A New Industrial Policy

7/30/2019 A New Industrial Policy

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www.skope.ox.ac.uk

A NEW INDUSTRIAL POLICY?

Ken Mayhew


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OUTLINE

The old industrial policy

Its abandonment

Why has this caused problems?

Is a new variant emerging?

What variant, if any, do we need - particularly in thecontext of SKOPEs remit on skills, knowledge andorganisational performance?


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THE OLD INDUSTRIAL POLICY

Horizontal (eg tax policy, regulation)

Vertical (eg picking winners)

A false distinction?

Focus


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ITS ABANDONMENT

Conventional welfare economics and thebelief in private markets

Regulated competition and the profit motive

Remove red tape and de-regulate

Privatisation

Efficient financial markets distribute resources

to the most promising sectors

Rolling back the frontiers of the state


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THE PROBLEM

Little improvement in underlying growth rates Little improvement in competitiveness

Modern stress on the high skills vision

Human capital as the magic bullet for

achieving this

But emerging problems with utilisation of skill

Need to change product and production

strategy


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CHANGING PRODUCT AND

PRODUCTION STRATEGIES

Can this be done without interference

The Soskice approach

Skills utilisation projects Quality of work/job quality projects

BUT Something more is needed.

A gradual partial realisation of this in policycircles


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A NEW INDUSTRIAL POLICY FOR THE

UK?

The Coalitions Plan for Growth

Some old-fashioned phraseology: creating theconditions for growth; removal of unnecessarybarriers BUT also some more radicalphraseology

The 2012 Budget:

Ambition 1: create the most competitive taxsystem in the G 20

Ambition 2: make the UK the best place in Europeto start, finance and grow a business


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Ambition 3: encourage investment andexports as a route to a more balancedeconomy

Ambition 4: to create a more educatedworkforce that is the most flexible in Europe

Budget measures to further these ambitions:

o Ambition 1 - tax measures

o Ambition 2 tax breaks and regulationexemptions


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BUT also

Government procurement from SMEs and

reform of Enterprise Investment Scheme and

Venture Capital Trusts

o Ambition 3 tax concessions

BUT also Green Investment Bank; newTechnology Innovation Centres; money for

capital investment in science


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o Ambition 4 greater emphasis on higher

quality of vocational education and training

BUT DOES THIS AMOUNT TO A NEW

INDUSTRIAL POLICY?

WHAT IS HAPPENING MORE WIDELY?


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THE POLITICIANS

Vince Cable: the government has no

compelling vision of where the country is

heading; its actions are piecemeal; it has

no clear and confident message about how

we will earn our living in the future.

Chuka Umunna: specialise in what we are

good at; trust in markets not enough; marketscant set strategic direction.


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THE POLITICIANS cont

Chuka Umanna: fundamental research (USgovernment and the ICT revolution);

regulation can create entirely new markets

(zero carbon homes); foster clusters Active government: horizontal and vertical

Sectorally targeted policies:

Coordination Automotive Council

Procurement policies


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THE POLITICIANS cont

Institutions: Technology Strategy Board; Office

of Life Sciences; but not enough

Clear vision: analogy of the US and the space

race and the Cold War


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SMART SPECIALISATION STRATEGIES

European Commission

High R & D intensive sectors

Strategies defining a policy mix and

budgetary framework focusing on a limited

number of priorities to stimulate smart

growth

Flanders In Action

UK Government stance


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INDUSTRIAL CLUSTERS

Michael Porter, The Competitive Advantage of

Nations, 1990

Clusters Policy Steering Group wound up in

2003

RDA Cluster Sub-Group

Porters 2003 assessment of the UK economy

Present UK Government stance


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GREEN TECHNOLOGY

Foreign initiatives

UK Government investing in green technologyinitiatives

How does the funding compare with othercountries?


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A LESSON FROM THE USA

An industrial policy by any other name?

DARPA; Small Business Innovation Research

Programme; National Institutes of Health

R & D tax credits in part to reduce off-shoring

Attempts to revive manufacturing

Billions on clean energy technology. Funding to

build factories

Military procurement nearly 3% of GDP


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IS THE UK DOING ENOUGH?

The rhetoric has changed

BUT

Still a reluctance to intervene Still a failure to face up to the problem of

achieving high quality production

What could be done? Does it matter?

A New Industrial Policy

Documents

Transcript of A New Industrial Policy