Industry sheds its old economy stamp
But the UK and EU must still cobble together a coherent policy to build on it Special to Gulf News
is particularly relevant where the government has access to a wider range of information than the private sector, strengthening its ability to optimise its investments.
Another component that is missing from current discussion of industrial policy in Europe is a clear timeline. The reality is that a strategy developed today could take a generation to deliver results (think education reform). So an effective industrial strategy must establish not only an overall time frame, but also important milestones along the way.
Shorter-term goals
In the UK’s case, those milestones should include shorter-term goals and outcomes associated with the Brexit process. After all, an effective modern industrial strategy requires a careful accounting of the assets and resources, including human capital, that the economy will need in the coming years. For the UK, such an accounting cannot be decoupled from Brexit. In particular, UK leaders must identify which resources are tied to Europe’s single market, how they can be replaced, and how long that process will take.
The final critical element of an effective industrial strategy is the institutional framework on which it depends. The UK government acknowledges the importance of creating the right institutions to address regional disparities.
But institutions must go beyond linking up sectors and regions to ensure transparency and accountability, especially in the relationship between the private and public sectors.
With that in mind, British leaders should reflect on which of the necessary institutions are already in place and which need upgrading. It is important to resist the urge simply to shut down weak or inefficient institutions, and to consider, instead, how they can be reformed and strengthened.
Major changes are coming to the British and European economies. Leaders must act now to define a comprehensive strategic vision that will enable them to cope with the challenges ahead.
That vision must be bold and ambitious. Above all, it must be shared. At a time of intensifying polarisation, that may well be the hardest part. The writer is Research Director of International Economics at Chatham House.