This employment performance of small and new manufacturing firms is examined in the County of Cleveland, an area of North-East England characterised by large establishments in 'heavy' industry. The paper shows that relatively few jobs were created by wholly new manufacturing firms in the area between 1965 and 1976, and that even raising the formation rate to that of the prosperous East Midlands would not have offset job losses through the contraction of large plants. New firm formations in an area are shown to be strongly associated with the proportion of the workforce employed in small establishments.
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