Strengthening the Foundational Economy: Moving From Theory to Action
The foundational economy refers to the goods, services and infrastructures that underpin everyday life. From care and education to food, housing and transport, it encompasses the sectors in which most people work, where most public money is spent, and upon which we all depend for our daily needs. These are often taken for granted, yet they shape our life chances far more directly than high-tech innovation or global trade.
Despite growing academic interest, the foundational economy features at the margins of economic policy, including that of the current UK Labour government. Industrial strategy and regional investment continue to prioritise ‘frontier’, high growth sectors like pharmaceuticals and artificial intelligence. But at a time of stagnant economic growth, widening inequality, climate crisis and straining public services, this lopsided approach to policymaking seems increasingly flawed.
Care workers continue to face poor pay and precarious conditions. Public transport is increasingly patchy and unreliable. Food costs and food bank use are rising sharply. Civic spaces like libraries and community centres are disappearing. The result is a fraying social fabric and growing regional disparities. Academics now argue that, if national and subnational governments are serious about achieving more inclusive local economies, they must put foundational sectors at the heart of their agenda.
Encouragingly, some are beginning to do just that. In Wales, the £3.5 million Foundational Economy Challenge Fund supported dozens of local experiments in procurement, food and care. Greater Manchester is now trialling a similar approach to improve productivity and working conditions in foundational sectors. And in North East England, local authorities and the new North East Combined Authority are exploring how foundational sectors can drive inclusive development. These efforts reflect a growing recognition that economic progress depends not just on an advancing frontier, but on strengthened foundations.
Yet academic research on the foundational economy is struggling to keep pace with these developments. Scholars have made important strides in diagnosing problems and theorising solutions, but translating these insights into policy and practice remains a challenge. Our work at Insights North East — a collaboration between universities and policymakers — shows that local governments are taking the foundational economy seriously. But they need more than conceptual frameworks. They need timely, place-based evidence to inform decisions, shape interventions and evaluate impact.
This calls for a shift in how foundational economy research is done. Too often, academic outputs remain locked in disciplinary silos or abstract debates. What’s needed are more cross-cutting, engaged and applied approaches, ones that involve working alongside policymakers, practitioners and communities to co-produce knowledge and test ideas. That means developing demonstrator projects and collaborative research initiatives that can bridge the gap between theory and action. Importantly, these must be evaluated and refined so that they endure and inform practice elsewhere.
There’s also an opportunity to reframe and apply existing research. Many academics are already producing work highly relevant to foundational economy policy — on housing, health, education, infrastructure or labour markets — but simply may not realise it. By adopting the foundational economy as a lens, researchers can maximise the relevance and impact of their work. This reframing can help surface new insights and connect disparate fields around shared challenges.
Workforce conditions must be a central concern. Foundational sectors rely on feminised, racialised and often undervalued labour. Employee turnover is typically high, and skills development opportunities limited. To ensure foundational economy sectors can support economic growth, it is essential that these foundational jobs remain attractive to workers and reward them fairly. Research on effective models can help inform policy design.
We also need more information on improving productivity in foundational sectors. Sectors such as healthcare and transport are very resource intensive, and productivity increases are difficult to achieve. Yet, the size and importance of these sectors mean that even marginal productivity increases will make a big contribution to boosting economic productivity overall. Meanwhile, other foundational sectors, including utilities and energy, are generally highly productive, and much more amenable to productivity improvements. Research that tells policymakers how productivity can be improved without undermining service quality, workforce conditions or equitable access is especially important.
Across the piece, policymakers need more concrete and actionable insights. Better data and measurement are also essential. Foundational sectors are often invisible in economic statistics. New indicators should reflect the quality, accessibility and equity of foundational services, not just their cost or output. This requires collaboration between researchers and policymakers to ensure metrics measure outcomes that matter, rather than incentivising more of the same.
To scale impact, we need sustained support for foundational research, capacity-building for local actors, and policy frameworks that enable experimentation. As policymakers continue to talk up the importance of the foundational economy, researchers must embrace this golden opportunity to use evidence to deliver real impact that really improves people’s lives.
So, let’s move from problems to solutions, critique to collaboration, and from theory to real action — to strengthen the foundational economy for everyone, everywhere.