Can foundational economy save regions in crisis?

Abstract

We perform, to our best knowledge, the first systematic mapping of the foundational economy (FE) at the sub-national level by looking at the FE employment in Swedish regions between 2007 and 2016. We show that the FE itself not only suffered less than traded activities from employment decline during the Great Recession of 2007–2009 but was also a domain of substantial job creation in the post-crisis recovery. At the same time, regions with higher dependence on foundational employment were hit harder during the crisis in terms of overall labour market performance. We demonstrate that it is specific compositions of foundational and traded activities in the regional employment mix that relate differently to regional employment growth in times of crisis and recovery. Jointly, these findings allow us to contribute to the literatures on the FE and regional resilience.

Mapping complexity in deglobalisation: A typology of economic localisms from ‘hyper-localism’ to ‘strategic autonomy’

“…The percentage seems even higher in Sweden, showing its overall significance (Martynovich et al, 2023). 2.…”

“…The FE stance on localism and economic scale is more ambiguous than in OL and HL, arguing that while ‘localism is politically essential’, adequate provision of things like healthcare ‘can only come from a regional and national political reinvention of taxation’ (Foundational Economy, 2018: 7; see also Hansen, 2021; Martynovich et al, 2023). That being said, FE proponents are clear that ‘foundational goods and services are always provided locally even if organized elsewhere’ (Martynovich et al, 2023: 580). This is a question of emphasis and strategic starting points for proponents.…”

“…1.Calafati et al (2019: 13) note that the FE ‘employs 45 per cent of the UK workforce providing goods and services essential to daily wellbeing’. The percentage seems even higher in Sweden, showing its overall significance (Martynovich et al, 2023). …”

The role of the foundational economy: The case of two regional centres in Central and Eastern Europe.

“…The foundational economy has a higher relevance for peripheral, leftbehind regions, as demand for such services is non-cyclical. Research has also pointed to a negative relationship between the size of the foundational economy in regions and employment growth, moreover, a larger foundational economy was found to be more damaging for regions with increasing population than for depopulating regions (see Martynovich et al, 2022). The literature mentions a distinct but overlapping category, i.e.…”

“…As noted by Morgan (2021), the EU debate was centred on the role of new industrial policies and increased state interventionism preceding the coronavirus crisis, largely overlooking the fate of regions and cities that fell outside the scope of mission-oriented industrial policies. The foundational economy, due to its socially and spatially inclusive nature, can deliver much benefit for left-behind regions and cities, saving them from the circular and mutually reinforcing spiral of deterioration (MacKinnon et al, 2021; see also Froud et al, 2020;Martynovich et al, 2022). Moreover, improving the productivity of "ordinary firms" in the everyday economy would result in more regionally balanced growth than an exclusive focus on frontier firms that are highly concentrated spatially (see Jacobs et al, 2017), as the regional productivity gap in the case of foundational activities is not at all significant.…”