Topic 7: UK Industrial Strategy Flashcards
a) Rationale for intervention
should always be justified by reference to market failure
a) Industrial Policy =
public intervention to change the distribution of resources across economic activities (Caves 1967)
a) Industrial policy more prevalant in
developing and emerging economies
a) Industrial Policy is generally an element of
inward oriented strategy (eg India, Tanzania) but can feature in outward oriented strategy (eg South Korea, China)
b) horizontal intervention definition
support all (or most) activities)
b) horizontal intervention aims (3)
To promote research and development, innovation and its diffusion; promoting productivity growth
b) horizontal intervention best for
(6 examples) PRINTT
Often public goods or merit goods, where market fails completely, or under-provides
Pure public goods R&D subsidies ICT networks National security Transportation networks Training and education subsidies
b) selective intervention definition
promote activity in one industry relative to others
b) selective intervention: two details
Actively shapes resource allocation across activities
Intended to deal with market failure and promote innovation and productivity growth
b) selective intervention justifications (4) IPEA
Infant industry protection
Promoting competition
Export promotion
Agglomeration development
c) horizontal policies 1950-70s (3) IRE
- Investment subsidies
- R&D subsidies
- Employment subsidies (Selective and Regional Employment Premium)
c) selective policies 1950-70s (3) PNT
- ‘Picking winners’ (aircraft, shipbuilding, motor vehicles)
- National Enterprise Board (extending public ownership of industry)
- Tariff policy
c) changes in horizontal vs selective policy 1979-2010
Selective policies largely abandoned
Horizontal policies shifted to more market based intervention
c) list six changes 1979- 2010 CRIIES
4) Changes to trades union legislation
1) Rebalancing of direct and indirect taxation
5) Investment in education
6) Investment in basic R&D
3) Extensive privatisation of public sector utilities and businesses
2) Strengthening competition policies
d) Ratiomale for Plan for Growth
Over last decade economy has become unbalanced and indebted
Marked decline in competitiveness
BUT:
UK has intrinsic strengths to build on
Appropriate policies should leverage those strengths
Need targeted Government intervention
d) perceived intrinsic strengths (6)
Openness to international trade
(UK top 10 exporter and importer )
Openness to inward investment
(UK biggest host to inward FDI in European Union)
Strength of research base
Credibility of institutions
(Stable governance, independent Central Bank)
Strength of services sector
(Especially in pre-eminence of London as financial centre)
Language
d) New approach to industrial strategy: Creating a framework for industrial development via: (4 points)
Access to finance
Partnerships within and between sectors
Support for emerging technologies creating a pipeline of skilled workers
Government procurement and the development of supply chains
Devolution of powers
e) 1: Big Data
90% of world’s data created in past 2 years
90% of smartpohne chips use british technology
e) 2: Satellites
40% of world’s small satellites produced in UK
8.2bn£ added to UK economy by space industries
e) 3: Robotics and autonomous systems
- UK researchers developed radar technology enabling cars to self-drive
- UK has created tiny robots used to pinpoint diseases in body
e) 4: Synthetic Biology
- UK developed method for copying DNA 10 thousand times faster
- synthetic biology market expected to reach £62bn by 2020
e) 5: Regenerative Medicine
- UK company testing injection of stem cells to restore brain damage caused by strokes
- UK have reversed paralysis in dogs using stem cells
- 15,000 jobs by 2020
e) 6: Agri-science
- UK: reduced amount of water to grow strawberries by 80%
- 80% of breeding chickens come from UK developed genetic stock
- food production largest single manufacturing sector in the UK
e) 7: Advanced materials
- British discovered graphene strongest, thinnest material known
- UK produces bone replacement material used by surgeons worldwide
