There is little doubt that the impact of the coronavirus pandemic on many local and regional economies will be severe.
In Wales a significant number of local areas were already forecast to see a contraction in their economies, and undoubtedly this is set to be exacerbated in coming years.
The already precarious position of these economies is likely to be further compounded by the drying up of public-sector investment in much-needed economic development and regeneration.
The shrinking of investment pools in the future means that there is a greater need for smarter public policy decision-making across Wales.
Public policy investment mechanisms such as the Framework for Regional Investment in Wales, which will replace previous European Union investment streams, and the City Deal through the Cardiff Capital Region must be based on clear and robust evidence concerning the types of investment that are likely to work, where they may work, and what other support is required to ensure the best chances of success.
Indeed, it must be said that throughout the recent history of public-sector investment in economic development in Wales, such success has been at best patchy.
This begs the question: what tools can politicians and public officials employ to better inform these decisions?
In recent years significant attention has been given to the potential role of the rapidly emerging field of behavioural economics in aiding public policy-making by providing evidence and solutions as to “what works”.
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As part of these understandings of investment success, there is a growing acknowledgement – at least in academic circles – that local and regional investment decisions must be attuned to the behaviour of the people who live and work in these places.
This behaviour encompasses their personalities, cultural histories, aspirations, perceived opportunities, as well as their broader propensities to act in certain ways and to engage (or not) in different types of activities, including forms of employment.
In other words, public-sector investment decisions should be at least partly informed by the “behavioural profile” of the local area or region in which a particular investment may be made.
Through recent work I have undertaken in conjunction with Dr Piers Thompson, a prototype behavioural profile modelling tool has been established for local and regional areas across the 海角视频, and initial results show significant relationships with the past and forecast economic growth of these places.
Similar developments are also being undertaken by other research teams that bring together economists, social scientists and psychologists in order to understand geographic differences in behaviour.
As a result, there is the potential to employ these new models and techniques as a means of providing more robust and evidence-based investment decisions that use public monies in order to avoid some of the embarrassing and expensive decisions made in the past.
Perhaps the most infamous and notorious episode in recent years concerns the investments made to foster entrepreneurship through the establishment of a series of business incubation facilities across Wales, known as techniums.
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On paper, the technium initiative was a laudable form of public policy investment to promote the entrepreneurship and innovation that drives local and regional development.
However, these investments appear to have been approved with little regard for the behavioural profile of the places where they were made, or for the associated forms of support that may be required to ensure the success of these potentially valuable assets.
As a result there was little demand for many of these facilities, resulting in a number being closed down, including those in Bridgend, Ceredigion, Gwynedd, and Pembrokeshire, and they were somewhat caustically labelled “emptiums."
A behavioural profile at the outset of the due diligence process for the technium initiative would have given an indication that the doctrine of build-and-they-will-come is likely to have encountered significant challenges.
Such profiling would have indicated a probable lack of individuals with a motivation or aspiration to engage in the type of entrepreneurship being promoted by the techniums.
Also, the cultural histories of these areas make them unlikely to be able to quickly adapt to the new forms of innovation-based development that techniums were seeking to enable.
This does not mean that these investments should not have been made in these locations.
In fact, they could have acted as a vital cog in stimulating economic development if they had formed part of a more holistic series of investments and policy interventions that supported the types of behavioural change required to stimulate demand for these facilities.
In particular, making entrepreneurship education available, which highlights and champions potential opportunities, is known to be effective in changing aspirations and career decisions.
Furthermore, a business support system that helps local individuals to establish start-up businesses in the more technology-based areas that techniums were presumably seeking to attract would have been valuable.
Of course, these developments occurred some years ago, with many techniums closing their doors in 2010.
There are, however, lessons to be learned. A number of influential and informed commentators suggest that the present business support system in Wales is nothing short of “shambolic”.
Wales and its constituent regions and localities do not have the types of effective business “ecosystems” that are fit to establish the sustainable growing economy we require.
Changing and building these ecosystems can only be based on human behavioural actions and responses, and this requires appropriate investments.
It is noticeable that while private- sector investment decisions are usually based on the analysis of myriad behavioural indicators and measures, the public sector lags in this respect, not only in relation to investment in the hard infrastructure of premises and transport, but also softer infrastructure concerning business support, innovation and education.
Given current developments in Wales, there is an opportunity to integrate these behavioural approaches into public-sector investment decisions, which appears particularly relevant given the highly uncertain times we are already encountering.
- Robert Huggins is professor of economic geography and director of research and innovation at the School of Geography and Planning, Cardiff University, and director of its Cities Research Centre.