The sources of the Scotland–Rest of the UK productivity gap: implications for policy

Abstract

ABSTRACTThe sources of the Scotland–Rest of the UK productivity gap: implications for policy. Regional Studies. This paper finds that aggregate total factor productivity (TFP) in Scotland was 16% below the ‘rest of the UK’ in 2012. This is mainly due to negative ‘non-place’ effects in the service sector. It also finds that new plant start-ups and foreign-owned plants contributed negatively to TFP growth during 1997–2012. This casts doubt on whether continuing to focus on increasing the rate of new firm formation and foreign investment will result in a ‘step change’ in productivity growth.