Taking a Well-being Approach to Economic Development
Remote Work on the Rise
The COVID-19 pandemic has substantially increased remote work in many industrialized countries. As data from Statistics Canada indicates, in January 2021 around 32% of Canadian employees conducted most of their work week from home – compared to just 4% in 2016. Indeed, HR executives expect remote work to be one of the biggest long-term impacts of the pandemic on the labour market. The trends towards remote work, coupled with increased digitization and automation, means that location will become less important in attracting and hiring talent.
Digital Nomads
What is more, these trends are not limited to the domestic economy. In recent months, a number of states have introduced digital nomad visas to welcome foreign remote workers. Next to Caribbean countries such as Antigua & Barbuda, Barbados and Bermuda, around 8 EU member states aim to attract remote workers via digital nomad visas. The latest example is Spain which is planning to launch a digital nomad visa allowing foreign talent to stay and work for a period of up to 12 months.
The introduction of these visas is aimed at professionals who can, in principle, work from anywhere. Yet, remote workers cannot easily apply for work visas in a different country – especially if their actual employer(s) are not operating there. In addition, there are limits to how long an individual can stay abroad on a tourist visa.
To address this legal gap, then, countries issuing digital nomad visas legalise the status of travelling professionals and remote workers. Similar to tourist visas, they are relatively easy to obtain but, and here is the key difference, allow for longer stays. While each country issuing digital nomad visas has its own particular rules a commonality is that applicants require a valid passport and proof of steady income.
Why are countries doing this? From an economic perspective, digital nomad visas follow the logic of traditional regional economic development. By attracting global talent and have them spend time and money in the local economy they stimulate overall business activity. Hence, in Spain, which is currently preparing a digital nomad visa program, many towns eager to participate are located in rural areas and have been facing a declining population and workforce over the years.
Challenges to Traditional Regional Economic Development
The shift in work arrangements and the increased possibility for international talent to work remotely – coupled with the rise in digital nomad visas – creates a challenge for economic development agencies focused on assisting communities across Canada to thrive.
Traditionally, the approach has been to attract businesses to a specific region which, in turn, would recruit the talent needed to work there. As a result, professionals would settle in a specific community, generating the need for more economic activity – from haircuts to childcare.
With the increased opportunities of remote work, however, this traditional approach might no longer work. What could replace it?
Taking a Well-being Approach
A promising approach would be to put the question differently. Instead of asking what types of jobs would attract workers to move and settle in a particular region or community one could start by asking what type of a community would people find attractive to live in?
This, ultimately, gets to the issue of what kind of community people prefer since humans are social beings. The characteristics of these preferences should ideally be measurable so as to provide communities with tangible indicators informing them which particular areas require improvement.
A good starting point would be the use of (internationally comparable) well-being indicators. Well-being indicators provide a framework to measure quality of life using a mix of subjective and objective metrics as illustrated in Figure 1.
As is shown there, a holistic approach to well-being includes conventional measures on jobs and earnings as well as wealth and income. In addition, it includes metrics on health and environmental outcomes as well as indicators for civic engagement, life satisfaction, civic engagement and social connections. Sweden, a frontrunner on well-being, includes measures such as ‘Low Economic Standard’ to capture relative poverty that might prevent people from fully participating in society as well as interpersonal trust within a community.
Figure 1: A well-being framework. Source: OECD, Better Life Initiative.
Re-thinking Economic Development
Using this approach as a starting point, one could build out a framework of suitable metrics, preferably at the level of municipalities. This would first entail an agreement on which metrics should be applied as the overarching goal is to create a framework that allows the comparison of well-being among different municipalities – at least at the national level.
A further necessity is to conduct a detailed data inventory. While sufficient data may exist to map, say, the economic situation of a specific community, information might be lacking for other metrics – especially those related to subjective well-being and/or those not regularly captured by standard data collection (such as the Labour Force Survey etc.).
Having identified any lack in the data, a suitable approach for the collection of that data needs to be put in place – preferably in line with the OECD’s Better Life Initiative. Further, agreement needs to be achieved on who is conducting data collection as well as at what level of frequency data should be collected.
Once all data is collected and an appropriate framework established, governments and policymakers can apply this framework to guide policy decisions. Specifically, the use of such a framework in policy will help reveal which areas require most immediate attention and improvement.
Public policy that uses a well-being framework as a guideline, then, should result in a tangible improvement of living spaces which , in turn, will make these more attractive for people to move to and live in.
