Institutional and policy approaches to major economic shocksMajor Economic Shocks Workshop, What Works Centre for Local Economic Growth, London, February 2020
Andy Pike
Henry Daysh Professor of Regional Development Studies
What is an economic shock?
Short, medium and long-term responses
The ‘Task Force’ model
Key issues
Outline
What is an economic shock?
Shock events Slow-burn processes
Sudden Slow
Local firm closure Local natural disaster
Gradual loss of local industrial competitiveness
National Recession Global financial crisis
Persistent adverse national policy
Global climate change
Local
Globall
SPEED
SCAL
E
Technological Disruption
Threshold Effects?
Brexit?
Source: Martin, R. (2017) The Resilience of Cities to Economic Shocks, Presentation Slides.
Possible reactions of an economy to a shock
5
1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435363738394041 1 2 3 4
Employmen
torO
utpu
t
Time
NegativeHystereticResponse:LoweredGrowth PathandSlowerGrowth
NegativeHystereticResponse:LoweredGrowth PathandResumptionofPre-ShockGrowthRate
BounceBacktoPre-ShockGrowthPathandGrowthRate
PositiveHystereticResponse:BounceForwardtoRaisedGrowthPathand ResumptionofPre-ShockGrowthRate
PositiveHystereticResponse:BounceForwardtoRaisedGrowthPathandRaisedGrowthRate
b
c
d
e
f
g
h
i
Shock
a
j
Source: Martin, R. (2017) The Resilience of Cities to Economic Shocks, Presentation Slides.
Short, medium and long-term responsesShort-term Medium-term Long-term
Local economy: assess immediate/likely impacts
Business: refinancing, new owners, receivership
Employees and labourmarkets: redeployment, redundancy pay, employment and financial information and guidance, job shops, outplacement, self-employment advice, subsistence allowances
Equipment, facilities and sites: sale, re-use, mothballing
Supply chains: capacity and employment retention support
Local economy: new FDI, support for expansion of growing sectors
Business: refinancing, new owners, exiting receivership
Employees and labourmarkets: counselling and psychological support, education and (re)training, self-employment and entrepreneurship support
Equipment, facilities and sites: sale, re-uses, changes of use
Supply chains: diversification
Local economy: re-assess ED strategy with focus on economic adaptation and identification of new growth pathways, monitoring and evaluation of responses and local business dynamics
Business: diversification, innovation support, tax breaks
Employees and labourmarkets: education and (re)training, entrepreneurship and enterprise support
Equipment, facilities and sites: sale, re-uses, changes of use
The ‘Task Force model’
Multi-agent selected membership
Strategic, co-ordination and/or implementation roles
Temporary, task-limited lifespan
Non-statutory
Employer, sectoral and/or territorial
Flexible, ‘rapid response’
Examples of task force aims by type
Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739
Task forces, North East England, 2001
Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739
Potential benefits
Responsive and regenerative
Focus, co-operation and co-ordination mechanism
Adaptable (‘context-sensitive’)
Innovative
Multiple, hybrid varieties and evolution
Transition to proactive and developmental
Varieties I: Dissolution
Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739
Varieties II: One-stage evolution
Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739
Varieties III: Two-stage evolution and formalisation
Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739
Varieties IV: Two-stage evolution and consolidation
Source: Pike, A. (2002) ‘Task Forces and the Organisation of Economic Development: the Case of the North East region of England’, Environment and Planning C, 20, 717-739
Issues
Reactive over-use and proliferation
Contingent establishment criteria: shock, crisis, slow-burn…?
Fragmented and limited (new) funding
Public sector reliance
Lacking accountability and transparency
Limited evaluation
Highly uneven evidence base
What would have happened without these (under-evaluated) interventions?
National and local political-economic imperatives: no strong evidence = no policy response?
Tension: shorter-term, direct and narrow outcomes versus longer-term, indirect and wider outcomes
Key issues I
Source: Adapted from Neil MacCallum, Office of Project Advice and Training, London, UK; OECD LEED Evaluation Workshop, Trento, 2006.
Measuring the difference: from inputs to impact
ImpactGVA
OutcomesBusiness R&D,
Productivity
OutputsCompanies assisted,
Spin-offs, etc.
ActivitiesR&D support, manufacturing advice,
marketing support, export networks, etc.
InputsStaff, project finance, etc.
Mor
e di
fficu
lt to
mea
sure
Long
term
Man
y in
fluen
ces
Easi
er to
mea
sure
Shor
t ter
mC
lear
attr
ibut
ion
Evolving adaptive pathways to economic resilience: enhanced, steady state/neutral or denuded…
Moments of intervention in unfolding economic restructuring processes – slowing down > speeding-up for adaptation
Policy mixes tailored to local contexts
Time-limited or standing institution(s) of adaptation?
Connecting to broader strategy amidst the firefighting
Locus of leadership, co-ordination and accountability
What kind of economic restructuring and for whom?
Key issues II
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