Industrial policy, FDI and employment:still a 'missing a strategy'

This paper contrasts the effects of trade, inward FDI and technological development upon the demand for skilled and unskilled workers in the UK. By focussing on industry level data panel data on smaller firms, the paper also contrasts these effects with those generated by large scale domestic investment. The analysis is placed within the broader context of shifts in British industrial policy, which has seen significant shifts from sectoral to horizontal measures and towards stressing the importance of SMEs, clusters and new technology, all delivered at the regional scale. This, however, is contrasted with continued elements of British and EU regional policy which have emphasised the attraction of inward investment in order to alleviate regional unemployment. The results suggest that such policies are not naturally compatible; that while both trade and FDI benefit skilled workers, they have adverse effects on the demand for unskilled labour in the UK. At the very least this suggests the need for a range of policies to tackle various targets (including in this case unemployment and social inclusion) and the need to integrate these into a coherent industrial strategy at various levels of governance, whether regional and/or national. This has important implications for the form of any 'new' industrial policy.

Industrial policy, FDI and employment:still a 'missing a strategy'

This paper contrasts the effects of trade, inward FDI and technological development upon the demand for skilled and unskilled workers in the UK. By focussing on industry level data panel data on smaller firms, the paper also contrasts these effects with those generated by large scale domestic investment. The analysis is placed within the broader context of shifts in British industrial policy, which has seen significant shifts from sectoral to horizontal measures and towards stressing the importance of SMEs, clusters and new technology, all delivered at the regional scale. This, however, is contrasted with continued elements of British and EU regional policy which have emphasised the attraction of inward investment in order to alleviate regional unemployment. The results suggest that such policies are not naturally compatible; that while both trade and FDI benefit skilled workers, they have adverse effects on the demand for unskilled labour in the UK. At the very least this suggests the need for a range of policies to tackle various targets (including in this case unemployment and social inclusion) and the need to integrate these into a coherent industrial strategy at various levels of governance, whether regional and/or national. This has important implications for the form of any ‘new’ industrial policy.

Creative credits:a randomized controlled industrial policy experiment

This report examines the results of a pilot study, which used a method of evaluation called randomised control trials (RCTs) to see if a popular business support scheme called Creative Credits worked effectively. The pilot study, which began in Manchester in 2009, was structured so that vouchers, or 'Creative Credits', would be randomly allocated to small and medium-sized businesses applying to invest in creative projects such as developing websites, video production and creative marketing campaigns, to see if they had a real effect on innovation. The research found that the firms who were awarded Creative Credits enjoyed a short-term boost in their innovation and sales growth in the six months following completion of their creative projects. However, the positive effects were not sustained, and after 12 months there was no longer a statistically significant difference between the groups that received the credits and those that didn’t. The report argues that these results would have remained hidden using the normal evaluation methods used by government, and calls for RCTs to be used more widely when evaluating policies to support business growth.

Rebuilding the city:a focus for European industrial policy?

While the city offers the potential of dynamic agglomeration economies which can spur the achievement of economic growth and act as an engine that powers the economy, it often appears as a centre of crisis in mature ‘developed’ regions and countries, even before the most recent economic downturn. This paper attempts to reconcile these two seemingly paradoxical observations by bringing in a strategic choice perspective to explain how concentrated strategic decision making in the corporate entities that dominate our cities has diminished the very diversity that Jacobs identified as being essential for cities to flourish and develop. The industrial policy implications for cities are subsequently explored in terms of building new industrial districts, developing high skill ecosystems, and fostering multinational webs of cities, all with the aim of ensuring the conditions exist in cities for creativity and development to flourish, notably a diverse and democratic economic system.

Tiger, tiger, burning bright? Industrial policy “lessons” from Ireland for small African economies

The chapter examines possibilities for industrial policy in African countries through the lens of lessons that can be learned from the industrial policy approaches pursued in Ireland as well as in East Asia. As latecomers to industrialization, the small African economies are well positioned to undertake such an exercise, we suggest. This chapter provides some novel insights by providing a comparison between Ireland and the small African economies. To our knowledge such a comparison offers a unique contribution. Cognizant of the fact that a “one size fits all” approach to industrial policy is not appropriate in the African context, we argue in favor of the adoption of a more “holistic” approach to industrial policy in these economies. Such an approach we argue should focus simultaneously on demand and supply factors of industrial development, and on microeconomic as well as macroeconomic factors.

A critical reflection on Irish industrial policy:a strategic choice approach

Abstract: This paper offers a critical evaluation of recent Irish industrial policy (IP) experience. It argues that whilst Ireland managed to get some things “right” through its IP, substantial tensions arose through making foreign direct investment (FDI) attraction the centrepiece of policy, without at the same time adopting a more holistic approach in IP which inter alia also placed an emphasis on indigenous firms and entrepreneurship more generally. In particular, greater efforts should have been made much earlier in attempting to embed transnational corporation (TNC)-led activity better into the wider economy, in fostering domestic small firms and entrepreneurship, in promoting clusters, and more generally in evaluating IP more fully – notwithstanding the context which mitigated against such actions. As a result, Ireland as an economy remained vulnerable to strategic decisions made elsewhere by TNC decision makers, with IP effectively contributing to a situation that can be characterised as institutional and strategic failure. Overall, the paper suggests that wholesale emulation of the Irish IP approach is problematic.

Industrial policy, FDI and employment:Still 'missing a strategy'

This paper contrasts the effects of trade, inward FDI and technological development upon the demand for skilled and unskilled workers in the UK. By focussing on industry level data panel data on smaller firms, the paper also contrasts these effects with those generated by large scale domestic investment. The analysis is placed within the broader context of shifts in British industrial policy, which has seen significant shifts from sectoral to horizontal measures and towards stressing the importance of SMEs, clusters and new technology, all delivered at the regional scale. This, however, is contrasted with continued elements of British and EU regional policy which have emphasised the attraction of inward investment in order to alleviate regional unemployment. The results suggest that such policies are not naturally compatible; that while both trade and FDI benefit skilled workers, they have adverse effects on the demand for unskilled labour in the UK. At the very least this suggests the need for a range of policies to tackle various targets (including in this case unemployment and social inclusion) and the need to integrate these into a coherent industrial strategy at various levels of governance, whether regional and/or national. This has important implications for the form of any 'new' industrial policy.

Assessing an experimental approach to industrial policy evaluation:Applying RCT+ to the case of Creative Credits

Experimental methods of policy evaluation are well-established in social policy and development eco-nomics but are rare in industrial and innovation policy. In this paper, we consider the arguments forapplying experimental methods to industrial policy measures, and propose an experimental policy eval-uation approach (which we call RCT+). This approach combines the randomised assignment of firmsto treatment and control groups with a longitudinal data collection strategy incorporating quantitativeand qualitative data (so-called mixed methods). The RCT+ approach is designed to provide a causativerather than purely summative evaluation, i.e. to assess both ‘whether’ and ‘how’ programme outcomesare achieved. In this paper, we assess the RCT+ approach through an evaluation of Creative Credits – aUK business-to-business innovation voucher initiative intended to promote new innovation partnershipsbetween SMEs and creative service providers. The results suggest the potential value of the RCT+ approachto industrial policy evaluation, and the benefits of mixed methods and longitudinal data collection.

A cautionary tale of two ‘tigers’: Industrial policy ‘lessons’ from Ireland and Hungary?

This paper draws industrial policy lessons for small Central and Eastern European states through a critical evaluation of recent Irish and Hungarian experiences. The paper outlines a ‘holistic view’ of industrial policy before exploring the experiences of the two economies. Whilst both have managed to ‘do’ policy well in some regards, substantial challenges remain in making FDI attraction the centrepiece of industrial policy, as has been highlighted recently. Overall, the paper suggests that wholesale emulation of the Irish and Hungarian approach is problematic for small open CEE states, and that more balanced approaches to development - and hence industrial policy – are warranted.