ESRC invests £1.6 million in Derby study to tackle productivity puzzle

A new research project at the University of Derby, designed to contribute towards higher rates of investment and increased productivity growth across the UK, has been granted £1.6 million in funding by the Economic and Social Research Council via UK Research and Innovation’s Strategic Priorities Fund.

The study will be led by Professor Marc Cowling, Head of Research and Innovation in the College of Business, Law and Social Sciences at the University of Derby, in collaboration with the University of Leeds, University of Warwick, University of Sussex, University of St Andrews, University of Edinburgh and University of Bath.

It is one of only seven to be awarded funding as part of a new £11 million research investment to bring researchers closer to unravelling some of the complex reasons behind the UK’s stagnant productivity. The projects, will focus on under-researched topics in relation to improving productivity, including diversity, net zero and the green economy, financial markets, mental health, and wages.

Each will tackle specific aspects of the so-called productivity puzzle with the aim that the findings will help policymakers and businesses take the steps necessary to improve productivity and raise living standards across the UK.

Derby’s study, ‘Understanding how constraints on access to finance and under-investment impact on productivity growth in smaller firms’, will build a picture of the problems that small firms face accessing investment capital and increasing their productivity. This will enable policy makers and businesses to design new policies to drive productivity and growth across the UK.

Speaking about the funding for the project, Professor Marc Cowling, said:

“I am so pleased to be leading such a talented team of researchers across seven institutions. Thanks to this funding, over the next three years we hope to advance thinking and knowledge about the key linkages between finance constraints and small firm productivity in the UK.”

ESRC’s Interim Executive Chair, Professor Alison Park, added:

“UK productivity levels have been poor by international standards and have stagnated in recent years.

“Funding research to understand the issues driving low productivity continues to be of paramount importance to the Economic and Social Research Council.

“So we are delighted to be able to fund seven projects that will delve into the reasons behind the UK’s stagnating productivity and provide evidence to help boost productivity and improve people’s living standards.

“Expanding our research portfolio in this way could ultimately improve the lives of millions of people in the UK, as it is addressing arguably the UK’s biggest economic challenge.”

The projects start in April 2022 and will each run for three years.

The projects complement ESRC’s existing portfolio of funded productivity research, which includes the £26 million Productivity Institute and the £4 million Programme on Innovation and Diffusion.