MBA 611 Business Economics

Topics: Economics, Short-run, Economics of production Pages: 12 (319 words) Published: May 17, 2015
“UK COMPETITIVENESS:
MOVING TO THE NEXT STAGE”
MBA 611 – Business Economics

Lecturer:
Dr. Spyros Hadjidakis

Students:
Christina Piki
Antontis Chimonas
Vassilis Koumettou
Nicolas Hadjigeorgiou
Chrysovalanti Xanthou

Costs Of Production
Meaning of Costs
 Measuring cost:
Implicit & explicit costs: economists
analyse both

Profit = Total Revenue – Total Cost (implicit +
explicit)

Production
 Factors Of Production:
• labour
• land and raw materials
• capital
• entrepreneurship
 Long-run and Short-run Production:
• fixed and variable factors
• distinction between short run and long
run

The Short-Run
Production Function
• Total Physical Product(TPP)
• Average Physical
Product(APP)
• Marginal Physical
Product(MPP)

UK Competitiveness:
Moving To The Next Stage
May 2003: Michael Porter and Christian Ketels of Harvard
Bussiness School published a review of the UK’s
competitiveness.
Porter: “Economic development is achieved through a
series of stages.”
Three significant stages:
1. The Factor-Driven
2. The Investment-Driven
3. The Innovation-Driven

UK Competitiveness:
Moving To The Next Stage
Industrial Clusters:
“Geographically proximate groups of
interconnected companies, suppliers,
service providers, and associated
institutions in a particular field,
linked by commonalties and
complementarities.”

Industrial Clusters
• Improve Productivity
• Aid Innovation
• Contribute to the formation of new
business
UK’s industrial clusters
weak
New stage
productivity growth and
innovation through cluster development
competitiveness

The Top UK industry clusters ranked by employment, 2006
(Source: EU Cluster Observatory, www.clusterobservatory.eu)

Industrial Clusters - UK
• The UK leads the rest of Europe in
Business Services, Finance and
Transportation, Logistical Services.
• The importance of location
e.g. The UK has been successful in
developing clusters in the provision of
Education and Knowledge Creation in
Oxford, Cambridge and East Scotland.

Industrial Clusters - Cost
• Important in relation to cost.
• Short-run Production: Competitiveness is
achieved through productivity of factors.
 Porter: Productivity is high in the
innovation-driven stage.

Industrial Clusters – Factors of
Production
• According to Porter and Ketels,
productivity of the UK has to be
increased:
 higher skill labour inputs
 higher capital intensity
 higher levels of technology

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