Slide 1 - Institution of Economic Development

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Building a Smarter Economic Future
The UK Economic Development Conference 2009
7-8 October 2009
Royal Bath Hotel, Bournemouth
Professor Alex De Ruyter
Business School
University of the West of Scotland
The Changing Global Economy – sectors
for the Future (or Foresight Revisited?)
•
Global Shifts…
…Changes taking place in the UK
and World economy; the challenges
of China and India; financial crisis in
the USA; the possibilities and
prospects of recession; and the
implications for localities in the UK.
Global Shifts …
•
The map of the world in terms of
production, trade, investment etc. is
continuously shifting …
… what have been some of the most
significant shifts?
Manufacturing production and trade
Services production and trade
FDI Origins
FDI Destinations
Changing Patterns of
Income … etc.
Other Recent International Trends
• Different forms of communication
• Growth in international travel
• Growth in leisure pursuits
• Changing demography: ageing populations
• Growth in currency transactions
• Changes in global security and responses
• Growth in regional trading arrangements
• Growth in bi-lateral trade and investment
agreements
Global Shifts …
• Rapid emergence of China (and India)
• Continued dominance of the US (?)
• Uneven performance of European
economies
• Integration of a group of ‘transition’
economies in Central and Eastern Europe
• Emergence of a number of newlyindustrialised economies in East Asia
• Weak economic performance of most
Latin American and African economies
• Credit crunch and impact
So where are we now … ?
•
Dicken (2007) suggests we can see
the global economy today through
three scales …
• The Macro Scale
• The Micro Scale
• The Meso Scale
The Macro Scale
• At a macro level, the world economy has
evolved from a bi-polar model centred on North
America and Western Europe … to a global triad
• Today there are three main pillars to the global
economy: North America, Europe and East Asia
• These account for 85% of total world
manufacturing output, and 81% of world
merchandise exports
• Around 80% of all FDI also originates from
this triad
The Micro Scale
The triad presents an overall view of the
•structure
of the global economy, but each of us
lives and works in specific communities that may
or may not lie within that triad …
… Most economic activity is clustered, and
•thus
place-specific, and this constitutes the
micro scale of the global economy. It is
organised around:
• Cities
• Regions
• … not necessarily nations
The Meso Scale
• Between the global triad and the
localised agglomerations of activity that
characterise production lies a scale of
economic-geographic organisation
• This might be thought of as corridors of
economic activity, for example
• The north-west and south-east axis
of Europe
• Emerging urban corridors in Pacific
Asia
Globalisation
• Many of these changes have been described as
“globalisation” - a complex, multifaceted phenomenon
incorporating changes in economic, political, cultural,
social relationships.
In particular, globalisation refers to the changes in
•relationships
due to the combining of:
• New technologies
• Spread of market capitalism
• Reduced significance of “territory”
• So globalisation has meant
• New and more integrated global markets
• New global (and local) actors
• New norms
Implications for communities
As markets have become global, there have been clear
•economic,
political, cultural and social implications for
communities …
Businesses need to recognise that they operate in global
•markets
• This presents both threats and opportunities
Most crucially, businesses need to understand that
•globalisation
is linked with the creation and distribution of
knowledge and information
• Success means innovating and staying one step ahead
There is also a need to recognise and respond to
•‘opposing
tendencies’
For example, regionalisation and localisation are
•important
counter forces to global markets
• Global businesses able to respond to local markets
• Local businesses able to project themselves globally?
Friedman’s Nine Questions …
• How fast is your company?
• Is your company harvesting its knowledge?
• How much does your company weigh?
• Does your company dare to be open on the outside?
• Does your company dare to be open on the inside?
• Does the management ‘get it’? And can you change
the management if they don’t ‘get it’?
Is your company willing to shoot its wounded and
•suckle
the survivors?
• How good is your company at making friends?
• How good is your company’s brand?
Implications for Communities
of the implications of globalisation identified
•forMany
firms can also be applied to societies more
generally
Friedman’s nine questions apply to countries as
•well
as companies
• This is not surprising, given that societies are
built around institutions, including firms
All institutions will be influenced by processes of
•globalisation
in some way
There are economic, social, cultural, political
•implications
for countries and regions as the world has
become more deeply inter-connected
The Significance of Firm ‘Clusters’
Globalisation does not remove a fundamental
•characteristic
of economic activity: it tends to be
geographically localised to some degree
Dynamic ‘clusters’ of firms can give significant
•advantages
to both small and large businesses in
competing in a global economy
It is interesting that local ‘clusters’ of firms have
•become
influential as ‘globalisation’ has gathered pace
• for example, the work of Michael Porter
Where will the UK jobs be?
• Transport & Communication
•500,000 new jobs by 2017
•Business Computing & Financial Services
•1.3 million new jobs by 2017
...and in contrast...
• Manufacturing
•Less than 1.5% p.a. between now and
2017
Source: UK Commission for Employment and Skills Report 2008
The recession and credit crunch…
• US spending binge
Imbalances in economy… internationally and
•domestically
• Financial de-regulation
• End of low prices from China…
• Asset price bubble… burst 2006-7
• Syndication of debt…
• Global contagion
• IMPACT ?
Impact?
• Recession + credit crunch…
• Business failures
• Inward investment?
• Land prices…
• Impact on regeneration opportunities
• De-industrialisation
• Need to re-balance economy?
• Debt advice, housing support…
• Skills, retraining, intervention in economy?
Implications for Policy…
• Plant closures: staggering the impact and
giving people options
- Importance of skills acquisition
• Wage subsidies to support struggling firms
•
National labour market policies built on local
initiatives and local knowledge (Brinkley et al
2008)
•
Reinvigorating industry policy and fostering
high-tech sectors (Bailey and MacNeill 2008)
•
Measures to tackle inequality
• Public works and infrastructure development
Summary
• Patterns in economic activity
• Global shifts in activity, driven by various factors
• A range of other, underlying trends
• A triad of three dominant world regions
But within this triad, a complex micro and meso
•structure
to economic activity
Globalisation – a multi-faceted and contested
•term
• Financial de-regulation, asset boom… credit
crunch
• … impact on economies and societies
• Identify and support key (emerging) sectors
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