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Building New Local Economies in Scotland: Lessons from the United States In partnership with

Neil McInroy & Matthew Jackson Centre for Local Economic Strategies (CLES)

Neil McInroy and Matthew Jackson CLES Centre for Local Economic Strategies BUILDING NEW LOCAL ECONOMIES IN SCOTLAND: LESSONS FROM THE UNITED STATES

What i CLES? Economic AND social growth Planners, Geographers, Economists Action on Ground, Policy, Consultancy Leading UK member and research organisation About CLES Independent charity. 30 th Anniversary

CLES’s principles for local economic development We need to build economic and social growth Build economic resilience How we harness existence wealth better The local state is important steward, enabler and democratic coordinator of local economic development; Think about economic relationships across the spheres of public, commercial and social economies Anchor institutions with a key stake in place are significant

School of economic thought Economies change through.. Local places...BIG policy Economic development policy (i.e) ClassicalInvestment..sites for investmentFree marketNo need for it! Neo classicalIndividual choices..where consumers are Free market with limited dose of interventionism Limited. Setting basic public goods (transport). tax reductions Institutionalist Individuals within institutions..imbue how institutions operate No strong position Invest in public, social and commercial institutions Keynesian Many things. Technology/capital/ labour..where people are economic actors Expansionist fiscal and monetary policy and redistribution Harness local wealth for capital, labour and TFP. Developmental Developing productive capabilities..where collective elements come together for development Government protection/ intervention Wider social development (health, education) Marxist Class struggle, capital build up and tech progress..where the struggle between capital and labour takes place Socialist revolution and central planning Power to Labour. Harness Private capital Post-capitalistFundamental flaws in capitalism..where people self organise and act Forget about economic growth- happiness Well-being and working within environmental limits Plural set of local economic development choices

Effective public services, improve lives and reduces demand. Public sector reform Economic development Social progress/justice Social progress as an OUTCOME OF, and INPUT TO, economy success Improving economy reduces demand System approaches

Lessons from United States: Purpose Explore other ways of doing economic and social development How are American Cities responding to economic decline and social opportunity? Are they adopting approaches which lead to a torrent of benefit as opposed to being framed by trickle down? What is the role of different spheres of the economy in instigating change To visit 4 cities and catch up with thinkers and organisations we have relationships with.

Cleveland – the collaborative city Lessons Learnt Collaboration A blend of resource Not just economic growth It takes time

Cleveland – the collaborative city Lessons Learnt Collaboration A blend of resource, including philanthropic capital Not just economic growth It takes time

Pittsburgh – the liveable city Lessons Learnt Take advantage of industrial legacy, as an asset Local tax raising/levy + redistribution BIDs

Philadelphia – the innovative city Lessons Learnt A strong local state has a role in enabling Mayoral leadership for economic and social growth Important to grow economy from within A need to take risks

Providence – the creative city Lessons Learnt Natural awareness of cross sector working due to scale Strong social enterprise infrastructure Anchor leadership to make a change Culture of creativity

Overarching lessons Collaboration is key We need to advance anchor institution strategy Philanthropy has a significant stake We need to harness existing wealth Business need to become ‘citizens’ Social sector are embedded in collaborative approaches

Overarching lessons The local state is an enabler Local government needs to be the core enabler of local economic development Needs to calibrate intervention carefully Places can shape markets from within We need to be innovative in service design and procurement of services Inequality must be addressed We must balance economic growth and social growth

In conclusion: new local economic strategies in Scotland National economic strategy is excellent frame Challenge to operationalise Role of public, social and commercial institutional anchors are important Think plural. Economic and social growth, and borrow from lots of schools of thoughts. Think growth, green growth, non growth, steady state and new forms of place development Systems: Public service reform, economic and social growth

Centre for Local Economic Strategies . or Website. @clestweet Phone. (0044)

Building New Local Economies in Scotland: Lessons from the United States In partnership with

David McPhee Scottish Government

Scottish Economic Strategy: Inclusive Growth David McPhee, Office of the Chief Economic Adviser 30 October 2015

Scotland’s Economy Economic Growth and Labour Market

Real Wages and Employment Opportunities

But Deep Inequalities exist Scotland would rank 20 th out of the 34 countries in the OECD for income inequality

Income Inequality – Income Distribution The distribution of income is skewed by a small proportion of households with very high incomes The bottom 40% of households have just over 20% of household income in Scotland. The middle 50% have approx. half of all income. This is the case across time and internationally. Inequality is driven by how the remaining 50% is divided between the top 10% and the bottom 40%. The top 10% of households have approx. 25% of household income in Scotland.

Regional Inequalities in Output, GVA per head 2013

Regional Inequalities in Scotland - Income

Health Inequalities

Education Inequalities

Justice Inequalities

1 in 7 Strong foundations – but more do do?

Scotland’s Economic Framework

Inequality and Growth Inequality is harmful for long-term sustainable growth –OECD: Rising income inequality in the UK reduced GDP per capita growth by 9% between 1990 and –The Scottish Government estimated the cost of our inequality has been a total loss to the UK economy of £100 billion – around £1,600 for every person in the country Tackling Inequality is a moral and social imperative “The world’s 85 richest people have the same wealth as the poorest half of humanity” (Oxfam 2014) (most recently been updated – 80 people now have the same wealth as the poorest half of humanity)

So what is Inclusive Growth? Inclusive growth: Growth that combines increased prosperity with greater equity; that creates opportunities for all and distributes the dividends of increased prosperity fairly. Characteristics of inclusive growth: –Multi-dimensional: social inclusion, well-being, participation, environmental –Sustainable economic growth that tackles inequalities in outcomes but also inequalities in opportunities –More equal growth across cities, regions and rural areas, and recognise importance of place/community in delivering this –Understanding synergies and trade-offs, short-term and long-term impacts –Delivered in partnership – public sector, third sector, trade unions, businesses and communities

International Approaches OrganisationDimension European Commission Raising employment rate (focused on women, young people, older workers) Improving opportunity through skills and training Ensuring benefits of growth reach all parts of the EU. OECD Dimensions should vary across countries, depending on circumstances and conditions Equality of opportunity to contribute to growth, and equality of outcome Economic dimensions of well-being (such as GDP per capita) Opportunity (e.g. labour market status) Outcome (e.g. health status) World Economic Forum ‘Pillars’ of inclusive growth: education, employment, asset building, financial intermediation, rents, services and infrastructure, transfers. Key performance indicators on growth, income-related equity, intergenerational equity.

Scotland’s Economic Strategy

Development of a Policy Tool

Programme for Government Scottish Government will : –Pursue an inclusive labour market by reducing barriers to employment to help women, young people and other groups to overcome structural challenges to their participation in work –Address regional disparities in economic performance –Invest in skills to promote a high-skill, high-wage economy –Develop the fair work agenda to improve the quality of work, progression prospects and productivity –Design new, devolved employability programmes that support those otherwise unable to return to the labour market –Support social enterprise and the social economy

Other Relevant Work City Deals Work with STUC on Locally Traded Sectors Community Empowerment Scotland Act (2015) Economic Geographies Development of Labour Market Strategy

Susan Love & Robert Pollock EDAS

Building New Local Economies in Scotland: Lessons from the United States In partnership with