The paper titled "Tackling the UK's Regional Economic Inequality: Binding Constraints and Avenues for Policy Intervention" by Anna Stansbury, Dan Turner, and Ed Balls, examines the binding constraints to productivity growth in the United Kingdom's regions outside London and the greater South East. The authors challenge several common arguments about the UK's regional economic inequality problem and find little evidence consistent with hypotheses such as low shares of university graduates remaining the primary constraint on growth for the UK's regions, a generalized issue with access to finance for firms outside the South East, or low or falling regional migration rates being to blame for the persistence of the UK's regional economic inequalities. Instead, the authors find evidence consistent with a specific relative shortage of STEM degrees, binding transport infrastructure constraints within major non-London conurbations, a failure of public innovation policy to support clusters beyond the South East, in particular through the regional distribution of public support for research and development (R&D), and missed opportunities for higher internal mobility due to London's overheating housing market. The authors also find some suggestive evidence consistent with constraints on access to early-stage equity financing for high growth-potential SMEs in certain regions. The paper's keywords include regional inequality, productivity, and regional economics, and its JEL codes are O47, R12, and R58.
