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Productivity at Alliance Manchester Business School

Prosperity is built on sustained growth in productivity, the way a society transforms the labour of its workforce into products and services that improve the quality of people’s lives. 

Productivity arises from the way people’s skills and entrepreneurial energy, the knowledge created in universities and laboratories, and financial and physical assets, are used. Productivity is key to the creation of decent work, the provision of high quality education and healthcare, and the resilience to cope with a rapidly evolving economic and social environment. It offers citizens opportunity and sustainable improvements in their standard of living. 

Our aims

We aim to pinpoint the causes of the stagnation in UK productivity and focus energies to laying the foundations for a new era of sustained and inclusive productivity growth. This is done through a strong focus on regional engagement with stakeholders across the whole country, something which is required to address the systemic nature of UK’s productivity challenges.

Through our productivity insights and action work we aim to:

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Advance understanding of UK productivity performance through a world-class action focused research agenda

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Act as a transformational hub with extensive regional reach including the public and the private sector

World class research

Build capacity to drive a productivity agenda

Productivity themes

We are building our work through eight main themes:

The low productivity levels of some regions or areas of the UK, and the consequent disparities in income and broader well-being, are widely documented. We research how the differences between leading and lagging places have evolved and what are the feedback mechanisms embedding them, while we also look at how these relate to the provision of public services, health and educational outcomes. Our research investigates the reasons for the mixed performance of these interventions, comparing them with international practices.

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Coming decades will see major transitions as the UK adopts new technologies and responds to climate change. These transitions will require transformative change in (digital and low-carbon) technologies, business models, skills needs, infrastructure, policies and markets (Geels, 2019). What are the future productivity opportunities from digital technology and green growth and how can investments and skills be shaped to make the most of the complementarities between them (Acquier et al., 2017)? And what are the main distributional impacts on productivity across regions, sectors, and firms, and how can those be managed?

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While there is a vast amount of human capital research on the value of qualifications, we know far less about which skills and abilities - particularly psychological and social - are important for productivity and wellbeing, and how and where they can best be developed and deployed in a rapidly-changing digital economy. Our research will explore these issues in depth.

Recommended reading:

Stagnant long-term productivity growth in UK firms has been linked - alongside other factors - to failures in technology diffusion, low levels of investment, short-termism, an inclination towards more incremental innovation and a general decline in business dynamism. Brexit and the impact of Covid-19 on the survival and strength of UK businesses may undermine investment, innovation and future productivity growth. Longer-term, UK businesses face other challenges – e.g. digitisation and the transition towards net zero – which may either exacerbate or help address the productivity challenge. Our research will examine how COVID-19 is impacting on firms across the productivity distribution, explore how firms are tackling the digital and net zero transitions, and how they can be incentivised to upgrade productivity.

Recommended reading:

There are large gaps in the understanding and measurement of knowledge capital. Our research explores the definition, measurement, and valuation of components of knowledge capital, as well as the interactions between intangible assets and organisational, human and social capital. What is the role of the state and universities in innovation? And how is innovation affected by market structure and participation in global supply chains?

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A long run and international perspective is essential for understanding the extent of the problem faced by the UK. And many of the UK productivity issues reflect economy-wide failures. Stagnant real wages and living standards for many are associated with slow productivity growth. Possible contributory factors include increased use of migrant labour in a relatively deregulated labour market; retrenchment and reform in the banking system and its consequences for firms’ access to finance; and public sector retrenchment and its impact on both public and private sector investment as well as regular disruptions in demand that may have acted to impede long run planning. The role of the monetary-fiscal settlement is key.

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This theme addresses the multiple weaknesses of UK governance of industrial policy that have previously been identified by researchers in the field. Namely over-centralisation, top-downism, short-termism linked to the electoral cycle, silos and the absence of effective joined-up government, to name just a few. Working closely with policymakers and stakeholders at national and local levels, we undertake primary research into why UK policy institutions generally fail to act in a coherent, coordinated and long-term manner.

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The rising importance of the intangible capitals and globally integrated production structures have led to new modes of value creation. This challenges traditional empirical approaches for unravelling the sources of growth and its distribution, and demands new data and methods. In this theme we consider how we can develop and analyse the firm-level evidence base through data linkage and novel data sources to gain deep understanding of regional, national and firm-level productivity drivers. We also consider what new modes of value creation imply for the measurement of growth and welfare.

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