De-industrialisation & the Balance of Payments in Advanced Economies

Kenneth Coutts () and Robert Rowthorn

Working Papers from Centre for Business Research, University of Cambridge

Abstract: The paper discusses the enormous structural changes in trade and income flows that have occurred in Britain over the past sixty years. In 1950, Britain was a leading industrial power with a trade surplus in manufactured goods equal to 10% of GDP. There is now a trade deficit in manufactures of 4% of GDP. Over the same period, trade in services has moved into substantial surplus exceeding 4% of GDP. No other large industrialised country has experienced such a large shift in the structure of its trade. The paper uses a small model of the balance of payments to project the main components of the current account consisting of visible trade, invisibles (services), current transfers and net investment income. Various scenarios are considered. Under the most pessimistic scenario, there is a persistent current account deficit of around 5% of GDP. A deficit of this magnitude is not sustainable over the long-run.

Keywords: Balance of payments; visible trade; invisible trade; investment income; model simulation (search for similar items in EconPapers)
JEL-codes: F17 F32 F47 (search for similar items in EconPapers)
Date: 2013-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.jbs.cam.ac.uk/cbrwp453/ (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cbr:cbrwps:wp453

Access Statistics for this paper

More papers in Working Papers from Centre for Business Research, University of Cambridge
Bibliographic data for series maintained by Ruth Newman ().