Consultancy
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Enhancing the productivity of the British economy: Cluster lessons and others
This paper considers findings from four projects and their implications for the debate on the UK's poor productivity record. Two projects have been cluster related, each informed by an essentially 'Porterian' view of what economic clusters are. As a result, each has been concerned with productivity. One of these (a project to develop the East Midlands clothing cluster) has been overtly to do with this; the other (a UK cluster mapping project, for DTI) is less obviously to do with enhancing UK productivity, but its theoretical underpinning means that productivity is a key variable.
In addition to these projects, Trends Business Research (which led the two studies on economic clusters) has revisited (for Small Business Service) its own original work on the job creation activity of small firms and (for Scottish Enterprise) further explored the components of employment change.
This paper considers three issues in particular. Firstly, there are regional differences in the performance of economic clusters and it is clear that strong economic clusters deliver job growth and probably high wages. Secondly, innovation is fundamental to cluster strength and innovation enablers must be close to where innovation is exploited. The 'death of distance' is much exaggerated; if anything, proximity is becoming ever more important. In the UK, innovation enablers and exploiters are remote from one another and often where they are proximate, the activities of key innovators - the Universities - do not match the needs of companies.
Thirdly, although the UK has created a significant number of jobs in recent years, the pattern of job creation, by comparison with the USA, reveals a number of issues. In particular, we find that far more jobs are created by NEW firms in the UK than in the USA. Put another way, EXISTING American small firms are far more successful at growing than are similar UK firms.
There are policy issues that flow from these research projects. These include issues to do with aid for R&D institutions; the encouragement of re-location where appropriate; the focus for business support and the direction taken by Universities in their local dealings.
To download a copy of our paper, please follow this link.
