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Beyond Growth? Alternative approaches to local and regional economic development

Tuesday 11 Jun 2024

By: Louise Kempton, Anne Green and Andy Pike, June 2024

Category: Inclusive Economy, Innovation and Growth

Introduction

This briefing is based on Crisp R, Waite D, Green A, Hughes C, Lupton R, MacKinnon D, Pike A. ‘Beyond GDP’ in cities: Assessing alternative approaches to urban economic development. Urban Studies 2024, 61(7), 1209-1229.

In recent years, cities have faced a myriad of challenges—from the 2008 financial crisis and the COVID-19 pandemic to the ongoing climate emergency. These crises have exposed the shortcomings of traditional local and regional economic development models that focus solely on GDP growth. As a result, there is a growing movement to explore alternative approaches that broaden the frame to include greater emphasis upon social and ecological well-being. This briefing delves into five such progressive local and regional economic development approaches: Inclusive Growth, the Wellbeing Economy, Community Wealth Building, Doughnut Economics, and the Foundational Economy.

Alternative Approaches

Inclusive Growth: Broadening Prosperity

Inclusive Growth (IG) aims to create an economic system where more people participate in and benefit from economic growth. Unlike traditional models, IG emphasises changing the nature of economic activity and distributing benefits more equitably. This includes improving business practices, labour market conditions, and investing in community infrastructure. Originating in the late 2000s, IG quickly gained traction among international organisations like the World Bank and OECD. Cities are seen as key sites for IG due to their dual role as engines of growth and areas of concentrated poverty. Initiatives in the West Midlands Combined Authority and city-regions in Scotland are notable examples of IG in action. Despite its promise, IG has faced criticism for sometimes failing to sufficiently break away from traditional growth models that perpetuate inequalities.

Wellbeing Economy: Prioritizing Quality of Life

The Wellbeing Economy (WE) shifts the focus from economic output to quality of life. This approach measures success through the health, happiness, and well-being of citizens rather than GDP. The idea is that a prosperous society is one where people are healthy, secure, and fulfilled. Wellbeing economics have been discussed since the late 1980s but gained significant traction in the 2000s. Proponents argue that by prioritising well-being, cities can achieve sustainable and equitable development. This approach encourages policies that promote health, education, and community cohesion.

Community Wealth Building: Local Empowerment

Community Wealth Building (CWB) focuses on local economic empowerment. It aims to ensure that wealth generated in a community stays within that community. This involves supporting local businesses, creating local jobs, and encouraging local investment. Emerging in the mid-2000s, CWB has been implemented in cities like Preston and Cleveland, Ohio. These cities have adopted strategies such as cooperative business models, local procurement policies, community land trusts as well as promoting the contributions of locally embedded anchor institutions including hospitals and universities. By keeping wealth local, CWB seeks to build resilient economies that benefit all residents.

Doughnut Economics: Balancing Needs and Planetary Boundaries

Doughnut Economics (DE), developed by Kate Raworth, proposes a model where economic activity operates within a "doughnut" that balances human needs and planetary boundaries. The inner ring represents the minimum standards for a good life (e.g., food, water, housing), while the outer ring represents ecological limits that should not be breached. This model encourages sustainable practices that respect environmental limits while ensuring no one falls short on life's essentials. Cities like Amsterdam have embraced DE to guide their sustainability policies, aiming to create a circular economy that minimizes waste and maximizes resource efficiency.

Foundational Economy: Focusing on Essential Services

The Foundational Economy (FE) highlights the importance of essential services like healthcare, education, and infrastructure, which are critical for daily life and often taken for granted. This approach argues for investment in these foundational sectors to ensure equitable access and resilience. Emerging prominently around 2013, the FE approach gained further relevance during the COVID-19 pandemic, which underscored the vital role of foundational services and key workers. By strengthening these sectors, cities can build more inclusive and stable economies.

Comparative Insights

These five approaches share a common goal: to move beyond GDP as the sole measure of success. They emphasise social equity, environmental sustainability, and local empowerment. However, there are differences in their visions and mechanisms for change. Inclusive Growth and the Wellbeing Economy focus on broader participation and quality of life, while Community Wealth Building emphasizes local economic resilience. Doughnut Economics advocates for operating within ecological limits, and the Foundational Economy underscores the importance of essential services in the everyday economy.

Each approach presents opportunities and challenges. Inclusive Growth is the most established but also the most criticized for its potential to align too closely with traditional models. The Wellbeing Economy and Doughnut Economics offer transformative visions but require substantial shifts in policy and practice. Community Wealth Building and the Foundational Economy focus on local empowerment and essential services, respectively, but to date lack robust frameworks to scale effectively.

Actionable Insights for policy and practice

  1. Embrace Inclusive Growth
    – Focus on economic policies that ensure broad participation and equitable distribution of economic benefits
    – Prioritise changing the nature of economic activities to foster inclusivity
    – Learn from the implementation of initiatives similar to those in West Midlands, Scotland and elsewhere, which have demonstrated success in inclusive growth
  2. Adopt the Wellbeing Economy Approach
    – Shift the primary goal from GDP growth to enhancing the quality of life for all citizens
    – Develop metrics to measure health, happiness, and overall well-being
    – Formulate policies that promote health, education, and community cohesion as central pillars of economic success
  3. Promote Community Wealth Building
    – Focus on local economic empowerment to retain and reinvest wealth within the community
    – Support cooperative business models, local procurement policies, and community land trusts
    – Look to learn from and adapt the successes of cities like Preston and Cleveland, which have effectively implemented CWB strategies
  4. Implement Doughnut Economics
    – Balance economic activities within the “doughnut” framework, ensuring human needs are met without breaching ecological limits
    – Promote sustainable practices and circular economies to minimize waste and maximize resource efficiency
    – Consider Amsterdam as a model city that has embraced Doughnut Economics to guide its sustainability policies
  5. Invest in the Foundational Economy
    – Prioritize investment in essential services like healthcare, education, and infrastructure
    – Recognize the critical role these services play in daily life and their importance for equitable access and resilience
    – Strengthen these sectors to build inclusive and stable local and regional economies, especially highlighted during the COVID-19 pandemic
  6. Integrated Policy Approaches
    – Recognize that these approaches are not mutually exclusive and can be integrated to create a more comprehensive local and regional economic development strategy
    – Develop policies that simultaneously address social equity, environmental sustainability, and local empowerment
    – Tailor these models to local contexts, ensuring they address the specific challenges and opportunities of each place
  7. Critical Evaluation and Adaptation
    – Continually evaluate the effectiveness of implemented policies through robust metrics and feedback mechanisms
    – Adapt strategies based on empirical evidence and evolving place-based dynamics
    – Engage with community stakeholders to ensure policies meet the needs of a diverse range of residents and adjust as necessary to enhance outcomes

Conclusion

As cities and regions grapple with unprecedented challenges, these alternative approaches offer promising pathways to more equitable, sustainable, and resilient development. But implementation is not necessarily easy. Policymakers must critically evaluate and adapt these models to local contexts, ensuring they can effectively address the complex issues we face today. By embracing these progressive strategies, we can hope to support local areas and regions not only thrive economically but also prioritize the well-being of all residents and the planet.

References and further reading

Anand, R., Mishra, S., & Peiris, S. (2013). Inclusive growth revisited: Measurements and Determinants. Economic Premise No. 122. World Bank.

Beatty, C., Crisp, R., & Gore, T. (2016). An inclusive growth monitor for measuring the relationship between poverty and growth. Joseph Rowntree Foundation.

Benner, C., & Pastor, M. (2016). Inclusive economy indicator: Framework and indicator recommendations. Rockefeller Foundation.

Bentham, J., Bowman, A., Ertürk, I., et al. (2013). Manifesto for the foundational economy. CRESC, University of Manchester.

Brown, M., & Jones, R. (2021). Paint Your Town Red: How Preston Took Back Control and Your Town Can Too. Watkins Media.

Burch, D., & McInroy, N. (2018). We need an inclusive economy, not inclusive growth. CLES.

North Ayrshire Council Community Wealth Building Strategy

MacKinnon D., Kempton L., O’Brien P., Ormerod E., Pike A. & Tomaney J. Reframing urban and regional ‘development’ for ‘left behind’ places.  CURDS, Newcastle University.

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