uk economic story

1. Story of the UK
by GAO Xueshengnan (1200013251)
CHEN Yan ran (W13194121)
YAN Xuqian (1200013513)
YU Xiaoyu (W13194022)
ZHAO Bingbing (W13194082)

2. OUTLINE
Historical Phases of UK’s Economy
UK Economic Growth Framework
- Factors of Production, Productivity
- Natural Environment, Government, Income Distribution
Potentials for UK to Grow Faster

3. Historical Phases of UK’s
Economy
1. Transformation Period(1500-1700)
2. Became The Hegemon(1700-1820)
3. Rapid Growth Period(1820-1913)
4. The British Disease(1918-1945)
5. Continued Economic Stagnation(1946-2000)
6. Slow Increase Period(2000- )

4. -9.4
0.
9.4
18.8
28.1
1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998
GDP growth rate
CPI
unemployment rate
-15.
-10.
-5.
0.
5.
10.
15.
1918 1920 1922 1924 1926 1928 1930 1932 1934 1936 1938 1940 1942 1944
Figure 1 The Growth Rate of GDP of the Britain (1918-1945)Figure 2 Three Main Economic Indexes of the Britain (1950-2000)
Data Source: Office for National Statistics(1950-2000)

5. UK Economic Growth
Framework

6. Development Accounting
Development Accounting 2005
Development Accounting 2009
Country
Output per
worker, y
Physical Capital
per Worker, k
Human Capital
per Worker, h
Factors of
Production,
Productivity, A
US 1.00 1.00 1.00 1.00 1.00
UK 0.76 0.69 0.97 0.87 0.87
Country
Output per
worker, y
Physical Capital
per Worker, k
Human Capital
per Worker, h
Factors of
Production,
Productivity, A
US 1.00 1.00 1.00 1.00 1.00
UK 0.82 0.68 0.87 0.80 1.03

7. Factors of Production
Physical Capital
Human Capital
Education
Health0
7000
14000
21000
28000
UK US Germany France OECD-Average
Financial and Human Resources Invested in Education
Expenditure Per Student
60
75
90
105
120
2000 2008 2009 2010 2011
Change in Expenditure Per Student, Primary, Secondary, and
Post-Secondary Non-Tertiary Education (2005=100)
UK
US
Germany
France
OECD-Average
60
77.5
95
112.5
130
2000 2008 2009 2010 2011
Change in Expenditure Per Student, Tertiary Education (2005=100)
UK
US
Germany
France
OECD-Average

8. Productivity - TFP
Technology
Efficiency
Patents
R & D
Country
Number of
Researchers
Researchers as a
Percentage of Labor Force
Research Spending
($ billions)
Researchers as a
Percentage of GDP
UK 251357.56 0.80% 39.13 1.69%
US 1252948.35 0.81% 429.14 2.77%
Germany 338688.74 0.80% 96.28 2.80%
France 249246.60 0.88% 53.43 2.19%
OECD Total 4304005.24 0.72% 1056.09 2.33%
Comparative US/UK and German/UK TFP Levels by Sector, 1879-71 to 2007 (UK=100)
A US/UK
Agriculture Industry Services Aggregate Economy
1869-71 99.5 154.2 86.5 95.2
1889-91 123.0 139.6 64.3 83.3
1909-11 118.7 150.9 71.6 90.5
1919-20 133.1 158.3 92.1 108.2
1929 118.0 187.8 92.0 112.7
1937 119.2 161.2 89.1 105.9
1950 132.6 217.6 110.2 138.1
1973 125.9 202.2 120.6 137.4
1990 138.8 157.3 119.8 125.3
2007 184.2 167.9 115.7 122.0
B Germany/UK
1871 58.4 90.5 67.2 61.6
1891 59.8 91.6 65.5 63.2
1911 71.6 106.1 76.4 75.4
1925 57.0 92.9 83.6 74.3
1929 59.3 96.0 90.0 78.5
1935 59.6 97.1 88.8 78.2
1950 44.7 89.4 89.3 76.2
1973 48.1 105.7 127.6 108.6
1990 65.4 98.5 139.0 116.5
2007 77.0 94.2 126.9 108.8

9. Government
-9.375
0.
9.375
18.75
28.125
37.5
1971197319751977197919811983198519871989199119931995199719992001200320052007200920112013
the UKInflation Rate
GermanyInflation Rate
0.
5.75
11.5
17.25
23.
28.75
1943 1960 1978 1995 2013 2030
the UKgovernment expenditure percentag（/GDP）
Germanygovernment expenditure percentag（/GDP）
-4.375
0.
4.375
8.75
13.125
17.5
1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011
the UKPublic education expenditure percentage(/government expenditure)
GermanyPublic education expenditure percentage(/government expenditure)
the UKpopulation growth rate
Germanypopulation growth rate
0.
5.
10.
15.
20.
25.
1988 1995 2003 2010 2018
the UKPublic health care expenditure percenta（/government expenditure）
GermanyPublic health care expenditure percenta（/government expenditure）

10. Part One: Government
0.
300.
600.
900.
1200.
0.
0.75
1.5
2.25
3.
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 20052006 2007 2008 2009 2010
the UK R&D Funding percentage(/GDP) Germany R&D Funding percentage(/GDP)
the UK Fundings in R&Dbillions in $ Germany's Funding in R&Dbillions in $
Income Distribution
0.0
12.5
25.0
37.5
50.0
62.5
1920 1940 1960 1980 2000 2020
GNIN of the UK GNINI of Germany
7 7 6 6 7 6 6
12 12 12 11 11 11 11
16 16 16 16 16 16 16
23 22 23 23 22 23 23
43 44 43 44 44 44 44
1991 1994 1995 1999 2004 2007 2010
the UK 1st income share
the UK 2nd income share
the UK 3rd income share
the UK 4th income share
the UK 5th income share
9 9 8 9 8 8 8
14 13 13 13 13 13 13
17 17 17 17 17 17 17
23 23 23 23 22 22 22
38 38 38 38 40 40 39
1984 1989 1994 2000 2004 2007 2010
Germany 1st income share
Germany 2nd income share
Germany 3rd income share
Germany 4th income share
Germany 5th income share

11. Directly
As an input to the process
of economic activity
Indirectly
Through other factors of
production.
Natural environment

12. 0.00
1000.00
2000.00
3000.00
4000.00
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
the UKGDP（billions in $）
GermanyGDP（billions in $）
Natural environment
0.
5.5
11.
16.5
22.
27.5
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
the UKCO2 emission（MT per capital） GermanyCO2 emission（MT per capital）
0.
1250.
2500.
3750.
5000.
1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011
the UK Energy Usage(oil equivalent(kg) per capital）
Germany Energy Usage(oil equivalent(kg) per capital）

13. Potential for UK’s
Economic Growth

14. Infrastructure
Labor productivity has
flattened out since 2007.
Infrastructure is a key driver
of productivity, as it
improves efficiency via
logistics, information etc..
Figure: Labor productivity flatted out
(Index 2007= 100)
Figure: gross government investment on infrastructure, compared
to peer countriesFigure: quality of general infrastructure of the UK

15. Infrastructure
Focus on:
Transportation infrastructure:
Road/Railway & Air/Sea (connecting
UK, an island country, to the outside world)
Attracting private finance
(without long term plan->uncertainty,
bank lending)
Figure: quality of transportation infrastructure

16. Industry Choice
Comparative advantage & history
Different market positioning with developing country
Traditional competitive industries
Focus on high quality, design, innovation
High-end clients, high premium(溢价)
More input into research & development
Future-oriented
May not profit right now
Bio-industry, gene, environment, low-carbon, etc.
Export services rather than goods
Financial services & education services

17. Industry Choice
Automotive
has a world-class reputation for design and innovation, especially in premium brands
Strengthen the advantage in technology and innovation, more support for R&D
Create a longer-term automotive supply-chain
Develop free trade agreement and non-tariff to export
low-carbon vehicles
Education
2011: overseas students studying in higher education in the UK paid £10.2bn in tuition fees and
living expenses
Boost the local economy and enhance UK’s cultural life
Emerging economies: 13% in China, 11% in India and 10% in Brazil

18. Industry Choice
Green technology & services
Industrial expertise and research strengths in biotechnology, maths, advanced materials, control
systems, electronics, engine technology and energy management drives growth.
Market share grew in real terms by 2.3% in 2010, faster than the global average
Currently delivers a trade surplus of 5 billion pounds. By 2014-15, green growth is expected to halve
the UK’s trade deficit(CBI analysis)
Creative industries
Music, literature and film
Exceeded by America
Explore international market, enhance digital literacy through the education system

19. Thank you for your listening!