Imports, exports, and foreign exchange rates: Economics Crash Course # 15
Exports play an important role in the UK economy, influence the level of economic growth, employment and balance of payments.
In the post-war, lower transportation costs, globalization, economies of scale and reduce tariff barriers have all contributed to export become a larger share of national income.
In 2011, exports of goods and services accounted for 19 of GDP against 14 in 1990, imports accounted for 24 of GDP indicating that we have a current account deficit.
The employment growth in exports can create jobs, for example, growth in car exports have created many jobs in the automotive, as the BMW plant in Oxford, and Nissan in Sunderland jobs traditionally the exports have been in the production of an important source of full-time employment industries, especially in the industrial areas in recent years, exports have become more diversified with greater dependence on exports based on service sector.
Economic growth Exports are an AD component of aggregate demand The increase in exports will help increase AD and cause a stronger export growth economic growth may also have a snowball effect related service industries, for example, success exports of cars in Sunderland help the local economy with the clubs and local shops benefiting from increased spending as well, falling exports, during a global economic downturn may have a negative impact on the economy from the United Kingdom.
Current account deficit Strong exports have an important role in determining the current account deficit over the past few decades, the UK has had a persistent current account deficit, which many attribute to poor performance compared to exports from the United Kingdom.
To reduce the current account deficit, the UK needs an improved export performance.
Exports to Europe account for about 55-60 exports Although GDP to non EU countries are increasing at a faster rate than in the EU countries.
Competitiveness exports relative competitiveness will play an important role in determining the level of exports If prices in the UK compared with other countries, the UK lose competitiveness is determined by factors such as unit labor costs, the inflation, productivity, infrastructure and the price of materials raw materials see the factors that determine competitiveness.
The quality and value of exports for certain industries such as drugs, demand is inelastic Therefore, a price change has less effect on demand The key issue is the importance, quality and product value .
Exchange Rate A depreciation of the exchange rate will make British exports more competitive, but can contribute to cost inflation and cause imports more expensive.
Economic growth in other countries if the euro zone in recession, it will negatively affect exports from the United Kingdom with a eurozone recession, even a currency depreciation may be insufficient.
Continue lower book in the devaluation of the exchange value sets a lower rate of the pound makes exports cheaper, but this boost to competitiveness may be temporary due to rising inflation, too, if you count on depreciation, exporters may be less incentive to reduce costs and improve long-term productivity.
secondary procurement policies to improve the competitiveness of supply side policies could include supply interventionist policies such as education and training and supply-side policies market-oriented eg reducing the power of unions, reducing government regulation this may allow increased productivity.
innovation of the private sector There are only so that the government can do to promote private sector productivity competitiveness depends on new technologies and management techniques as well as government policies.
Reduce lower tariff barriers tariff barriers can help increase trade However, if you reduce the general tariff barriers, some domestic industries may lose because they can not compete, however, the comparative advantage theory indicates good global economic -being increase, there will be just a change in the economy.
The UK exports a diverse range of products Despite the industrialization process, we still manufacture many goods.
Some of the best performing export sectors in recent years include.
Automotive Industry Although most foreign-owned, the automotive industry in the UK is a major exporter British factories construct 1 46 million cars in 2012, the Society of Motor Manufacturers and Traders said, 1 21 million were shipped overseas.
The main products manufactured by category include.
Compared household consumption is even more important part of GDP.
That compares with household consumption accounting for about 60 of GDP.
The importance of exports to the economy Economics Help, importance, exports, economy.
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