskill PhD

Bridging the route to market

From partnership to profitPolicy into reality

Entrepreneurial outcomesE.F. Schumacher “Small is beautiful” 1973,

concepts of appropriate technologies & sustainable development

Concept of Creative destruction Joseph Schumpeter 1942

Destructive innovationC.M.Christensen “Innovator’s Dilemma” 1997

To sustain or disrupt

• Sustainable approaches • Improving existing or established products• Discontinuous, radical or incremental• Enormous potential for “drift”• Builds on existing paradigm

• Disruptive approaches• Very different value proposition• Targeting different market segments• Long-term benefits may be obscured by short –term

performance• Enormous capacity to move minor markets into mainstream

Cornerstone• Asking the customer what they want

• Corporate inertia even in well run businesses leads to loss of effectiveness– Managers don’t make decisions Stakeholders do

• Incremental change to maintain growth & profit– Policy drift leads to divergence from original benefits

• Retreat from small markets in search of big profit

• Customers are fickle and technologies can outstrip obvious need and hence fail

• Governments seeking re-election give the biggest lobby what they want but this leads to unintended consequences

• Rural Economies • Farmers keep farming• CAP reform is actually policy drift• FDI becomes a quick win• Become progressively deskilled • Social capital is undervalued• Youth migrate to urban environments• Increasing social welfare issue

• Why should rural economies be any different from urban economies but with a different set of “quality of life” measures

CAP Reform• Today CAP has built a dependency culture

rather than an empowered society• Disruptive approach might ask

• Do traditional economic models work• Do direct subsidies help transformation• Do current perspectives “stall” rural development • Does current “framing” of the issues maintain or worse

promote Policy drift.– What is the countryside for– Who is the countryside for– What era is being preserved

• Are we asking the right question

Governments dilemma

• World already produces more than enough food to support global growth– We still have for famine and crisis

• Policy is a blunt instrument– Should build infrastructure for success– Not try to solve individual problem

• Society, that is individuals, must assume responsibility – Otherwise you remove responsibility – Build dependency

Convergence

Convergence

• CAP remains at 41% of EU budget• CAP over the last 30 years spend on direct

subsidies• 1980-1993 25-30% CAP• 1992-2006 25-30% CAP• 2005-2009 25-30% CAP

• Despite large increases in budget and shifts to different “Pillars”

• Funding farmers to farm however efficiently• Preserving the countryside

• Is this sufficient to transform the sustainable use of natural resources and promote food security

Comparative Advantage

Source Eurostat 2012

Renaissance Economics

• Disruptive approach• Get rid of subsidy “junkies”• Data demonstrates opportunity for local comparative

advantage• Traditional economic approaches maintain status quo and

keep rural economies essentially agricultural or old age communities

• We should operate a two tier economic strategy – National states support infrastructure – Local competitive advantage delivering real value

• Require to produce viable, vital & vibrant rural economies: sustainable and growing

• Direct subsidies effectively block new entrant or indeed distort market opportunities

Unconventional times• Renaissance Economics

– Resets Policy back from the divergence of Policy “Drift” affects– New rural renaissance economic model

• Re-engages fully with market demand more Hayak than Keynes• Reduce to zero direct subsidies• Re-addresses the true value of food chain• Remove inefficient farming practices• Re-shape the vision for what rural economies should offer

– Net inward migration– Job prospects for youth– Entrepreneurial opportunities– Job creation through quality of life improvements– Harnessing local comparative advantages

– Intervention is at infrastructural level & planning legislation– Government “leans” down and local “entrepreneurs” re-invigorate social

capital availability– Builds real re-assessment of value chains and supply chains at local

levels

Thank youDr Jamie MacAskill

www.bite.ac.uk

Tel: +44 (0)2085523071email: jmacaskill@bite.ac.uk

“Some people see things as they are and say why. I dream things that never were and say why not?”George Bernard Shaw

www.academy-zone.com

Principles of Disruptive Innovation*

• Companies depend on customers and investors for resources• Managers do not control investment decisions, Shareholders and Customers

do• Small markets don’t solve growth needs of large companies

• Hence big companies tend to innovate through acquisition• Markets that don’t exist can’t be analyzed

• Data is historical and so can historical data forecast the future or is it a sustaining and incremental route bound to fail

• Use discovery based planning• An organization’s capabilities define its disabilities

• Strengths correlate with weaknesses and so companies may find it difficult to engage with disruptive innovation and lean start-ups

• Technology supply may not equal market demand• Companies constantly seek to move up market leaving behind poorer

profitable markets for more high value : high profit markets• Inevitably competitors invade these markets and disrupt the market• Sometimes investing in smaller less profitable markets is correct to avoid

entrants stealing your market space

*Innovator’s Dilemma (1997) Clayton Christensen

Disruptive Innovation

*Innovator’s Dilemma (1997) Clayton Christensen