Last week, one of the most prestigious business schools in the world – the Institute for Management Development in Switzerland – published its World Competitiveness Yearbook.
This demonstrated that whilst the UK is losing ground against the US – the most competitive nation in the World - smaller countries such as Iceland, Denmark, Switzerland and Singapore are closing the gap. Even Estonia – a new member of the European Union – is set to overtake the UK next year with an annual growth rate of over 3.5 per cent relative to our American cousins.
Of course, if the UK is doing badly in relative terms next to the United States, then what about Wales’ position relative to the rest of the UK? As many of you are no doubt aware, Wales remains, in relative terms, the poorest part of the UK, despite billions of pounds of European and Treasury money being allocated towards economic development during the last eight years.What can we do about this? Part of the solution lies in the remedy offered for the ills of the UK economy by IMD, which I assume every politician within the Welsh Assembly has already digested thoroughly!
One threat identified is the increasing trend in the UK towards the relocation abroad of research and development facilities. This is where our focus on inward investment must be over the next eight years – to use the additional funds we have at our disposal from Europe to encourage small but cutting edge technological businesses to relocate around our universities in Wales to deal directly with this issue.
To do this, we must look to upgrade the skills offerings within our universities and ensure that there are relevant Master’s programmes that fit in with the needs of fast growing industries much in the same way that two of the smaller successful economies of recent times – Finland and Ireland – have demonstrated that postgraduate students are the magnet by which highly innovative businesses have been attracted to these peripheral nations.
For example, given the high concentration of graduate students in environmental sciences emerging from the University of Wales Bangor every year, the Assembly Government seems to be missing a trick in failing to encourage the development of major cluster in environmental services, a sector which is estimated to be worth over £400 billion globally.Could anybody think of a more relevant location for an environmental science park than on the Glyn Rhonwy site at the foothills of Snowdon?
The IMD also suggests that the status of managers within the UK must be addressed and this applies more so in Wales. Management development is key to the future competitiveness of both individual firms and entire business sectors. Yet in the eight years we have had a devolved administration, it has received little funding and has been very much the poor cousin in terms of the importance placed on it by economic policy-makers.
Given the hundreds of millions allocated to general skills development by European Objective 1 funding, it is a tragedy that not only has so little been spent on management development, but that there was no overarching plan implemented to ensure that the private and public sectors, including our business schools, work closely together to upgrade the skills of managers across Wales.Certainly, bringing management development under the wing of the Department for Enterprise could give it improved status and impetus within the Welsh Assembly Government.
Like many pro-devolutionists in the business sector, I believe that improved economic competitiveness should be one of the main policy targets of the next Assembly Government and issues such as management development and skills remain the tip of a very large iceberg in terms of improving the entrepreneurial and innovative nature of our economy.
However, if Wales has not closed the prosperity gap with the rest of the UK by 2011, what then for devolution after twelve years of autonomy in economic development?
The clock is ticking.
Comments
I agree that WAG needs to make Wales richer to win the devolution argument. I have a theory that as long as a Welsh government has reasonably sensible policies Wales can't help but get richer through devolution or independence. My logic goes as follows:
1. Assume that the English are not genetically superior to the Welsh (but that clever high income Welsh people may move to London).
2. Note that there is no relationship whatsoever between country size (population) and GDP per capita (using data UNDP 2006 Human Development Report)
3. Note further that there is a strong relationship between the proximity of a "region" to a nation's capital, and regional income per capita
Thus, the size of a country does not affect mean GDP per capita, but within a country, income inevitably becomes centralised if politics is centralised. Total GDP is therefore unaffected by splitting countries up, but the distribution of GDP is. More income will go to Wales, less to SE England if Wales is independent.
Therefore, for any peripheral region, income will tend to be increased by getting independence.
Furthermore, since Wales is peripheral to London, ceteris paribus, it will be richer if they get independence.
Imagine what Iceland would be like if it was still ruled from Copenhagen. Would it be one of the richest countries in the world? Do you think that a conventional economic analysis in 1944 would have predicted that Iceland, a country devoid of almost any natural advantage, would outstrip its former colonial power?
The mechanism is obvious. All the highest paying jobs in a centralised UK are in the SE England, around the capital (the same is true on a smaller scale in Wales). As devolution shifts more power to cardiff, Cardiff will get richer, London poorer (though imperceptively so) and since most of Wales is closer to Cardiff than to London (travel-time wise), Wales as a whole will get richer.
Of course, this assumes reasonably sensible policies!