Paul Temple

Dr Paul Temple

Reader in Economics
weeks 1-6,11 12.30-1.30pm 4-5pm weeks 7-10: 12.30-1.30pm 5-6pm



Paul Temple graduated from Cambridge University in 1973 and obtained an MA (Econ) from Manchester in 1975; in 2009 he was awarded a PhD from Cambridge on the basis of his published research. He has worked in a variety of academic posts, and taught in both the UK and US up until 1989. After that he worked as an Economic Adviser to the National Economic Development Council, working on issues such as labour market performance and international competitiveness. In 1993 he was appointed as Research Fellow in the Centre for Business Strategy, London Business School, studying a variety of topics related to Britain's economic performance - including investment, innovation, and the role of standards in promoting international competitiveness. He joined the School of Economics at Surrey in 1997, and was promoted to Reader in 2007.

Research interests

His recent research at Surrey has included work relating to physical investment and the economics of technological change and innovation, especially in relation to standards. He also has interests in business and technological history. His publications include editorship of Britain's Economic Performance; Investment, Growth, and Employment; Critical Perspectives: Mergers and Acquisitions. He has also published articles in various journals including the Economic Journal, Oxford Economic Papers, The Journal of Business and Economic Statistics, the International Journal of Industrial Organization, Cambridge Journal of Economics and the Economic History Review.

Research collaborations

Professor Ciaran Driver, School of African and Oriental Studies (investment and Britain's economic performance)

Dr Christopher Spencer, Loughborough University and Shimomura Fellow, Research Institute of Capital Formation, Development Bank of Japan (standardization and productivity growth)

Dr Ray Lambert, Associate Research Fellow, Department of Management, Birkbeck, University of London


  • Applied economics
  • The economics of international business competitiveness
  • Business History

Departmental duties

Module review administration


C Driver, P Temple, G Urga (2008)Real options - delay vs. pre-emption: Do industrial characteristics matter?, In: International Journal of Industrial Organization26(2)pp. 532-545
QG Yang, P Temple (2012)Reform and competitive selection in China: An analysis of firm exits, In: Structural Change and Economic Dynamics23(3)pp. 286-299

This paper considers aspects of the competitive selection process in China - firm entry, survival, and exit - in an important sector of manufacturing, looking in particular for changes resulting from the process of reform. Using industry census data from a province in North-East China, we find substantial differences in the process between ownership types. By conducting decompositions of aggregate growth and exploring the determinants of firm's exit using a hazard rate model, we observe a substantial rate of churning of enterprises in the sector, finding that the competitive selection processes operate, for small and collectively owned enterprises (COEs), in a manner consistent with what is known about a private market economy. While the hazard for state owned enterprises (SOEs) is lower than for COEs, we find that the reforms introduced in 1992 were important in closing the gap for similarly situated firms. © 2012 Elsevier B.V.

C Driver, K Imai, P Temple, G Urga (2004)The effect of uncertainty on UK investment authorisation: Homogeneous vs. heterogeneous estimators, In: Empirical Economics29(1)pp. 115-128

This paper compares pooled and non-pooled models of UK capital investment using the Confederation of British Industry's (CBI) Industrial Trends Survey, focusing on the impact of uncertainty. The uncertainty measure is based on the cross sectional dispersion of optimism about the future business conditions in the industry in which the firm operates. The panel data estimation shows that uncertainty has quantitatively important negative effects on investment. However, if we look at the estimation results at the industry level, we find a great diversity in both estimated elasticities and t-statistics, providing valuable information not available from the pooled model. Finally, we compare the forecast performances of the above models; this analysis confirms that pooled estimators are generally better than non-pooled estimators in terms of out-of-sample forecast performance, but the difference between the two is not very large.

C Driver, P Temple, G Urga (2005)Profitability, capacity, and uncertainty: a model of UK manufacturing investment, In: OXFORD ECONOMIC PAPERS-NEW SERIES57(1)pp. 120-141 OXFORD UNIV PRESS
C Driver, P Temple, G Urga (2006)Contrasts between types of assets in fixed investment equations as a way of testing real options theory, In: JOURNAL OF BUSINESS & ECONOMIC STATISTICS24(4)pp. 432-443 AMER STATISTICAL ASSOC
MA Choudhary, P Temple, L Zhao (2011)Taking the measure of things: the role of measurement in EU trade, In: Empiricaforthc Springer

In this paper theoretical and empirical models of intra-industry trade are developed in which economic activities, based on measurement and an associated measurement infrastructure, play a role in creating product variety. The paper discusses how the measurement infrastructure which includes institutions conducting metrological research and standard setting organization reduces transactions costs, especially in markets where differences in product characteristics are important. The theoretical analysis focuses on the public good characteristics of the measurement infrastructure, considering how the infrastructure impacts upon trade in a model based upon product differentiation under monopolistic competition. In the econometric analysis, indicators of the strength of the infrastructure within the EU, both across industries and across countries, suggest that measurement activities are important in determining the extent of bi-lateral EU intra-industry trade. Despite many common elements in the measurement infrastructure across the EU, there is also some evidence of differential access to the infrastructure among EU members.

A Lanza, P Temple, G Urga (2003)The implications of tourism specialisation in the long run: an econometric analysis for 13 OECD economies, In: TOURISM MANAGEMENT24(3)PII S0261-pp. 315-321 ELSEVIER SCI LTD
CG Spencer, PA Temple (2015)Standards, Learning and Growth in Britain, 1901-2009, In: Economic History Review: a journal of economic and social history69(2)pp. 627-652 Wiley

This article considers the model of voluntary, consensus based standardization as developed through the British Standards Institution (BSI) and its contribution to learning and productivity growth. It discusses the significant role played by professional engineers in the model’s introduction, its extension at home, and its imitation overseas. It is argued that by 1931 the BSI catalogue of standards represented a considerable stock of codified knowledge whose growth reflected underlying aggregate technological opportunities, assisting in their transformation into technological advance. To help validate this claim, a measure of the size of the BSI catalogue of standards is incorporated into an econometric model of aggregate productivity growth in Britain. Findings show that the growth of the standards catalogue is associated with a substantial proportion of labour productivity growth over the period 1931–2009. Estimates relating to the short-run dynamics involved are consistent with the idea that there are causal linkages running from standards to growth. When interpreting these findings, it is argued that the overall weight of historical evidence points to standardization—coordinated through the BSI—as providing an important path of learning for the British economy over the period considered.

C Driver, P Temple (2010)Why do hurdle rates differ from the cost of capital?, In: CAMBRIDGE JOURNAL OF ECONOMICS34(3)pp. 501-523 OXFORD UNIV PRESS
C Driver, P Temple, G Urga (2006)Identifying externalities in UK manufacturing using direct estimation of an average cost function, In: ECONOMICS LETTERS92(2)pp. 228-233 ELSEVIER SCIENCE SA
P Temple, G Williams (2002)Infra-technology and economic performance: evidence from the United Kingdom measurement infrastructure, In: INFORMATION ECONOMICS AND POLICY14(4)PII S0167-pp. 435-452 ELSEVIER SCIENCE BV
P Temple, G Urga, C Driver (2001)The influence of uncertainty on investment in the UK: A macro or micro phenomenon?, In: SCOTTISH JOURNAL OF POLITICAL ECONOMY48(4)pp. 361-382 BLACKWELL PUBL LTD
R Lambert, Paul Temple (2016)Mutuality of Intellectual Property Protection with Standards Development and Use: An Innovation Systems Perspective, In: Iréne Bernhard (eds.), Proceedings of 19th Uddevalla Conference

The paper argues that both the development of standards within consensus and rule based organizations and the methods used for the protection of intellectual property have pervasive and interacting, and sometimes possibly harmful, influences throughout innovation systems; both are moreover highly relevant for business strategies based upon open innovation. Using the UK Innovation Surveys and specially constructed data on the standards environment confronting firms, we illumine the importance of the standards for innovation and forward looking innovation commitments, as well as for firm’s decisions regarding methods of intellectual property protection. We find that cooperating firms particularly value the information content of standards. We supplement these findings with direct survey based evidence regarding not only the use of standards but also the motivations for participation in standard setting organizations. The surveys reported confirmed the widespread use of standards in research and services as well as manufacturing. Both IPR and participation development were frequently seen as strategically important. Motivation for participation included the ability to influence future standards and obtaining valuable information about the trajectories for technologies and markets. While IPR issues do sometimes conflict with standards setting processes, the evidence does not suggest that delay and other issues are a widespread problem in standard setting.

In this paper we develop models of intra-industry trade in which the technological infrastructure associated with measurement activity plays a role in determining the ability of firms to differentiate their products, making them more marketable, and hence promoting intra-industry trade. We observe that public support for the measurement infrastructure is an important element of public support for industry, while publicly available technical standards provide a significant means by which firms make use of this infrastructure. As an empirical test for the importance of the measurement infrastructure, we consider bi-lateral intra-industry trade flows between economies in the EU and find that both a measure of the cross industry importance of the measurement infrastructure – as proxied by standards - as well as the degree of investment in the ability to measure – as proxied by the use of instruments – are important correlates of intraindustry trade. The econometric analysis suggests that differences in national measurement infrastructures continue to play an important role in determining EU trade flows.

P Temple, R Witt, C Spencer (2004)Institutions and Long-Run Growth in the UK: the Role of Standards., In: University of Surrey School of Economics Discussion Paper DP 19/07.

In this paper we consider the relationship between the standards created by national standards bodies and long run economic growth, exploring the relationship in the context of the UK and the British Standards Institution (BSI). We suggest that standards provide a key enabling mechanism for the widespread diffusion of major technologies, while being generally supportive of incremental innovation and general technological understanding. In order to further understanding of this mechanism we measure the ‘output’ of the BSI by estimating the size of the BSI ‘catalogue’ available to the economy since its inception in 1901. The measure allows us to estimate an augmented production function for the UK economy over the period 1948-2002. Within a co-integrating framework, we find a statistically significant and unique co-integrating vector between labour productivity, the capital-labour ratio, exogenous technological progress and the BSI catalogue. The long-run elasticity of labour productivity with respect to the standards stock is estimated to be about 0.05, so that the rapid growth of the catalogue in the postwar period is associated with about 13% of the aggregate growth in labour productivity.

Economic theory suggests several plausible reasons why firms may employ hurdle rates for capital investment appraisal that differ from discount rates. Using a sample of business units from the PIMS data bank of North American companies we find that hurdle rates are frequently below and also frequently above matched data on discount rates. Using multinomial logit analysis we find that variables representing the opportunity for strategic investment or the motivation for such investment increase the probability of managerial or strategic behaviour. We also find evidence for an irreversibility effect.

This paper presents an empirical study of the channels of influence from uncertainty to fixed investment suggested by real options theory. Using panel data from the Confederation of British Industry (CBI) Industrial Trends Survey, we report OLS estimates of the impact of uncertainty on investment where the regressors are augmented by cross-sectional averages of the dependent variable and of the individual specific regressors, as recently suggested by Pesaran (2004). The cross-industry pattern of results is checked for consistency with the pattern predicted by real options theory, using a specially constructed data set of industrial characteristics. We find that irreversibility is able to predict the pattern detected, but only when combined with a measure of the information advantage of delay. There is also evidence for expansion options effects; industries with high R&D and advertising intensities tend to have positive uncertainty effects.

C Driver, P Temple (2012)The Unbalanced Economy Palgrave Macmillan

Reviews and criticises the market-led approach that has dominated economic policy in the UK from Thatcher to the financial crisis

This paper reports estimation of investment equations for two classes of fixed assets: plant & machinery and building for a large sample of UK manufacturing industries. It exploits the different degree of irreversibility that characterises these assets to test the power of real options theory to explain investment under uncertainty. Additionally, the paper uses a specially constructed industry-specific measure of irreversibility for plant and machinery investment to test for real options effects within that class of investment.