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Business.
Tutor2u Economics
Autumn 2002
Decline in tariff
and non-tariff
restrictions Rising Real Living
Standards
Business.
Fall in Sea
Transport Costs
Liberalisation of
Domestic
Fall in Markets
communications
costs Declining Air
Freight Costs
40
36 World trade now accounts for 25% of global GDP
35 There are now 142 members of the World Trade
Organization with 30 other nations applying to join
Business.
30
Growth Multiple
25
19
20
15
10
6 6
5
2.3
0
Exports of Total exports of Agricultural exports World Production World Population
Manufactured Goods visible goods
Source: IMF, OECD, United Nations
Norway 8.70%
United Kingdom 9.20%
Portugal 9.46%
FDI inflows + FDI outflows in 2000
Singapore 16.14%
France 16.42%
Sweden 19.23%
Switzerland 21.60%
Ireland 24.22%
Finland 25.46%
Netherlands 32.45%
The long term impact of the globalization process is likely to cause further
changes to our patterns of trade in goods and services. Where will Britain’s
comparative advantage lie in an increasingly competitive, global economy?
ENTRE-PRENEURSHIP
INTERNATIONAL COMPETITIVENESS
COMPARATIVE ADVANTAGE
EXCHANGE RATE
RELATIVE INFLATION
160
GDP per w orker
GDP per hour w orked
140
120
100
80
60
40
20
0
US Fr ance* Ger many J apan*
“Skills deficit”
Labour market failure? Government failure?
Other Factors
Limited exploitation of economies of scale
The Pace of Innovation
Success at applying knowledge and turning it into higher
productivity
Competitiveness (contestability) of markets? – perhaps a relatively
minor factor
Japan
50
Canada
Germany
40
US
30
France
Italy
20
10
0
1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: IMF
25
Business.
UK
Japan
20
US
15
France
Germany
10
Canada
Italy
5
0
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999
Source: UN