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Britain's productivity shortfall is its foundational economic problem. Debate about this gap and how to fix it typically focus on raising productivity of existing firms, via two routes. First, innovation: investment, R&D and patenting as ways to inject new ideas into pre-existing firms. Second, diffusion: the cascading of those new technologies and improved management practices as a way for less productive firms to catch up with the best. Both processes are important, but something else has been largely forgotten: the role of economic change. The contribution of this paper is to put dynamism, reallocation and change back into discussions about UK economic policy.
Richard Davies, Nadim Hamdan and Gregory Thwaites
25 September 2023
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This work is published under POID and is part of the CEP's Growth programme.
This publication comes under the following CEP theme: R&D and innovation, UK productivity and policy