A rising tide lifts all boats? Advanced industries and their impact upon living standards

Published on Jobs, Skills and Pay

Policy makers in Westminster, devolved administrations, cities and local authorities struggle with many of the same challenges. Encouraging economic growth is vital but so too is ensuring the prosperity created is evenly shared. After a long absence, industrial strategy is back on the agenda as a way of providing this inclusive growth.

The cornerstone of the consensus view of industrial strategy is the need to help advanced sectors develop and spread them across the country. The intention is that growth that is inclusive across places is also inclusive within places, as those not directly involved in advanced sectors will benefit from positive spillover effects. This theory underpins both industrial strategy and city economic empowerment.

But to what extent does this hold true? The key tests of this approach are, firstly, whether growth in advanced sectors been dispersed and, if so, whether the benefits have been shared within those areas. Answering these questions is a prerequisite not just for the government’s industrial strategy but also for those at the levers of power beyond Westminster, including the newly-elected Metro Mayors.

This paper explores some of these core assumptions of an industrial strategy built on advanced industries and its ability to spread growth both geographically and across households.