From an economic to an industrial strategy

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Following on from a recent blog post on ‘a revised strategy for Northern Ireland’s Economy’, this post looks at the Department for the Economy’s draft Industrial Strategy and highlights some of the key similarities and differences between the new strategy and its predecessor.

Cover pages of the 2012 Economic Strategy and 2017 draft Industrial Strategy
Cover pages of the 2012 Economic Strategy and 2017 draft Industrial Strategy

On the 24 January 2017, the Department for the Economy (DfE) published its draft Industrial Strategy. The Industrial Strategy continues the work outlined in the Northern Ireland (NI) Executive’s 2012 Economic Strategy. Although the two strategies have a number of similarities in their approach, the Industrial Strategy also departs from its predecessor in a number of ways. This blog post provides a brief comparison of the two strategies and identifies some high level similarities and differences.

Economic context

In 2012, the Economic Strategy noted:

The economic challenges facing the NI economy are significant. We continue to feel the impacts of the downturn in the global economy and it will be some time before economic performance and employment returns to pre-recession levels.

This economic context ensured that the 2012 Strategy’s short-to-medium-term targets were focussed upon rebuilding the NI labour market, specifically:

  • Improving employment opportunities and employability; and,
  • Promoting employment.

In the medium-to-longer-term the 2012 Strategy focussed on rebalancing the NI economy toward a stronger private sector.

By contrast, the draft Industrial Strategy is more optimistic:

Northern Ireland has emerged from the worst effects of the global economic downturn. There have been positive developments across the economy, in the labour market, and on exports, innovation and skills.

As such, whilst the draft Industrial Strategy retains some focus on rebuilding the labour market, centred particularly on economic inactivity, its primary focus is on rebalancing the economy through private sector growth.

The draft Industrial Strategy is being developed at a time of new uncertainty resulting from Brexit and the implications of this on a number of key pillars of NI economic policy, including trade and foreign direct investment. The draft Industrial Strategy recognises this new economic context and emphasises the need for strategic adaptability in order to respond to a changing situation. On trade, for example, it states:

Exporting remains central to our Industrial Strategy and, with a changing economic landscape on the horizon as a result of exiting the European Union, it is vital that we are responsive and adaptable in the ways we seek to achieve our objectives on trading globally.

 

Strategic vision

In 2012, the vision of the NI Executive’s Economic Strategy was to create, by 2020:

An economy characterised by a sustainable and growing private sector, where a greater number of firms compete in global markets and there is growing employment and prosperity for all.

This has been revised and updated for the draft Industrial Strategy, which proposes a vision for 2030 when NI will be:

…a globally competitive economy that works for everyone.

The draft Industrial Strategy also introduces new measures of overall success. NI’s global competiveness will be measured using the Competiveness Scorecard, which was been developed by the Department for the Economy’s Economic Advisory Group. The Strategy proposes a particular focus on the scorecard’s quality of life and business performance indicators. NI’s productivity will be ‘against the world’s leading, small advanced economies to learn from their success’.

The draft Industrial Strategy also proposes a move away from a purely economic measure of well-being in order to track the goal of creating an economy that works for everyone. It proposes that the Legatum Prosperity Index be used to measure prosperity. This index tracks a range of measures, across a number of broad headings that include elements like education, health and the natural environment alongside more typically economic indicators.

Strategic priorities

The strategic priorities outlined in each strategy are similar, although there has been some rewording (see Figure 1). Overall, the draft Industrial Strategy has retained the 2012 Economic Strategy’s focus upon research, development and innovation; skills and employability; growth; global competitiveness; and improving infrastructure. The redrafting of the pillars for growth has introduced some subtle changes. For example, the 2012 Economic Strategy’s focus on ‘business growth’ becomes ‘driving inclusive, sustainable growth in the draft Industrial Strategy’. This change appears to reflect the draft Strategy’s vision – ‘a globally competitive economy that works for everyone’.

2012 Economic Strategy   2017 Industrial Strategy
Innovation, R&D and Creativity Becomes → Accelerating Innovation and Research
Skills and Employability Becomes → Enhancing Education, Skills and Employability
Business Growth Becomes → Driving sustainable growth
Competing Globally Becomes → Succeeding in Global Markets
Economic Infrastructure Becomes → Building the best Economic Infrastructure

Table 1: Strategic Economic Priorities 2012 vs. 2017

Strategic targets

The Industrial Strategy has adopted the outcomes based approach utilised in the programme for government (see Table 1 below for targets). This represents a significant change in approach. The targets included in the 2012 Economic Strategy tended to be prescriptive and include a quantifiable level of ‘success’. For example, the target relating to foreign direct investment sought to ‘secure total investment of £375m by establishing and growing externally owned companies’.

By contrast, the draft Industrial Strategy’s targets seek only an unspecified level of improvement and to answer the question ‘what will a desired outcome look like’. For example, the equivalent foreign direct investment target in the draft industrial strategy is an ‘Increased amount of Foreign Direct Investment in NI’.

Each target in the draft Strategy is, however, linked to a specific indicator. This approach should allow policy makers to track progress across each target.

Departmental remit

The 2012 Economic Strategy was a product of the NI Executive. As such, the strategy covered the broad range of policy areas under NI Executive control. By contrast, the Industrial Strategy is a product of the DfE and is therefore much more narrow in its focus. Although the Industrial Strategy is not cross-departmental, it does recognise:

…the interdependencies between this Industrial Strategy and the Executive’s commitments in the new draft Programme for Government to address health and education inequalities, environmental sustainability and diversity.

It would be expected that the draft Industrial Strategy’s reach would be limited to the DfE’s remit. As can be seen from the table below, which outlines the draft Industrial Strategy’s pillars for growth and associated outcomes, this is generally the case, with a notable exception. A number of the targets falling under the ‘Enhancing Education, Skills and Employability’ fall under the remit of the Department of Education. This is true of the ‘Improved quality of education’ target, which is to be measured by the proportion of schools performing well at inspection, and ‘Improved quality educational outcomes’ target, which is to be measured by the percentage of ‘school leavers achieving at level 2 or above including English and maths’ (although responsibility for this second target is likely to be shared given the DfE’s responsibility of further education policy).

Pillars for growth What this will look like
Accelerating Innovation and Research
  • Increased innovation in our economy;
  • Increased total spend on Research and Development;
  • Increased employment in the knowledge economy; and,
  • Increased number of new businesses.
Enhancing Education, Skills and Employability
  • Improved education outcomes;
  • Improved quality of education;
  • Improved skills profile of the population;
  • Reduced economic activity; and,
  • Increased proportion of graduates moving into employment or further study.
Driving Inclusive, Sustainable Growth
  • Increased proportion of people in work;
  • Increased proportion of people working in better jobs;
  • Improved regional balance of economic prosperity through increased employment;
  • Increased number of business start-ups;
  • Increased numbers of businesses of scale; and,
  • Increased entrepreneurial activity.
Succeed in Global Markets
  • Growth in the value of sales by local businesses made outside Northern Ireland;
  • More local businesses selling outside Northern Ireland;
  • Improved attractiveness as a destination;
  • Improved international reputation; and,
  • Increased amount of Foreign Direct Investment in NI.
Building Economic Infrastructure
  • Improved internet connectivity; and,
  • Enhanced security, sustainability and cost-efficiency of our energy supply.

 Table 2: draft Industrial Strategy 2017 – Outcomes

Consultation

The draft Industrial Strategy is not yet finalised. A consultation on it was launched at the end of January 2017 and runs until the 25 April 2017. It is unclear, at the time of writing, how the unfolding political situation in NI will impact on the Strategy’s development and content.

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