(How) does productivity matter in the foundational economy?

Abstract

Academics and policy makers have increasingly recognised the importance of mundane economic activities – variously termed foundational or everyday – by academics and policy makers. The foundational or everyday economy is now featuring in local industrial strategy and economic action plans, because the desirable high-tech sectors on the ‘frontier’ cannot diffuse prosperity within and between regions. This paper aims to distinguish between several different approaches to the foundational or everyday economy and argues that a constructive approach needs to break with the preoccupation about improving productivity. This argument is developed in three stages. First, we distinguish between a social approach and a more technical economic approach to delimiting this other mundane economy; the defining feature of the foundational in the social approach is contribution to wellbeing and in the technical economic approach it is low productivity. The second section presents and explores productivity evidence on output per worker hour across a range of foundational activities and by region. Drawing out the implications of observed diversity and heterogeneity, the third section develops an argument about how productivity has limited relevance as measure and target in foundational activities