Specialised Markets and the Behaviour of Firms: Evidence from the UK's Regional Economies

A key feature of the South East regional economy in recent decades has been the development of several intermediate markets in specialised business services. This paper investigates whether the greater development of specialised markets in the South East is associated with different competitive and technological behaviours of innovative firms in this region when compared with firms in the Industrial Heartland regions of the West Midlands, North West England and Yorkshire and Humberside. We find greater buying and selling of technology by firms, and the presence of technological externalities in the South East, even when the services-intensive nature of the region's production is accounted for. Industrial Heartland firms, in contrast, more frequently collaborate with domestic suppliers who are also an important source of technology. They also have greater collaboration with Higher Education Institutes.