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Assess whether or not the changes in the structure of the UK industry have been beneficial for the economy, industries and the consumer.

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Introduction

Luke Neale Assess whether or not the changes in the structure of the UK industry have been beneficial for the economy, industries and the consumer. Over the past 30 years the structure of the UK economy has been transformed. By this I mean there has been changes in the production and employment between the primary, secondary and tertiary sectors. In 1964, 1,201,000 people were employed in the primary sector. By 1995 there were only 383,000 people employed in the primary sector. This shows a decrease of 818,000 employees over 31 years. This was mainly due to a contraction of output in the coal mining industries, and the collapse of oil prices in 1986, further contributing toward the declining industry. The second change in the structure of the UK industry was a decrease in output and employment in the secondary (manufacturing) ...read more.

Middle

A prime example is steel, the substitute being aluminium. International competition had a dramatic affect on UK structure. Changing consumer tastes, the creation of new products and the changing comparative costs result in the redistribution of economic activity around the world. For example the Japanese were able to produce more reliable motorcycles at a cheaper cost and therefore there was a decline in the UK motorcycle industry, because Japan had a comparative advantage. The membership of the EU meant some inevitable restructuring of the UK economy, in accordance with European comparative advantages, as there were no trade restrictions within the EU (free trade, no import duties). This lead to an increase in economic activity in the tertiary sector for the UK, where it has a comparative advantage in banking and finance, (due to specialisation). The maturity argument states that our changing economic structure simply reflects the changing pattern of demand that follows from economic development. ...read more.

Conclusion

Therefore the government has to subsidise farmers to produce. However consumers benefit from the imported goods, because they will be cheaper than domestically produced goods, if those countries have a comparative advantage. Over the years there has been heavy investment in capital, reducing the human labour force, and causing unemployment. This is because technology and new machinery increase a firm's productivity, while reducing labour costs. This benefits the consumer by lower prices but causes an increase in government spending, because of those people on the unemployment benefit. Also causing unemployment, inflation. If deindustrialisation is so advanced that the economy is not capable of producing goods to match those patterns in market demand, then there may be implications not only for imports to increase but prices too. Any increase in aggregate demand will meet a shortage of domestic suppliers. Therefore import substitution will be encouraged and so will the rise in prices by domestic suppliers. This will increase the price to consumers causing inflation and unemployment. ...read more.

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