What's this page?

A place where I'll update questions about regional economies I'm chewing over and add in any others (with acknowledgements obv) that I've picked up from reading or chats.

I'll break it down into different kinds of question. Though picking any one question inevitably pulls on other threads, let's see if we can keep it at least moderately sane. I will aim to write self-contained little pieces discussing each and how they connect, where appropriate with some data analysis.

A few words on the spirit of this work, going back to a point I was mulling back in 2018. I've just been re-reading a [2023 post by Richard Murphy](GDP are an honest attempt to do something that is conceptually and technically very difficult – and there are honest debates about what to include and what not to include.) about imputed rent (the rent that would be paid if owner-occupier houses were rented). It has - shock! - a really polite, critical, well-informed comment thread. Richard starts off with a GOTCHA claim: imputed rent isn't real! "10% of GDP is made up – it simply does not exist in the real world". Just another example, he says, showing how ridiculous national accounts are.

A commenter replies:

I really do wish you’d dial back the language a bit! GDP are an honest attempt to do something that is conceptually and technically very difficult – and there are honest debates about what to include and what not to include.

I want to keep my own discussions firmly grounded in that respect for work done by much smarter people than me, often under extreme pressure. The ONS, especially in recent years, has taken a bit of a beating despite doing phenomenal work with less money and a much harder survey landscape. Politicians will spin the tiniest percentage point change in GDP, causing stampedes this way and that. None of it's conducive to having those calm, honest debates that commenter wishes for.

But let's try.

I want to be guided by what's useful for understanding regional economies. National accounts are just that - national - and issues arise straight away from re-purposing those tools for subnational thinking.

The thread of questions will circle round - data thoughts lead into "what are we trying to understand" leads into "what theories do we have in our brains? What assumptions can we see, which can't we?" Those circle back round...

The data

Data threads

• Revisit Calvin Jones' breakdown of data issues ('measuring what we manage') here on LinkedIn.

What do we want to know and why?

And how does this change the kinds of questions we need to ask, as well as where to look for answers?

A lot of things come under this heading:

• If we want to support development in a region, what's the balance between 'picking winners' (leaning into existing economic strengths a region already has) versus thinking holistically (how to develop an entire region's economy, thinking across sectors and siloes)?
  • See e.g. Giles Wilkes' piece on the Pitfalls of the Sector Method and GVA factory thinking for some common ways to go awry with winner-picking.
  • The whole picture includes the foundational economy (Welsh gov page explaining the concept) - something my Y-PERN colleagues at Sheffield Hallam / CRESR have done amazing work on. One good way to define foundational economy jobs might be "anyone who still had to leave the house to work during COVID". The pandemic drew attention to a harsh, paradoxical truth - those jobs were (a) entirely essential to making sure the country didn't fall over and (b) on average, among the worst-paid jobs (with obvious exceptions). They are also the largest percent of any regional economy (CRESR's work on this has it at 69% of all jobs in South Yorkshire).

A different but similar axis:

• Claim: focus on tradeable jobs, as growing these is the quickest route to strong growth. These jobs are almost always the opposite of foundational ones - any job/sector that makes goods and services that can be traded outside the region.
  • The theoretical foundation comes from (I think) this Rice & Venables working paper for the Productivity Institute. From a quick read, it looks like it's re-stating Ricardian comparative advantage for UK regions pretty much exactly. So all the same arguments and counter-arguments for international trade as inter-regional apply (though of course domestic context adds plenty of wrinkles).
• The claim continues: those tradeable jobs are the linchpin of any region; the wage rates of service / foundational sectors are higher in places with better tradeable jobs because there's more internal demand for them. While this is clearly a chunk of the economic story, it's also worth considering the ways non-tradeable sectors feed into overall regional productivity - they aren't just passive beneficiaries of tradeable 'trickle down'.