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Dragging the Welsh economy into the big league

The Welsh Government needs to set a new direction for the Welsh economy in order to attain the status and characteristics of a ‘Premier League’ developed country within the next 20 years.

 

The key facets of this vision should be economic dynamism, a high quality of life, and a strong national identity.

Strategies for the long term, which would also produce some benefits for Wales in the short to medium term, should be directed at maintaining and extending the nation’s international competitiveness.

 

When change is so rapid and dynamic as in the international economic environment, the very planning process is fraught with risks. Very few predicted the global financial crisis or the degree of impact this would have on the world economy now and in the future.

 

Wales cannot hope to predict such dramatic events at home or abroad. But through scenarios and contingency plans our new direction should take into account various contributory factors, and weigh up other more gradual shifts and trends in international politics, trade and economics.

 

With clear lessons from the recent past of the world economy and Wales’ experience, the writing on the wall for the next ten years and beyond is that economic strategies for Wales need to evolve from the past single dimensional type to a multi-dimensional one in order to remain viable in an increasingly complex environment.

 

In this context, the Welsh Government needs to develop an economic plan which would: provide an overview of the economic landscape over the next 20 years; define a clear vision for the economy and analyse its implications; initiate a national planning process, which is consultative and evolutionary in character; and help build a shared vision among labour, business and government on national economic aspirations.

 

Despite the long horizon, Wales must take steps now to seriously and vigorously pursue the goal of becoming a first division developed country for two reasons. First, some of the strategies, like enhancing manpower, requires a long lead time of one generation or more. Second, it provides the best possible assurance against being overtaken by other emerging countries which, if it happened, could lead to economic stagnation or decline.

 

In order to grow at relatively high rates, it is necessary to reorganise the way human and physical resources are managed.

 

The basic issue which underlies Wales’ efforts to become a developed country economically is the issue of international competitiveness.

 

On what basis can Wales hope to compete with higher-performing export-led countries? The answer can only lie in improving and upgrading to a level comparable to what these countries have today in key areas. And so long as Wales remains an open economy, the assessment of what factors are important is essentially one that is judged by companies themselves.

 

Wales needs to understand where the developed countries are on key parameters, and to move towards where they are. However, it must be recognised that, given our size, there are some things that are beyond our capabilities. Basic research, for example, is one area where a country needs economies of scale and a large pool of interdisciplinary talent.

 

But, as in Switzerland’s case, there are several niche areas in which it has specialised and earned a top developed country’s standard of living. Wales needs to identify and cultivate the right kind of niches and within these niches, move as close to the level of top developed countries as it is possible to achieve.

 

The single most important factor towards achieving developed country status is enhancing Wales’ most important resource, its people. They should therefore be equipped with: a high standard of competence; a high level of basic education; a high degree of industry relevance in training programmes; effective programmes for mid-career training; and nurturing important human resource qualities, such as the work ethic and creativity.

 

Wales has spent the last 15 years investing heavily in physical infrastructure, but emphasis now needs to be placed on soft infrastructure which consists of technological infrastructure, comprising a pool of trained manpower in key technologies as well as a network of technical competence centres and research institutes which enable companies to be effective in design and innovation, along with a social climate and institutional structure which supports innovation and a national system which encourages a high degree of co-operation among labour, business and government.

 

 

 

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