Have City Deals delivered higher productivity in England? An empirical assessment of a broad-spectrum local growth policy

Abstract

The issue of what constitutes effective regional growth policy has remained elusive, particularly for ‘broad-spectrum’ policy aimed at a large part of a country. We undertake one of the first quantitative studies looking at the City Deals in England, analysing effects on productivity. We employ a difference-in-differences model, an event study, and a synthetic control method to evaluate effects on productivity. The results are mixed and usually not statistically different from zero. While the difference-in-differences framework indicates some positive effects, possibly driven by places that were the most productive before the intervention, the event study and synthetic control methods point to, at best, small effects that diminish over time. Our findings, therefore, question the efficacy of such deals in terms of narrowing the UK’s longstanding regional inequalities, while opening up several avenues for further research to understand what worked and what did not within a ‘broad-spectrum’ local growth strategy.