Sectoral composition and productivity differences: A regional analysis with particular reference to the North East region of England

Abstract

For the period 1991-2000 the North East region experienced the slowest productivity growth rate relative to its UK regional counterparts. Manufacturing is a prominent feature of the North East landscape; to this effect the relationship between regional growth differentials and regional differences in industrial composition are explored using a technique known as shift share analysis. Output per worker data for the North East (and UK regions) for the period 1991-2000 is used to examine whether the slow productivity growth performance is attributable to the regional industrial structure. The empirical results reveal that differences can be explained by region-specific productivity differentials. These differences are attributable primarily to differences in the regions' labour productivity of given industries as opposed to between regions in sectoral composition of their economies.