Extract
Explaining spatial variation in business performance in Great Britain.
1. Introduction
Issues of competitiveness and productivity at a regional level have increasingly been a focus for academic and policy concern. As Gardiner et al (2004) observe, differentials in competitiveness and productivity have been a focus for policy concern on grounds of both equity and social cohesion. Increasingly as well, the policy goal of reducing differentials, specifically by raising the competitiveness of the less buoyant regions, has been seen as a key to raising overall levels of productivity at a national or European level and closing the gap on competing territories in a global context. Harris and Li (2005) found evidence that spatial agglomeration is associated with a higher probability of exporting which is in turn linked to higher productivity. Work by Boddy et al. (2005) also started to explore the effects of 'peripherality' as a measure of spatial factors that might impact on productivity and found that peripherality accounted for a significant proportion of the productivity gap between the regions and countries of Great Britain, having already taken into account factors including capital stock, skills, foreign ownership and a range of other variables. This paper seeks to extend this analysis of spatial factors by building a measure of economic potential based on a gravity-type model into an establishment-level analysis of productivity across Great Britain. We then seek to identify whether this variable is an important factor in determining the labour productivity of plants across Great Britain using cross-sectional regression analysis. Our results suggest that the importance of this economic potential is overstated as it is correlated with several other contributory factors; nevertheless it remains important even after other factors have been taken into account. The rest of this paper is structured in the following way. The next section presents a review of the literature which is followed in Section 3 by the model specification. Details of the data used in the econometric part of this study are presented in Section 4. The results are presented in Section 5. Conclusions are presented in Section 6. 2. Survey of the theoretic...See the full content of this document
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