Five features for resilient economies

By far the greatest influence on the resilience of a region is the form and structure of the economy. This includes the initial strengths and weaknesses of regions, their industrial legacy, the size of the market and access to external markets. Dependence on particular sectors, or a small number of employers, is detrimental to the resilience of the economy. A more diverse economic structure provides greater regional resistance to shocks than does a more specialised structure. Higher levels of innovation performance are associated with stronger resilience outcomes.

A region’s population can influence its ability to withstand – or recover from – an economic shock. In practice, the relationship between population characteristics and resilience is complex and non-uniform. The clearest relationship is in the area of skills. Areas with more highly qualified populations tend to have more positive resilience outcomes. Flexibility in labour markets has also been an important feature shaping the ability of many regions to respond to economic crisis, such as where firms and workers agreed shorter working weeks.  Higher levels of labour market participation are positively correlated with resilient economies.

Some place-based characteristics prove to be more significant than others. Urban areas, and those places that are more accessible, tend to be more likely to be resilient than more remote locations. The resilience of mountainous, coastal and island regions depends on wider context rather than simply their physical characteristics.

Community-based features appear to have some impact on observed levels of resilience. Whilst rarely strong enough to impact directly on the ability of an economy to withstand the effects of an economic crisis they are able to play an important role in shaping the way in which it responds and the opportunities available to communities. Strong social ties and positive levels of community based capital (including business networks, and inter-firm social capital) can play an important role in mediating resilience outcomes.

There is a strong correlation between the quality of government present in a region and its observed capacity for resilience to economic shocks.  This is about government having the capacity and resources to engage with the resilience agenda, and choosing to do so, as well as more tricky questions regarding how trusted government is.