Service Industry vs Manufacturing Industry in the Uk

Topics: Industry, Tertiary sector of the economy, Manufacturing Pages: 7 (2788 words) Published: December 1, 2010
The market in which organisations find themselves is continually changing. On the other hand, trade and investments are growing rapidly and overtaking the world output and there is increasing integration of the world economy. Multilateralism is constantly threatening and regionalism is stronger in Europe, Asia and America than ever before. This continuous structural change in world economies indicates the variations in the relative size of each sector which can be seen in terms of changes in output, employment and productivity.

Economies can be divided into three categories: Primary, Secondary and Tertiary. The primary economy includes all activities related to the extraction of natural resources e.g. mining, farming etc. The secondary economy includes activities related to the production of goods and processing of materials which have manufacturing as its major component. It also includes the construction sector and utilities sector. The tertiary sector includes both the private and public services such financial industry, health, defence and other services related sectors. accessed on 31st November 2009.

Industry is defined as a group of firms producing similar products with boundary of an industry determined by a gap in the chain of substitutes. All sectors of the economy can be referred to as an industry but emphasis lay with the secondary sector which is widely regarded as the manufacturing sector. Roger Cox (2009) Concerns have been raised over the competitiveness and continued decline of Britain’s manufacturing base. This de-industrialisation has continually raised questions whether it can seriously damage the country’s wealth. The concerns about manufacturing have been reflected in trends in various statistical indicators especially the shift away from manufacturing towards services, the productivity gap between Britain and its major international competitors. Malcolm Sawyer (2009) clearly stated that the value of manufacturing output in Britain has continued to rise slowly in the last half century, but the share of manufacturing in the total output is what has declined not the absolute amount.

The trade balance in manufactured goods moved into deficit in 1983 for the first time since the Industrial revolution of the early 90’s. This could be attributed to the gradual movement of the economy from manufacturing to more service-oriented economies. This experience is not unique to Britain alone, over the period 1970 to 1990, the share of manufacturing in the national output declined in all major industrial nations while that of services increased. By 1990, the share of manufacturing in the GDP among major economies had declined with Britain coming sixth behind Japan, Germany, USA, and France. Mark C. & Corri F. (1998) De-industrialisation can be viewed in a number of ways:

The decline in employment, in both absolute and relative terms. The decline in the share of national output contributed by the sector. The decline in the country’s share of world manufacturing output or exports. The failure due to poor export performance or increased import penetration to generate sufficient export to finance a full employment level of imports. Office for National Statistics ONS figures for the last quarter of 2008 shows a decline of 10.4% lower than the figures from the previous year with output decreasing in 12 out of 13 sub-sectors. Significant decreases were recorded in the metal industries, transport industries and in machinery and equipments industries 11.4%, 10.8% and 9.8% respectively. accessed 25th of November 2009. In Britain, the fall in the demand for labour is associated with a reduction in output until 1987 and probably a rise in the wage level...

Bibliography: Curwen P et al. Understanding the UK economy. 1997. Macmillian publishers, 4th edition. Pp 447-450
John Sloman and Mark Sutcliffe, Economics for Business, 2004, Prentice Hall, 3rd edition, pp 347-348
Malcolm Sawyer
Mark Cook and Corri Farquaharson, Business Economics, 1998, Prentice Hall, 1st edition, pp 12-27
Roger Cox, Lectures notes, Greenwich School of Management, 2009 accessed on 31st November 2009. accessed on 23rd of November, 2009.
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