Businesses create wealth and add value to regions. Through their own spending power and that of their employees they create multiplier effects which spread through to other businesses and underpin regional economies.
But firms have different levels of impact on regions, according to their own value chains and supply networks chains, and one of our main objectives at City-REDI is to help policymakers understand this variation so regional growth policies can focus on the right businesses. With the right interventions, we increase the regional impact of businesses, to enhance economic performance or inclusivity.
The UK faces a productivity challenge. For regions outside of London this challenge is greater and the underlying causes are more embedded. City-REDI is carrying out research at the firm level, across business sectors and supply chains to understand the regional dimensions of the productivity puzzle. Investment in skills and R&D and the development of innovative capabilities, new products, services and processes are all key factors which drive productivity. More productive firms enhance regional competitiveness and attract more skilled employees on higher incomes, creating stronger multiplier effects. We are studying how policies can promote this virtual cycle, which benefits businesses, people and places.
City-REDI also examines entrepreneurship, start-ups, spin-outs and scale-ups as part of the regional innovation system. Strong clusters of R&D-intensive firms, linked to research-active universities can create high-value jobs and attract new firms to regions. Some new technologies also have an enabling effect, improving productivity across a wider range of businesses and supporting broader regional competitive advantages.