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By Stuart Holland (auth.)

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Extra resources for The Regional Problem

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19 In twenty of the twenty-two main industrial and service sectors ~n the British economy, six firms or less control 50 per cent of the assets of the entire sector. 20 These meso-economic giants are squeezing thousands of smaller micro-economic firms into the lower third of their respective industries and services. They corroborate Marx's prediction a century ago that 'the larger capitals beat the smaller. ' 21 These new meso-economic leaders are notably multi-national in operation. For instance, in an analysis of 92 of the top 100 British manufacturing firms between 1950 and 1970, Paul Channon found that those firms with at least six foreign subsidiaries grew from 23 in 1950 to 30 in 1960, with a 'dramatic increase' to 50 in 1970.

Multi-national companies shows that the scale of regional incentives which they discount in Britain has been staggering. Such incentives have included grants ranging up to 40 per cent of investment costs, and subsidies on labour costs (Regional Employment Premiums). Unilever submitted to the House of Commons Expenditure Committee that it was 'unable to produce evidence from our own experience that the Regional Employment Premium has increased investment or employment in the Development Areas'. Cad bury Schweppes submitted that neither labour nor capital incentives played a major role in THE LIMITS OF LIBERAL CAPITALIST POLICIES 45 location decisions.

According to the theory, this complementary process of labour and capital flows will partly substitute for interregional trade. Firms will find it more profitable to locate production in regions to which they previously exported. The main qualifying features of this analysis would be ( 1) product differentiation, whereby the same firm produced different products in different regions, and (2) regional specialisation based on differences in natural resource endowments (mining, forestry, and so on).

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