Abstract

This report outlines the findings of a study examining the economic structure
and dynamics of the East Midlands and Yorkshire and Humber regions of the
UK, using the logic of firm and labour agglomerations and their contribution to
GDP as the basis for the analysis.
1.2 The project was undertaken by the Enterprise Research and Development
Unit (ERDU) at the University of Lincoln. The main aim of the project was to
examine GDP growth in the two regions in order to understand the dynamics
and structure of regional economic activity and explore the implications for
regional development.
1.3 Because GDP provides a value for an economy’s output, changes in GDP
can highlight the changing state of a region’s economy. Thus, GDP provides
a benchmark for the performance of an economy which will be comparable
across nations and regions.
1.4 While it is a useful indicator, GDP can be viewed as a set of figures which are
the result of an accounting procedure. This reporting of figures covers the
dynamics of an economy in that we know the end result, i.e. the total value of
the economy but lack an understanding of how that figure is generated. What
is also required is an understanding of the structure of an economy and how
this may affect changes in GDP.
1.5 The approach adopted in this study has been to ‘decompose’ GDP in order to
understand its component parts and link this to the structure of a regional
economy. In doing this we depart from
a traditional ‘macroeconomic’ analysis
in that the report also examines policy interventions and the geographic
structure of the two region’s economies.
1.6 As there are many actors and policy initiatives within a region, it made sense
to consider a sample of these organisations to acquire a sense and ‘flavour’
of the different and distinctive approaches undertaken.
GDP Growth in the East Midlands and Yorkshire & Humber
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1.7 While the size of regional economies dwarfs the budgets of regional, and sub-
regional, agencies involved in policy development and intervention,
organisations can play important stimulus, leverage and demonstration roles
in regional economic development. For example, a programme that involves
expenditure of £1m will not make a large contribution to a region with GDP of
£60bn. However, if the results of the programme improve the productivity of
the workforce then there will be ‘knock-on’ impacts. Keynes termed these
‘multiplier effects’ and can be an important source of regional economic
growth.
1.8 Good and effective practice is also
likely to stimulate improvements in
practice, and hence impact and knock-on effects, throughout a region (and
vice-versa), indicating the importance of development organisations and the
premium that can be placed on ensuring their effectiveness and impact.
1.9 The five main goals of the project are to:
•
Develop an outline framework of a regional economy in order to
understand the relevant actors and processes within regions;
•
Summarise and evaluate existing data on both regional economies;
•
Identify the sub-regional ‘building blocks’ of the regions, i.e. the
location of economic activity and the reasons underpinning this;
•
Map and assess strategic interventions in the regions in order to
evaluate the effects of policy interventions on the regional economies;
•
Develop a framework for measuring the impact of interventions on
GDP