-Productivity= output per worker
-Higher level of productivity= greater efficiency= lower cost= greater profit= improved welfare.
-UK productivity relatively low in relation to the rest of the G7 countries
-Relatively low R&D in UK
-Slow to adopt new management practices= flexible working and incentives
Therefore, it is cheaper and more ad more efficient to import. If the UK was more productive, then it would have a greater balance of payments.
How Do We Improve The BOP:
-Specialisation of workers through education
-Incentivise Investment (tax breaks + subsidy for R&D/ entrepreneurship/ innovation).
-Exploit comparative advantage (less labour intensive/ higher skilled activity).
-develop infrastructure (HS1/2- road rail)
Why Is Balance Of Trade So Important:
-The effect on the macro-economy (negative to the circular flow and AD).
-It slows the multiplier and reduces trickle down.
-Employment in manufacturing is regional (unequal impact of north).
-Impact on social structure-opportunity.
Trade In Services:
City of London (Finance, Banking, Law, Consultancy and Insurance)
-Tourism (exports= foreigners coming to the UK)
-Transport (sea, air. Ticket on a UK ship= export
-Air Tickets (British airways vs Lufthansa)
No comments:
Post a Comment