A NOTE ON REGIONAL DIFFERENCES IN PRODUCTIVITY, PROFITABILITY AND GROWTH

DOIhttp://doi.org/10.1111/j.1467-9485.1961.tb00168.x
Published date01 November 1961
Date01 November 1961
A
NOTE
ON
REGIONAL DIFFERENCES
IN
PRODUCTIVITY, PROFITABILITY
AND
GROWTH
MR.
Hart
and
Mr.
MacBean presented data on productivity, profit-
ability and growth of comparable firms and industries in Scotland
and the whole of the United Kingdom, in the February 1961 issue
of the
Scottish Journal
of
Political Economy.
They concluded that
no significant daerences have been found, when like-with-like
comparisons
are
made between firms and industries in Scotland and in
the United Kingdom.’ In this note
I
hope to show that Messrs. Hart
and MacBean used criteria for their comparisons which were unduly
favourable
to
Scotland, and that their conclusions about industrial
growth in Scotland may not be correct because
of
inadequacies
in
the
data they used. However,
I
hasten to add that, even when the
qualifications
I
will suggest are taken into account, the implications
of their results for location
of
industry policy in Britain are
of
the
first importance.
My main concern is with the sections
of
their article devoted to
growth and productivity, but first a few remarks about their findings
on
the profitability
of
Scottish industry.
Profitability
Mr.
Hart and Mr. MacBean found that ‘differences in average
profitability of similar firms and industries in Scotland and the United
Kingdom are very small:
so
small in fact that it is not possible to
assert with any confidence that there is a difference.’ Profit rate
comparisons, however, are not particularly relevant to the problem
of deciding
whether there are significant differences between Scotland
and other regions as environments for manufacturing industries.’ We
expect profit rates
to
be much the same for comparable industries in
all regions as they both determine and reflect the regional allocations
of industrial and commercial capital. Northern Ireland, for exampIe,
is a region where profit rates appear to be slightly higher than in
Great Britain, and this has been interpreted as evidence of a reluctance
to invest in Northern Ireland.’ Presumably there
is
a greater willing-
ness to invest
in
Scotland than in Northern Ireland. The similar
profit rates in Scotland and the United Kingdom confirms that the
capital invested in Scotland is paying its way. But it is not unlikely
1K.
S.
Isles
and Norman
Cuthbert,
An
Economic
Survey
of
Northern
Ireland,
Belfast: Her Majesty’s
Stationery
Office, 1957,
p.
179.
246

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