The Long-Run Consequences of Adverse Eco

Does Social Cooperation Affect Macroeconomic Performance? Research Project

The Long-Run Consequences of Adverse Economic Shocks: UK Regional and Urban Inequalities

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Principal Investigator: Professor Philip McCann

Philip McCann holds the Chair in Urban and Regional Economics in Sheffield University Management School, and held the Tagliaferri Research Fellow in the Department of Land Economy at the University of Cambridge 2015-18. Philip has published in almost every area of economic geography, regional and urban economics. He has also previously been a Special Adviser to two different EU Commissioners for Regional and Urban Policy, and has also advised four OECD directorates, the European Investment Bank, and government bodies in various countries. He was an independent adviser on the Northern Powerhouse Independent Economic Review and before that on the IPPR Northern Futures Commission and the North East Independent Economic Review.

Co-Investigators: Andre Carrascal-Incera (University of Birmingham), Ben Gardiner (Cambridge Econometrics), Ron Martin (University of Cambridge), Philip McCann (University of Sheffield), Raquel Ortega-Argilés (University of Birmingham), Patricia Rice (University of Oxford), Tony Venables (University of Oxford)

Project Summary

Regional productivity and prosperity underpin national performance. Many parts of the UK appear weak on both dimensions, and fail to benefit from technological change and globalisation. The result is of an apparent partitioning of the country. The extent to which this partitioning takes place also appears to be greater in the UK than in many competitor countries, but it is still unclear which aspects of these processes are specific to the UK, and which reflect international trends. Crucially, this partitioning acts as a major drag on overall UK productivity, because productivity gains in some regions appear not to transmit to other regions, thereby limiting overall national performance. This project has uncovered different aspects of the UK’s interregional divides, using a variety of methodologies.

One strand of our research examined the long-run adjustment to adverse shocks, looking for evidence that certain places do get ‘left behind’ due to adverse economic shocks. Many places in the UK have experienced severe negative employment shocks in the last 50 years, arising largely from changes in trade, technology, and mining activity. Our research found that the shocks experienced many decades ago still account today for many of the prosperity and performance features of these same places. The final paper entitled “The Persistent Consequences of Adverse Shocks: How the 1970s Shaped UK Regional Inequality” will be published in 2021 in the Oxford Review of Economic Policy.

The second strand of the empirical research, undertaken by the University of Birmingham (Andre Carrascal-Incera, Raquel Ortega-Argilés), Sheffield University (Philip McCann) and LSE (Andres Rodriguez-Pose), compared the evolution of UK cities and regions with that of other industrialised economies. Our results demonstrate similar patterns of increasing UK interregional divergence in comparison to other countries both at the regional and the urban scales. Yet no national productivity advantage associated with interregional inequalities was found.