Productivity growth in British manufacturing: spatial variation in the role of scale economies, technological growth and industrial structure

This paper investigates the role of scale economies, technological growth a nd industrial structure in creating spatial variation in manufacturing labo ur and Total Factor (TFP) productivity in Britain. Separate estimates of a translog specification are presented for British manufacturing firms locate d in defined areas of the country over the period 1994-1998. The results sh ow that TFP change due to scale economies and technological growth has been of much less important in influencing the output growth of manufacturing f irms than input growth or industrial structure. Regarding the components of TFP, technological growth has been the dominant force at play. The analysi s of average labour productivity identifies shifts to other factors of prod uction and industrial structure as being the main determinants of change, s cale economies appear to have had a marginal role. The results identify spa tial patterns indicating that more favourable locational effects arise for firms in areas adjacent to large urban centres, rather than for those locat ed within cities, on the extreme periphery of the urban hinterland, or in r ural areas and smaller towns.