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Two articles in this week’s Economist caught my eye.  Both carry the story about what might be considered as New Industrial Strategy.  The narrative goes something like this.  After several decades of free market economics run amok, the UK economy has become unbalanced to favour services, more specifically financial services.  The economic fall-out is still decaying and, desperate to do something, the government is pumping money into attractive areas of potential – areas selected by experts and driven by interests.  It goes on to caution against this interventionism and pleads for hands to be kept off and allow commercial ventures to choose these investments for themselves; that governments always get these things wrong. (That is not always the case as I wrote in this linked piece…)

I take a counter view and one based on systems-thinking.  The national innovation system cannot be left to the market alone to create and sustain itself, while on one hand the profit motive (nothing wrong with that) drives creativity in seeking to fulfill the future needs of consumers, it cannot know by itself the intricate workings of this innovation engine.

It is true that there have been systemic failings in the UK – a less than stellar performance in connecting inventions to finance and other things that make innovation succeed in the industrial setting.  Now we are waking up to an education system that has under-produced STEM graduates by several legions.  A stronger, guiding hand is needed.

The high-value manufacturing hubs are an interesting test case.  The argument goes that by investing in facilities and creating clusters of expertise that gravitate capability, the UK can partly rebalance its innovation system.  I, like many engineers, find the current efforts intuitively appealing after decades of the nation ignoring its science and engineering calling.  I qualify that last statement however; one should not pine for the past and want to recreate old, dead industries.  Nations like the UK as an advanced economy will naturally develop more significant service sectors as natural progress in its economic life-cycle.

Perhaps a more nuanced approach would be to work on the more core needs; education, finance, planning, transportation and communications…

Rob Munro

So, what do you think ?

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