How research shows the benefit of long-term industrial strategies
The Productivity Institute
The Productivity Institute aims to better understand, measure, & enable improvements in productivity across the UK.
The UK's industrial strategy - or lack thereof?- continues to be in the headlines.
Three former business secretaries - Greg Clark (Con), Lord Peter Mandelson (Lab) and Sir Vince Cable (LibDem) were all quoted in The Financial Times warning this approach could fail to prepare Britain for the future.
Here are three different perspectives from researchers at The Productivity Institute:
Learning from the past
The UK’s industrial policy since the 1970s has been characterised by frequent policy reversals and announcements, driven by political cycles, while multiple uncoordinated public bodies, departments and levels of government are responsible for delivery.
Professor?Diane Coyle?was a member of the former?Industrial Strategy Council?and is Co-Director of the Bennett Institute for Public Policy and The Productivity Institute.
She writes about the deficiencies of the industrial policymaking landscape and importance of developing institutional frameworks that support policy consistency, better coordination and the ability to learn or to build on successes.
How planning can help recover from unforeseen events
The COVID-19 pandemic caused world-wide socio-economic disruption on an enormous scale. In response, governments launched unprecedented financial stimulus programmes, many of them focused on a "green recovery" in a time of heightened concern about environmental sustainability and climate change.
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Frank Geels , Guillermo Pereira and Jonatan Pinkse for The Productivity Institute examined how France, Germany and the UK chose to invest in policies and initiatives that would both boost the economy and green growth. They found France and Germany both spent more - both in absolute and GDP-relative terms - on green recovery. In fact, France spent 43% more than the UK.
And while France and the UK focused on existing sectors such as buildings and railways, Germany spent nearly 60% of funding on new technologies such as electric vehicles and hydrogen. The research details numerous motivations and contexts and found those policy responses were powerfully shaped by pre-existing contexts, plans and developments.
Be proactive, not reactive
How does the UK best benefit from digital transformation and green growth? What are the opportunities, risks and barriers for productivity and jobs?
Low-carbon and digital transitions are poised to define the economy for the next half century, with significant ramifications for productivity. They will require transformative changes in business models, skills needs, infrastructure, regulatory policies and markets.
Research from Frank Geels, Jonatan Pinkse and Dimitri Zenghelis for The Productivity Institute recommends governments seeking to boost productivity sustainably strategically design and steer, rather than passively forecast, the future.
Productivity opportunities and risks in a transformative, low-carbon and digital age By Frank Geels, Jonatan Pinkse and Dimitri Zenghelis. The Productivity Institute Working Paper 009.