When developing an economic strategy, there are five key principles that should remain front of mind the planning and development stages.
1. Demographics are rapidly changing the competitiveness of local economies
As societies undergo demographic shifts, it becomes essential to recognise the impact these changes have on the competitiveness of local economies. Working age population projections can play a crucial role in shaping economic strategies:
House Building:
Working age individuals are a vital component of economic productivity, and ensuring an adequate supply of housing can attract and retain skilled workers. This may involve assessing housing demands, promoting affordable housing options, and adapting urban planning to support the changing needs of the workforce.
Career Development:
As the working age population changes, it's crucial to address the evolving skill requirements and provide adequate training and educational opportunities. Policies that encourage lifelong learning, vocational training programmes, and partnerships between educational institutions and industry can enhance workforce skills, boost productivity, and increase the competitiveness of local economies.
Promotional Narrative:
Highlighting the advantages of the local economy, such as job prospects, industry growth, and a favourable business environment, can attract talent and investment and is an important element of a successful economic strategy.
Economic strategies that incorporate working age population projections should adopt a long-term perspective. By anticipating demographic shifts and analysing potential implications, policy makers and business leaders can make informed decisions that drive sustainable economic growth.
2. Supply chains represent a huge opportunity
Supply chains play a vital role in economic growth, and recognising their potential can have significant benefits. For the most part, larger businesses are the driver for successful economies, however, the public sector has historically focused on nurturing SMES, meaning that larger enterprises receive little to no account management. Working with both large and small businesses can be a key component in a successful economic strategy:
SME Integration:
Integrating SMEs into the supply chains of larger businesses, can foster innovation, spur entrepreneurship, and contribute to the growth of local economies. This can be achieved through initiatives such as supplier development programs, mentorship opportunities, and capacity-building efforts that support SMEs in meeting the requirements of large businesses.
Collaboration and Partnerships:
Effective supply chain management often requires collaboration and partnerships among businesses of different sizes. Bigger organisations can play a pivotal role by actively seeking partnerships with SMEs and local suppliers. By working together, they can create symbiotic relationships that promote mutual growth and shared success.
Sustainability and Resilience:
Larger businesses can take the lead in promoting environmentally friendly practices, ethical sourcing, and social responsibility throughout the supply chain. With sustainability baked into operations, companies can meet the growing demand for environmentally conscious products and contribute to the development of a greener economy. Additionally, building resilience in supply chains, through diversification, risk management, and contingency planning, can help mitigate disruption and ensure continuity during any challenging times.
3. Engage a wider range of communities
Inclusive growth needs engagement across a wider range of communities to ensure that everyone has the opportunity to participate and reap the benefits:
Equity and Accessibility:
To ensure economic growth benefits everyone, it is crucial to address existing disparities and promote equity. This involves creating an enabling environment where individuals from all backgrounds have equal access to education, healthcare, infrastructure and economic opportunities.
Empowering Underrepresented Groups:
Engaging a wider range of communities means actively empowering underrepresented groups such as women, minorities and people with disabilities. Providing targeted support, mentoring programs and resources can help overcome systemic barriers and promote entrepreneurship and employment opportunities.
Local Community Development:
Involving community members in decision-making processes provides a sense of ownership. This can be achieved through initiatives such as community development projects, local sourcing, and collaboration with community organisations. Investing in local infrastructure, supporting small businesses and promoting cultural heritage can also contribute to community well-being and economic growth.
Education and Skill Development:
Providing quality education and lifelong learning opportunities, particularly in underserved areas, helps empower individuals to seize economic opportunities and adapt to evolving industries. The facilitation of skill development programs by educational institutions, and businesses can address local needs and enable upward mobility.
4. Tie decarbonisation to sector development
By linking decarbonisation efforts to sector development, it becomes possible to leverage the demand for sustainable solutions and stimulate business investment:
Green Innovation and Technology:
By promoting research and development in renewable energy, energy efficiency and sustainable practices, governments and businesses can drive technological advancements that support sector development.
Policy Support and Incentives:
Government plays a crucial role in tying decarbonisation to sector development through policy support and incentives. Favourable regulations, tax incentives and subsidies, can encourage businesses to adopt low-carbon practices and invest in sustainable solutions.
Collaboration and Public-Private Partnerships:
Collaboration between the public and private sectors is vital to effectively link decarbonisation with sector development. Governments, businesses and research institutions can form partnerships to jointly develop and implement sustainable solutions.
Job Creation and Economic Opportunities:
Investments in renewable energy infrastructure, energy-efficient technologies, and sustainable manufacturing processes can create employment in sectors such as construction, engineering, manufacturing, research and development and service industries.
5. Demonstrate the link between economic development and a financial return for the local authority
By effectively demonstrating the connection between economic development and financial benefits from business and residential investment, Local Authorities can attract support, justify resource allocation and drive sustainable economic growth.
Business Investment:
Economic development often attracts business investment, which can generate direct financial returns for Local Authorities. A business-friendly environment that provides incentives and streamlines regulatory processes can attract new businesses, stimulate entrepreneurship and expand existing enterprises. This results in increased tax revenues, licensing fees and other business-related income for the Local Authority.
Job Creation and Employment Opportunities:
Economic development initiatives that focus on attracting businesses and fostering sector growth lead to job creation and increased employment opportunities, which positively impacts the local economy and generates financial returns for Local Authorities. With more individuals employed, tax revenues from income and other employment-related taxes increase. Additionally, a larger employed workforce may reduce the burden on social welfare programs, further enhancing the Local Authority's financial position.
Increased Property Values and Residential Investment:
As the local economy grows, housing demand rises, leading to a potential boost in property sales and prices, generating increased property tax revenue for Local Authorities. In addition, residential investment also contributes to local business development, as increased population leads to increased consumer spending and demand for goods and services.
Revenue from Tourism and Events:
By showcasing the local attractions, cultural heritage and hosting events, a destination can draw visitors and generate income from tourism-related activities, including hotel taxes, sales taxes, permit fees and revenues from Local Authority-owned venues.
In conclusion
In today's rapidly changing economic landscape, it is crucial to adopt a comprehensive and inclusive approach to economic strategy development.
For a strategy that can shape the competitiveness, sustainability, and overall well-being of your local economy, the five key themes we’ve outlined are a good place to start.
If you would like to find out more about best practice in developing or finessing an economic strategy, please contact us.
Written by Lois McLuckie, Marketing Associate