'THE UK MANUFACTURING SECTOR HAS DECLINED

'The UK manufacturing sector has declined significantly over the last 40 years'.

'The UK manufacturing sector has declined significantly over the last 40 years'.

In 1890, the UK was the largest and most powerful economy in the world; now, a century later, it is not. Certainly, if you start from the top, there is only one way to go. But our relative decline goes beyond the convergence of national growth rates. Since 1960, several similar European economies, notably Germany and France, have caught and overtaken us, sustaining substantially higher rates of growth. Further afield, Japan and others have also thrived. (Kevin Jefferys 2002)

Four articles in a recent issue of the Economic Journal explore the causes of the poor UK industrial performance since 1960, with a particular focus on the significance of deindustrialization and the role of policy in the relative decline. Among their findings: The stagnation of British manufacturing over the past two decades has been almost total. In addition between 1973 and 1992, the total increase in manufactured output was only 1.3%. In the same time, manufactured output rose 68.9% in Japan, 68.6% in Italy, 55.2% in the United States, 32.1% in West Germany and 16.5% in France. The poor industrial performance acted as a brake on the whole economy and is a result of a fundamental underinvestment problem.

There are plenty of other examples. Shipbuilding has all but disappeared, heavy engineering has declined, and docks now rely on machinery not manual labour. Sometimes the impact has fallen on relatively isolated communities in otherwise prosperous counties - in the East Kent coalfield or West Cumbria for instance. Although it is not necessarily inevitable that the UK's manufacturing base will continue to decline, regional and local economies will need to adapt and diversify. Globalisation points towards further development of the knowledge economy as the most likely way forward for much of the British economy. Yet it is in these knowledge-based sectors that Britain's traditional industrial areas are also starting from a low base. The loyal home market can be an important spur for export success. The loyalty of Japanese consumers to home-produced goods provided the springboard for the Japanese economic miracle. (Correlli 2001)French consumers, too, are notoriously chauvinistic, as a glance around the car park of any hypermarket there will confirm. Differences in productivity, both between and within regions, are more a product of inherited industrial structure than inherent inefficiency. The traditional industrial areas of Britain often have much lower stock of businesses in high value-added, high wage sectors, especially in the knowledge-driven economy. Loyalty can, however, go too far. There is no doubt that British industry grew soft on the easy home market and blind loyalty to the national brand. When the competition arrived, in the form of foreign motorcycles or consumer electrical and electronic products, Britain was not ready for it and unable to respond adequately. Blind loyalty to the national brand is a kind of ...