PLANT SIZE AND INDUSTRY-MIX EFFECTS ON UK REGIONAL PRODUCTIVITY, WAGECOSTS AND OPERATING SURPLUS

The ability of a region to create wealth depends both on the competiti veness oi its individual firms and its industrial structure. This pape r examines the effect of industry-mix and plant size structure on the wealth generating capacity of the UK regions from 1980-91. Reflecting the findings of similar US studies, the analysis suggests that, in gen eral, UK regions' structural disadvantages act to reinforce rather tha n counter plant level productivity, wage cost and operating surplus (p rofitability) differentials. Thus lagging regions face a three-fold di sadvantage: poorly performing plants; disadvantageous industry-mix; an d plant size structure. This suggests a need for a strategic approach to policy which must aim to counter regions' structural disadvantages as well as to improve the competitiveness of existing plants.