Growth and Structural Change in the British Economy
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Like many other developed economies over the last 30 years the UK’s industrial structure has altered from a predominantly manufacturing economy towards a more service-orientated one. Unlike other developed nations, however, which possessed relatively high levels of agricultural employment the UK compensated for the growth in service sector employment by a reduction in manufacturing employment. This feature of the changes in the relative sectors of labour employment in the ‘maturing economy’ is perhaps too simplistic an explanation of the structural changes in the UK economy, since it does not make clear why the UK, rather than Germany or Japan, experienced a decline in its share of world manufacturing output. Within the UK there may be factors which are singularly British, such as the role of North Sea oil and the impact of the non-marketed sector in crowding out private sector investment, which may be relevant in explaining the structural change. It may well be that the structural changes in the UK have been brought about by concentrating on products for which it possessed a comparative advantage, that is services, or that the UK was ‘unfortunate’ in possessing a poor industrial structure. Let us examine these factors in more detail.
KeywordsService Sector Financial Service Real Exchange Rate Manufacturing Sector Primary Sector
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