To economic development rather than the provision of

To what extent can the nation
state influence the geographies of economic activity?

 

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The state refers to a set of institutions that holds
sovereignty over a designated territory, exercising a monopoly of legitimate
force and law-making ability (Mackinnon and Cumbers, 2011). Its role in the
economy is wide-ranging but often invisible to individual consumers. It shapes
the provisions of goods and services through regulating markets, governing
business laws and helping workers to find employment (Mackinnon and Cumbers,
2011). However, globalisation and spread
of neo-liberalism have changed its forms and functions over time; highlighting
the state as a ‘dynamic process’ rather than a fixed ‘thing’ or ‘object’ (Peck,
2001). This essay will explore the changing role of the state on the economy
through the shift towards a neo-liberal ‘competition state’ and introduction of
a ‘new’ regional policy in the UK. The growth of non-governmental institutions
and transnational corporations will also be discussed in relation to the
‘hollowing out’ (Jessop, 2002) of the state.

 

Changing
role of state

 

Since
the 1980’s the state has undergone considerable restructuring, driven by
neoliberal reform programmes and the globalization of the economy (Mackinnon
and Cumbers, 2011). Neo-liberalism is based on the belief in the virtues of
individual markets, liberty and private enterprise (Mackinnon and Cumbers,
2011), thus has influenced state policies through reductions of public sector and
welfare spending and increasing privatisation and deregulation. It highlights a
shift from the from the post-war Fordist
‘Keynesian Welfare State’..—to the post-Fordist ‘Schumpeterian Workfare
State’ (Jessop, 2002); focusing on
the national economic development rather than the provision of welfare services
to its citizens (Mackinnon and Cumbers, 2011). For example, the introduction of
‘workfare’ initiatives in UK – ‘a system that requires people to work in
exchange for welfare benefits and payments’ – (Mackinnon and Cumbers, 2011)
echoes this transition and neo-liberal ideas of reducing the reliance of
individuals on the state by helping people help themselves and promoting
entrepreneurship.

 

In
conjunction to this, a neo-liberal ‘competition’ state was promoted, emphasising
innovation, enterprise and workforce skills (Jessop, 1994) to strengthen the
economy and is closely aligned with shifts in UK regional policy aimed to address
the uneven development across the UK- often referred to as the ‘North South
Divide’. For example, Keynesian regional policy aimed to direct investment into
depressed regions through a range of incentives and controls (Amin, 1999),
following a highly ‘top down’ method of state intervention. However, after deprivation
persisted and hopes of prosperity in the North failed to materialise, a ‘new’
regional policy was introduced in 1997 that stimulated growth through
competitiveness of the regional economy, using ‘supply-side’ measures (Mackinnon
and Cumbers, 2011). For example, the state improved the efficiency of markets
through workforce conditions, providing infrastructure, labour training and
capital to promote innovation (Mackinnon and Cumbers, 2011). This new model of
local and regional development echoes a ‘bottom up’ approach, focusing on the
need to develop local skills and stimulate enterprise by giving the regions ‘a
hand up rather than a hand out’ (Mackinnon and Cumbers, 2011). As a result, state
intervention is reduced as planning responsibilities are redistributed to local
governments, allowing them to take control of their local environment, develop
local solutions to local issues and stimulate economic growth in appropriate
ways.  

Under the authority of the coalition government,
the creation of ‘Local Enterprise and
Partnership (LEPS) Scheme in England 2010’ demonstrates the success of the change
in policy responses to the North- South divide; an economic development underpinned
by a ‘local growth’ agenda which aimed at ‘realising every place’s potential’ (HM
Government, 2010). It encourages the partnership between local governments,
businesses and non-governmental bodies, allowing them to collectively decide on what the priorities should be for investment to
help the area prosper (HM
Government, 2010). Thus, the government’s role is reduced to supporting and funding
the regions, enforcing many LEPs to public claim they are ‘free from central
control’ (Puglias et al, 2015).

 

Currently there are 39 LEPs in the UK, with Greater
Manchester as one of the first places to embrace the ‘collective approach to
planning’ (HM Government, 2010) and has since ‘leveraged at least £300 million of private funding’, which will support
city projects over the next decade. A success of the scheme is reflected
through the Manchester city airport ‘Enterprise zone’ which, through offering ‘business rates discounts, simplified local
planning laws, tax relief and support’ for businesses who locate there, has led
to the ‘Online giant Amazon … confirmed plans to open a new 654,000 sq ft
fulfilment centre at Global Logistics (HM Government, 2018). This will bring ‘over
1,500 jobs to the region’ (HM Government, 2018), helping to increase wealth into
the area and raise standard of living; demonstrating how enterprise zones can
be seen as a driving force of the local economy. Furthermore, direct flights to China seals the city’s reputation as a
major gateway for Asian businesses (HM government 2018) which will lead to
further economic development through the encouragement of foreign investors.