This thesis investigates the consequences of devolved government in Wales for its economic performance. Economic theory is ambivalent concerning the consequences of changes in governance that are often considered as issues in fiscal decentralization or fiscal federalism. Economic growth theory however can be interpreted as dogmatic in expecting convergence between the economies of nation-states: for neo-classical growth convergence between similar states at different stages of development is considered to be inevitable; under endogenous growth theory, convergence is attainable through identifying and adjusting key policy variables. I have examined UK regional economic data using a selection of descriptive statistics and have not found evidence of neo-classical economic convergence between Wales and other regions of the UK. I have investigated the possibility of endogenous growth in Wales in relation to other regions of the UK in terms of spending on economic development and differences in human capital within the workforce. The evidence suggests that public spending on economic development has not been effective in improving Welsh economic performance although there is evidence that it is positively influenced by education. I have also undertaken an investigation of spatial dependence in economic activity between Wales and other UK regions. This analysis indicates that an endogenous model augmented with a spatial lag based on the distance between regions does provide some evidence that spending on economic development and investment in human capital do contribute to our understanding of Welsh economic performance. However, the analysis that was undertaken has not found evidence that Devolution has yet been instrumental in improving Welsh economic performance in relation to other regions of the UK.

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This thesis provides a description and analysis of government intervention in the Welsh economy between 1974 and 1997. During this period, Wales underwent rapid and far-reaching economic upheaval on such a massive scale that few avoided its impact. The scale of these changes was dramatic, as was the intensity of attempts to deal with their consequences. Wales acted as a laboratory for the development of approaches to government intervention in the economy. This thesis defines government intervention in the Welsh economy, before identifying activity, expenditure and (where possible) outputs across categories including land reclamation, factory construction, attraction of foreign direct investment, urban renewal, business support and the provision of grants and subsidies. It also places such interventions in their political and economic contexts, highlighting the dynamics that evolved between policies developed in Cardiff and London. By doing this, it asks and answers three questions relating to the changing dynamics of government intervention; namely, what was done, why was it done and was it effective? The thesis draws on primary sources including interviews with politicians and those formerly holding senior positions within governmental organisations, records held by the National Archives, personal and organisational archives held by the National Library of Wales, records held by other archives, newspapers and government publications. Secondary texts are discussed and drawn upon, with this study adding a history of government intervention in the Welsh economy to the literature for the first time.

This thesis presents a case study of Welsh innovation policy from the period of political devolution (1999) to the present day (2014), exploring the role of regional government as a driver of innovation and economic development. It proposes a multi-theoretical framework to be employed in the study of real world innovation interventions, to illicit nuanced insights into the Wales case study, and also to test the applicability of key regional innovation theories in a weaker region context. The four regional innovation theories identified as the most prominent in both academic literature and policy, and incorporated into the conceptual framework of this study are: systems of innovation, clusters, the learning region, and the triple helix. The case study presented consists of a systematic review of Welsh innovation and related policy since devolution and in-depth interviews with key stakeholders in the Welsh innovation system. The Welsh approach to innovation is found to have evolved in three distinct phases, whereby innovation is prioritised differently relative to other policy spheres, and the dominant approach to innovation varies over time. Innovation interventions have met with varying levels of success, and, interestingly, the most prominent approaches have been, on the whole, less successful in Wales. This thesis argues that no one theory is ideally suited to the analysis and development of innovation policy in weaker regions; instead it draws on the strengths of the four key theories identified. It argues against a “one-size-fits-all” approach to innovation policy, premised on exporting models from exceptional leading regions in a manner that is geographically, historically, and culturally blind. It supports a move away from normative approaches to the study and practice of innovation policy, instead drawing on the different theoretical elements that are particularly relevant to the case in question.