Competition, local growth and productivity

Introduction

• Competition is often thought to be a driver of innovation and competitiveness. For many small firms, however, competition is primarily local and the intensity of local competition may vary considerably either encouraging or discouraging investment and growth. To what extent, if any, is there a relationship between the intensity of local competition across the UK and local growth and productivity outcomes?
• How does concentration influence growth? Do areas with lower prosperity also exhibit low levels of competition? How does industrial demographics (entry, exit, size distribution) influence the effects of competition on growth outcomes and how stable are these relationships over time and different geographies (e.g., both urban/rural and other local/regional differences)? How does this differ between urban/rural locations?
• A key issue here will be defining ‘local’ – which type of geography is most relevant? LAD, LEP or TTWA areas? Another key issue will be causality. Does competition lead to differences in growth outcomes or does local dynamism influence business start-up, closure or movements and hence competition. LEP outlook data will be used as conditioning variables.
• BSD provides much of the data which we need for this with the potential to develop measures of concentration, market entry and exit at various sectoral and geographical levels. Data on firms’ engagement in UKRI grants and IPO data on formal IP could also be used to define alternative competition metrics. It may be that different geographies are relevant for different types (sizes, sectors) of firms. There is a need here also to include spillovers in any specification using spatial regression approaches. LEP outlook data can be used as conditioning variables at LAD and LEP levels for England at least.

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