Regional Inequalities in Wales

Devolution has resulted in Wales developing new policy initiatives rather than just implementing policies issuing from Westminster.  This has lead to a greater need for research on the Welsh economy and policy advice for the Welsh Government.  The aim of this research is to expand the knowledge base by modelling and explaining regional differences in economic prosperity within Wales and identifying those groups which may be falling behind.  It is planned that the research will identify future areas of policy development aimed at increasing prosperity throughout Wales.

Previous research has shown that economic prosperity in the ‘peripheral’ regions of the UK has tended to be significantly lower than in southern and central regions (Blackaby and Manning 1990, Martin 1993, Blackaby and Murphy 1995, Beatson 1998, Rice and Venables 2003 and Patacchini and Rice 2005).  The presence of those differences in prosperity has been a driving force in the demand for more devolved government.  A ‘regional problem’ can be said to exist in an economic sense when a region departs from the national average in important ways, and this usually manifests itself in low levels and growth of GDP.

The National Economic Development Strategy: A Winning Wales 2002 revealed the major reasons for differences in GDP per head across regions is largely explained by low levels of employment and low wage rates.  The explanation given for low employment levels and wage rates includes issues related to the industrial and occupational structure, proximity to economic mass, skill levels (including the ‘long tail’ of people with low skills), lack of enterprise and health status of the potential workforce.

This research will use micro data from the LFS to analyse the effects of structural factors and individual characteristics in examining regional differences in prosperity within Wales at the level of unitary authority.  This research will build on the research of Blackaby and Manning (1990), Blackaby and Murphy (1995), Porter (2003) and Rice and Venables (2004).  Variations in prosperity within Wales is an important spatial phenomenon which the Welsh Government will need to address further.  The Consultation on the European Structured Funds Convergence Programmes (ERDF and ESF) for West Wales and the Valleys 2007-2013 noted, “there is still much to be done to reduce economic disparities with the rest of Wales”.  The focus of the research project will be analysing these economic disparities and drawing out policy implications.

The researchers involved in this project are Huw Beynon, David Blackaby, Rhys Davies, Stephen Drinkwater, Melanie Jones, Philip Murphy and Nigel O’Leary.

Related WISERD Publications

Blackaby D, et al., 2010, ‘Modelling and Explaining Regional Differences in Economic Prosperity in Wales’, Report for the Economic Research Unit, Welsh Government. (Available here)

Blackaby D, Drinkwater S, Jones M, Murphy P, O’Leary N, Perman M, Souabni S, 2010, ‘Modeling and Explaining Regional Differences in Economic Prosperity within Wales’ (A report to the Welsh Government) (Available here)

Davies R, et al., 2011, ’An Anatomy of Economic Inequality in Wales’ WISERD/RRS 002 (Available here)

For further details, contact David Blackaby: d.h.blackaby@swan.ac.uk