Our economy 2023: International case studies

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Our Economy 2023 : International Case Studies

Exploring what the North East can learn from places with better inclusivity and productivity performance

Introduction

Achieving inclusive productivity growth in the North East can seem challenging, but other similar regions in the world have seen better performance on inclusive productivity metrics than the North East in recent years.

The case studies below explore what some of these regions might be able to teach the North East. Selecting regions with similar economic positions to the North East in 2008, we have analysed how these regions have changed since 2008 to find cases with exemplary performance.

We have selected five cases studies from around the world, the West Midlands, New Zealand, Wisconsin, the Basque region, and Saxony. They help us understand how these regions have balanced the needs of economic growth with inclusive opportunities.

The case studies were produced by Ortus Economic Research and Kada Research. In addition to reading the evidence base online here, you can also download a PDF version and the slides used in support of Our Economy 2023 the event.

Identifying the case studies

To generate a longlist of potential case study regions that were historically similar to the North East we analysed performance against three key indicators of inclusive productivity. The three indicators were chosen because they represent key aspects of inclusive productivity and data was consistently available for most OECD regions. They were:

Gross Domestic Product per head in constant prices and constant purchasing power parities – a measure of productivity that takes account of the differences in inflation rates and spending power between countries
Economic activity rate – a measure of regional differences in labour market participation among the working age population
Disosable household income per head, in constant prices and constant purchasing power parities – a measure of income inequality that takes account of the differences in inflation rates and spending power between countries.

The first stage of identifying case studies looked at each region’s performance in the period 2003 to 2008 and their position in 2008. This period was chosen to represent a period against which more recent performance could subsequently be compared, with the endpoint of 2008 roughly coinciding with the global financial crisis.

Due to data availability we compared performance to North East England including Tees Valley. Other regions whose performance was within ten percentiles of North East England on two or more indicators were longlisted as potential case studies. This process identified 136 regions in 28 countries.

The second stage looked at longlisted regions’ performance from 2008 to 2018. This period was chosen to identify regions that had outperformed the North East on key inclusive productivity indicators since the global financial crisis. The cut-off point of 2018 was chosen to avoid the risk of skewing the analysis due to the more recent impacts of the Covid 19 pandemic.

You can explore the North East's and the longlisted regions performance since 2008 on these three indicators below. The charts show since 2008 North East England has had a similar level of economic activity among its residents, but the North East has lower GDP per head and disposable income.

The case studies

Having identified regions with a similar starting point to the North East but better performance since 2008, we used this data to identify a shortlist of case studies. This phase was more qualitative and iterative and shaped both by the data and the feasibility.

Regions which included capital cities and regions without a similar mix of large conurbations and rural areas to that in the North East were excluded. This left 13 regions in 7 countries, which were then narrowed down to five using a rapid review of the available policy documents for suitability.

The final five case studies are presented below and can all be explored in detail by following the link to their respective pages. We have also linked to a page focussing on health inequalities in particular, as our wider evidence base suggests this is a particular challenge for the North East.

Learnings for the North East

The key indicators of inclusive productivity growth demonstrate that the North East faces a challenge. Compared with regions with similar historical performance, since 2008 North East England has had a similar level of economic activity among its residents, but the North East is less productive (has lower GDP per head) than comparable regions. This means that disposable household income in North East England is below the average among comparable regions.

The case study regions also show that other economies – and a positive future for the North East – are possible. Starting in 2008 with similar characteristics to the North East across our comparison indicators the case study regions have since seen overall better economic performance. The case studies show a trajectory the North East should be aiming for.

The policy approaches summarised in the case studies show different factors which have helped the comparator region's performance, with some of the key common factors being:

Place-making to attract new business investment and skilled workers
Increasing productivity in traditional industries through tech adoption and fostering new high-value clusters, working closely with university and innovation centres
Increasing tech adoption and non-technological improvements in low-productivity SMEs
Enhanced childcare provision where it is most needed is important to allow more people to access more and better jobs
Work on the ground with more economically excluded groups and employers to create pathways and opportunities to bring people into the labour market
Efforts to support internationalisation and exports for the region’s businesses as a driver of business expansion and wage growth
Partnership working between public bodies to address health inequalities

These policy areas provide pointers for how the North East can tackle its own inclusive growth challenges.

Other Our Economy pages

This spotlight page is just one aspect of our analysis for Our Economy this year. You can also explore in detail what the data on inclusive productivity looks like in the North East, as well as our other inclusive productivity page looking at the conceptual links between the two concepts.