High productivity areas do not develop without infrastructure. Government has a role through provision of road and rail networks and by investing in research universities. But, if the goal is to develop additional high productivity centers, it is important that government funds are concentrated and focused, rather than dissipated across a large number of disparate rural communities. The UK has room for no more than two or three additional growth centers: one in the north of England, one in Scotland and one in Northern Ireland.

Although there is convincing evidence that aggregate demand policies can influence the LEVEL of economic activity, there is less convincing evidence that these policies can influence the GROWTH RATE. There is, however, a role for investment in public infrastructure. Economic activity is concentrated in urban areas connected by road and rail networks and served by world class universities. In the UK, London and the areas around Oxford and Cambridge are by far the most important drivers of growth. The most significant potential opening for public policy to contribute to economic growth is through the promotion and creation of infrastructure in the regions that will provide a catalyst to private enterprise and the potential for connected networks of businesses that replicates the success of London and the South East.