Abstract: New Manufacturing Plant Formation, Clustering, and Locational Externalities in 1930s Britain

Peter Scott and Peter Walsh


This paper examines the geography of new manufacturing plant formation in Britain during the 1930s, using a dataset of new plants (with 25 or more employees) established during 1932-1938. For sectors not strongly influenced by the need for proximity to primary sector inputs, plants are shown to be clustered in industrial districts located within a coffin-shaped "axial belt," running northwest from London to Merseyside and the West Riding of Yorkshire. Most provincial regions within this belt had factories clustered in long-established, sectorally specialized industrial districts based around mature industries and benefiting from Marshallian externalities. Greater London and the West Midlands had clusters of this type. Yet they also contained "new industrial districts," based around a diverse range of complementary industries and deriving locational externalities primarily through functional, rather than sectoral, commonalities. The emergence of these districts marked the start of a long-term trend from local and regional industrial specialization by sector, to specialization by function.