In pursuit of the productive

As part of my involvement with the Young Academy of Scotland , I am fortunate to have the opportunity to engage across the Royal Society of Edinburgh . One of the benefits is access to their calendar of events, linked to my own work in fields such as economic development. Earlier this week, I had the chance to attend a session exploring how we can address productivity, looking at factors such as its importance in the economy and how we seek to address its revival. This article considers some of the key intelligence shared, and where this links in to wider economic discourse.

Following a brief introduction from Anton Muscatelli , we were honoured to welcome Bart van Ark from the The Productivity Institute . In starting his presentation he spoke of the growing pace of change in technology, yet the challenge of slowing productivity growth across developed economies. While these observations were apparent during the technology boost in the late 80's (considered through the Solow Paradox), we are now faced with a wider range of shared societal challenges with demographic shifts, rises in deglobalisation and climate change. In terms of the question of why productivity matters, there is a broad awareness that the concept may be seen as popular, yet it is not always acknowledged as a positive.

Our relationship with productivity is often linked to efficiency, with removal of human capital within the market. Yet Bart argued that productivity offers the only sustained source of economic development in the long term. The gains leveraged provide the opportunity to redress the system and explore how we consider the boundaries of growth. There was a moment to explore the shift from outputs / inputs towards an awareness of outcomes and the resources required. We must look to consider the measures we adhere to, and ask do we need to move to alternatives e.g. a shift beyond GDP.

Looking at the trends in terms of productivity delivery, a global slowdown is apparent (only India is currently capable of demonstrating an uptick in productivity). Some time was taken to create a distinction between productivity growth and productivity levels, recognising the lack of resilience currently apparent within the economy to address further shocks. However the UK consideration pointed to three specific challenges: chronic and broad based under investment, lack of knowledge diffusion and institutional fragmentation. Following the financial crash, the strengths which underpinned the economy have shifted.

As a nation, we are seeing investment shift towards intangible assets, and a reduction in our medium sized firms capable of driving productivity. In exploring solutions, the answer will not come in considering the working hours within the economy, rather an acceptance of the need to adopt AI as a solution. Those firms which have adopted AI have already demonstrated the potential it offers in terms of efficiency to deliver key organisational deliverables. Yet to fully realise the benefits of this system, we must see investment in both the intangible (skills, software and data) and tangible (computing capacity).

Looking specifically at the Scottish question, there was a broad acknowledgement of our competitive strengths and a route to recover. Yet productivity requires coordination beyond a single policy area; rather than recognising this solely as an economic measure, we must consider its role in areas such as health and education. While there are examples of countries successfully pursuing productivity gains, there is no off the shelf solution. Instead a need to connect stakeholders to the assets which will facilitate the change required - the knowledge diffusion within the innovation system.

Concluding his presentation, there were a number of clear recommendations proposed:

• Science and innovation policies need to better balance technological progress with the diffusion of knowledge and absorptive capacity in the ecosystems. This point is one which sits prominently within the SE Scaling Innovation Mission, recognising how the organisation looks to knowledge as a vehicle for change across the quadruple helix.
• Greater attention to investment related policies consistent with inclusive sustainable growth. Again, the SE Mission exploring Productivity through Capital Investment explicitly looks to how to address these challenges and seek to create capacity within the economy to adopt (and create) new methods of delivery.
• New paradigm for innovation and industrial policies that supports inclusive development. This point related back to the need to consider interdisciplinary productivity and where change goes beyond a singular economic focus.
• Competition to allocate resources to most productive uses. As we strive to stimulate change across industry, we have seen the introduction of innovation challenge calls as a vehicle to help pursue this goal e.g. Financial Regulation or Green Heat
• Stronger institutes and capabilities to allow for dynamic learning and adoption of innovative practice. While we are capable of identifying better practices globally, we must prime organisations so they are capable of responding to opportunities.

Moving in to the panel session, we were joined by several MSPs from across the political spectrum in Scotland (Maggie Chapman, Brian Whittle and Michael Marra) who spoke to their own experiences in the pursuit of productivity through Holyrood. There was a consensus recognising that many of these challenges go beyond a single political cycle or agenda and there is a need to adopt a mission based approach which brings together resource from across the public sector rather than seeing these issues in isolation. There was also a question of how do we allow for failure in a system; innovation requires the capacity to learn from mistakes. Instead of treating these as a reason to admonish, there is a need for political maturity. There was a chance to consider how we explore regional ownership with the city / growth deals acknowledged as a vehicle in delivering change. In particular, Bart flagged the need for both planning and infrastructure to be considered within the regional context. The questions from the audience offered a different perspective with exploration of what do we seek to measure, the role of education and how we target support around factors such as SIMD.

As I took notes throughout the event, there were several points which stood out and prompted further questions and avenues worth exploring:

1. This event was framed within the context of productivity in an economic context, yet there is a need to consider its impact in a multi-disciplinary manner; how we explore this within the context of health, education or other social goods? This framing is something which is becoming more important and underpins much of the work we seek to deliver through the Young Academy.
2. There was several references to the notion of measurement and how we define productivity. Yet there was also a question of framing this within the growth debate. Bart made reference to the Beyond-GDP movement and raised the question of where do we seek to capture progress.
3. I was encouraged by the points raised around the notion of ownership of the economy and productivity. I have long advocated for more productive forms of business ownership, yet I also recognise the notion of ownership as a means to empower societal stakeholders, particularly through Community Wealth Building.
4. If we look to drive productivity, we must recognise this will impact on the availability of economic opportunity for those often furthest from employment. As we strive towards the creation of an economy built on a higher value labour market, ideally we should look to utilise the resource gain to explore concepts such as Universal Basic Income.

This reflection seeks to build on personal experience from a range of economic development positions, yet it also acts a call for action. Productivity is accurately described as one of the key drivers of economic progress. Yet discussions with RSE fellows post event reaffirmed the need to consider the beneficiaries of productivity gains. The economy must remain sustainable, both in terms of environmental limits, and in terms of resilience in the face ongoing societal challenges. However, we must also seek to recognise the inclusive nature of who is served by the economy. As future industries seek to balance these issues, there is a need to provide a platform from which we consider where productivity gains are societies gains.

P.S. These reflections remain political agnostic, recognising the commencement of the General Election political campaign cycle. This article seeks to offer personal reflection in terms of the wide discussion on the night and remain independent of my work with any specific organisation.