Topic 7: UK Industrial Strategy Flashcards Preview

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Flashcards in Topic 7: UK Industrial Strategy Deck (28)
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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
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)


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


e) 8: Energy storage

- up to 10% of UK energy from wind, storage for when not windy
- developing batteries that can reduce electricity consumption by one fifth


e) Witty review... ( 4 points)

Proposed series of publicly funded interventions to drive cooperation between Universities, business and Local Economic Partnerships
‘Arrow Projects’ to leverage the potential of the eight great technologies at heart of industrial policy
Strategy aiming to support selective activities, with horizontal intervention
Strategy not geographically focused


e) current strategies of UK gov (5 points)

Changes to Corporation Tax (down from 23 to 20% at top rate)
Incentives to promote R&D (eg Patent Box, reduction of tax on patents to 10%)
Significant infrastructure investment (eg HS2)
Eight Core Cities promoted (including Nottingham)
Enterprise Zones created (including one in Nottingham)


e) steel

down 350,000 to 38,000 1967-94