ECONOMIC institution and policy(British economy) Essay - 1

ECONOMIC institution and policy(British economy) - Essay Example Globally, the manufacturing sector of UK is the sixth largest in the one and is one of the largest exporters of heavy industrial products1. The table underneath hints towards the growth of UK manufacturing and service sectors, between 1970 and 1994 compared to other nations. The base year being considered in this case is 1970 and the growth rate is found to be rather low over the years in relation to those for other nations. The progress of the sector is found to be quite low in contrast to the domestic service sector2. The present paper addresses the progress of the manufacturing sector over the years between 1970 and 2010 through illustrating its economic and social contribution to the economy of UK. It makes use of secondary quantitative data to draw a comparison over time and analyses on the basis of the same. Economic Contribution of UK’s Manufacturing Sector The following figures help in evaluation of the degree to which the manufacturing sector of UK has evolved over th e years since 1970 till 2010. ... Between 1970 and 2008, the percentage of contribution of industry behind national production has receded fast. The downfall had been the highest towards the end of 1970s as could be noted from the large difference in the statistic between 1970 and 1975 continuing to that in 1980. The diminishing contribution however, is not much reflected if gross fixed capital formation as percentage of GDP is considered. As the corresponding graph shows, the rate of capital formation had remained more or less stable over the years. Since capital formation is held identically equal to investment in capital, it could be implied that UK manufacturing sector did not contribute proportionally to the amount being invested in it. In other words, manufacturing sector suffered from a diminished productivity over time. Inward investment in UK manufacturing sector of UK is found to be fluctuating over time, as it falls down to a lower value from 1986 to 1991 and then improved to a positive value from 1991 to 1996 and to a further higher value in 2001. However, the downfall had been stark between 2001 and 2006 when growth rate of inward investment had been approximately equal to 60 percent. This only implies the erratic behaviour of the manufacturing sector of UK which over the years has lost its previous glory on account of a number of unavoidable reasons. Growth in industrial production too had been quite low over the years. To be precise, as the diagram below shows, UK manufacturing sector did not come across a consistent period of positive growth since 1970. Post 1970, the sector saw an entire decade of negative industrial growth. However, it gained momentum as growth rate surged up from 1980 to 1985 by 5.14 percentage points. But the following period of 15 years saw modest growth