New Economic Thinking for a New Industrial Strategy
This blog follows up on the event ‘New Economic Thinking for a New Industrial Strategy’, the launch of the Strategic Economics Alliance.
Why a Strategic Economics Alliance?
Nearly three-quarters (73%) of articles published in the top 20 development journals from 1990 to 2019 were authored by researchers from the Global North. Only 16% were authored by researchers from the Global South, and the remaining 11% were collaborations between North and South scholars.
The marginalization of Global South researchers also affects their influence on development policies. For example, less than 1% of authors of the World Bank are based in developing countries.
Gender disparities add another layer of inequality. Women hold only about 32% of academic economic positions worldwide, and this percentage plummets at higher academic levels. Only 15% of senior economists, such as associate professors and above, are women, and 95% of economy Nobel winners were men.
To address these issues, the UCL Institute for Innovation and Public Purpose (IIPP) has launched the Strategic Economics Alliance (SEA). Co-chaired by Mariana Mazzucato and Carolina Alves, SEA aims to bridge the gap between new economic thinking and practice by amplifying voices that have been historically and structurally marginalized. The alliance was launched last June 12, in a panel chaired by Leslie Johnston, Chief Executive Officer at Laudes Foundation.
New people, new ideas
To tackle the social, economic, and political challenges of the 21st century, we need a more inclusive academic field. “This alliance is trying to create a new pipeline of young female academics,” said Mariana Mazzucato during the network launch. As the Founding Director and Professor of Economics of Innovation and Public Value at IIPP and co-chair of the network, she emphasizes the importance of bringing in new voices. However, diversity alone isn’t enough.
On the contrary, she argued that we also need fresh frameworks that redefine the role of the state in addressing major challenges. Instead of viewing the state as merely a market fixer, Prof Mazzucato argues for adopting a market-shaping approach. As she pointed out, “It’s not surprising that the types of policies that we have are always a bit too little too late, a bit lame, and a bit depressed.”
Adding to this, Erika Kraemer-Mbula, a Professor of Economics at the University of Johannesburg, emphasized that “traditional economic thinking does not allow us to deal with uncertainty.” During her intervention, she underscored the profound changes the world is experiencing and how these shifts challenge traditional economic models and assumptions.
Rethinking economic theory also means rethinking the state. Addressing our biggest challenges requires a capable, agile, and flexible public sector working alongside the private sector, academia, and civil society.
But, are these ideas actually new?
A large part of the panel discussion circled around the re-rise of industrial policy. However, the speakers agreed that without a new approach, a green industrial strategy risks reproducing the same mistakes, just with more money.
The panellists also highlighted that much of the new economic thinking had already been conceptualized by Global South academics, yet these ideas have been marginalized from the global mainstream.
Bogolo Kenewendo, a global economist at Kenewendo Advisory and former Minister of Investment, Trade, and Industry in Botswana, pointed out, “Some of the elements that are being re-emphasized were actually mentioned by African presidents in 1966. The idea that for the continent to develop, we had to have much more deliberate engagement and implementation of industrial policy change.”
Similarly, Carolina Alves, Associate Professor in Economics at IIPP, honoured the legacy of Maria da Conceição Tavares, a Brazilian economist who recently passed away. Tavares was renowned for her view of economic theory as a transformative tool. Prof Alves quoted her to emphasize this point: “An economy that’s not concerned with social justice is an economy that condemns people. If you don’t care about social justice, with who pays the bill, you’re not a serious economist, you’re a technocrat.”
In essence, while these ideas might seem new to some, they are deeply rooted in the rich intellectual traditions of ideas conceived in the margins. SEA’s challenge is to bring these historically marginalized perspectives into the global mainstream to help reshape the economy.
Neo-colonialism
Erika Kraemer-Mbula highlighted a critical issue: the digital transformation and green energy transition are heavily reliant on minerals, many of which are located in Africa. “The digital transformation is very mineral intensive. And that means that most of the minerals that are needed for the North are sitting in Africa. We are not producing enough solar panels to consume all the silver that we extract, and we’re not producing enough batteries to use all the lithium. So we have to export it. Therefore, it becomes a new scramble for Africa. We are reproducing systems that perpetuate the patterns and distortions of colonial legacies we’re trying to move away from”.
Adding to this, Bogolo Joy Kenewendo pointed out the disparity in renewable energy investments. Despite Africa holding 30% of the critical minerals needed for the energy transition, the continent sees less than 3% of the development investment.
The Challenges Ahead for SEA
The Strategic Economics Alliance (SEA) will face significant challenges moving forward:
- Overcoming Entrenched Biases: The first challenge is to overcome the entrenched biases within academic and policy-making circles that have long favoured white, male economists in the Global North. This requires a concerted effort to amplify the voices and contributions of diverse scholars from the Global South and other marginalized groups.
- Disrupting Economic Thinking: The second challenge is to disrupt traditional economic thinking and reshape how economic research and policy development are approached. This involves challenging outdated models and assumptions, and embracing new, more inclusive frameworks that reflect the complex realities of today’s global economy.
- Translating Inclusivity into Policy: The third, and perhaps the biggest challenge, is ensuring that the shift towards a more inclusive and equitable economic framework translates into concrete policy changes. This means advocating for policies that recognize and address the power imbalances and geopolitical dynamics that perpetuate inequality.
This means advocating for policies that recognize and address the power imbalances and geopolitical dynamics that perpetuate inequality. SEA’s mission is ambitious, aiming to transform both the academic landscape and real-world economic practices. However, in my experience, ambitious missions is all IIPP is about.
