Investment in Energy Infrastructure
Many people take as given a pressing need to increase capital investment in the infrastructure of our energy sectors - but how strong are the economic and social impacts of such investment? The LSE Growth Commission met this week to discuss this and I have brought together some of the arguments drawing on a number of various twitter feeds
read more...»Unit 2 Macro: Cyclical and Structural Economic Issues Facing the UK
Our focus in an AS macro revision session was on the difference between cyclical issues and events and the wider / deeper structural problems and issues facing the UK economy at this fascinating time. Key macro policy decisions affect the path of an economy out of recession, but are these the same policies that will address the supply-side constraints and weaknesses that hold back growth, development and contribute to growing inequality?
read more...»Unit 2 Macro: Evaluation on Supply-Side Policies
Lots of students will be revising the economics of supply-side policies this week with their AS macro paper coming into view. There are different interpretations of what constitutes a supply-side policy measure. I like to label SSP (supply-side policy) to any policy or group of measures where emphasis is given to improving the working of markets, raising factor efficiency, improving the quantity and quality of labour and in lifting the capacity and competitiveness of an economy in a constantly-changing international environment.
Many supply side policies focus on improving incentives and outcomes in the labour market, others are geared towards bettering the performance of markets for goods and services, All of them centre on helping to sustain non-inflationary growth, improve trade performance, lift living standards and create new and fulfilling jobs opportunities.
This revision blog looks in particular at some evaluation points on supply-side approaches:
read more...»Unit 2 Macro: Migration and the UK Economy
A revision blog on the economic impact of migration on the UK economy
read more...»Unit 2 Macro: The Importance of Productivity
Productivity is a key measure of supply-side economic performance and labour efficiency.
read more...»Improving Evaluation Skills in Economics Exams
Here is an updated version of the WEESTEPS approach to economics evaluation designed to boost the evaluation scores and exam results for AS and A2 students. Paul Bridges is the mastermind behind this superb approach to evaluation - it gives you some great pointers about the evaluative approaches that can be used. Works well for micro and macro - but particularly when you have to evaluate a specific policy intervention in a market / industry / or a macro policy discussion.
read more...»Eurozone Crisis - Lessons Learnt
Last week I attended a very interesting lecture at the LSE on the Eurozone crisis, given by Leszek Balcerowicz, a Polish economist who is former chairman of the National Bank of Poland and Deputy Prime Minister.
The following blog outlines his thoughts, but also includes useful links to articles to read.
Using the crisis as a case study will hugely benefit A2 students as it encompasses many of the topics covered in the syllabus.
Under-employment - the dark side of flexible working or just a sign of the recession?
Today, TUC figures showed that the number of men working part time who are looking for full time work has doubled in the last four years from 293,000 to nearly 600,000. Is this a sign of the recession or is it an inevitable result of a move towards more flexible working?
read more...»Unit 2 Macro: Economic Cycle Glossary
A short glossary of key terms connected to the economic cycle
read more...»Unit 3 Micro: The Third Industrial Revolution
This is well worth watching! It is an 8 minute discussion from the Economist which examines what is being called “The Third Industrial Revolution” - based around the digitisation of manufacturing processes. Concepts such as 3d printing and advanced robotics are discussed, as are concepts such as competitiveness, productivity and product personalisation. One possible consequence of these changes might be that high quality manufacturing may begin to move back from lower-wage economies such as China and back to economies like the USA.
read more...»Unit 2 Macro: Skills Shortages Hold Back Recovery
Here is a superb news report from Channel 4 news about the shortage of skilled workers in the North East of England (an area of high unemployment). Nissan this week announced a big new investment in car making at their ultra-high productivity plant in Washington, Tyne and Wear. But many of the manufacturers along Nissan’s supply chain are finding it tough to get enough skilled people coming througth to make realistic bid for the orders that will come from Nissa. Some businesses are having to turn down contracts because they dont have the extra workforce to cope with the higher volumes of businesses.
Skills shortages are restricting the growth of many small and medium sized businesses especially in manufacturing. Little wonder that Nissan is working very closely with Gateshead College to run an apprenticeship scheme - an example of external economies of scale in action.
read more...»Unit 4 Macro: Productivity Improvements in China
Productivity is a measure of the efficiency with which a country combines capital and labour to produce more with the same level of factor inputs. We commonly focus on labour productivity measured by output per person employed or output per person hour.
A better measure of underlying productivity growth is total factor productivity which takes into account changes in the amount of capital available for each worker to use and also changes in the size of the labour force.
To give a simple numerical example, if the size of the capital stock grows by 3% and the employed workforce expands by 2% and output (GDP) increases by 8%, then total factor productivity has increased by 3%.
China has achieved impressive gains in productivity in recent years. Some of this is undoubtedly the huge spending on capital investment which has grown to nearly 50% of China’s GDP. The labour force has also grown although this is scheduled to level off and then decline in the years ahead.
What has driven improvements in Chinese total factor productivity?
read more...»Unit 4 Macro: Unemployment Scarring Effects
In the past we have discussed some of the long term economic and social costs of a persistently high rate of unemployment and we have used the term hysteresis effects. It seems that a new term is being used to cover some of the consequences of millions of people being out of work - unemployment scarring - and this revision blog looks at some of the causes of this.
read more...»Blanchflower calls for more action to address youth jobless crisis
Professor David Blanchflower didn’t pull his punches when he was a member of the Bank of England’s Monetary Policy Committee and he is making his mark once more with an attack on what he views as the Coalition government’s lacklustre approach to tackling youth unemployment. Blanchflower is reported in the Guardian as wanting zero national insurance contributions for employers who take on younger workers in depressed regions and localities. And he wants greater investment in vocational education in schools and colleges with the school-leaving age raised to 18.
read more...»Budget 2012 - analysis with evidence
As ever, there are loads of sources that students can use to analyse the Budget and to extract pieces of Evidence for the Examples they will need to add depth to their analysis in essays. Those who are attending the current round of revision workshops will recognise this as a key part of ensuring that they write essays which PEEL the answer (each paragraph makes one Point, using Examples with Evidence, offering Evaluation and Linking to the question). As start points, I would suggest these sources which are reasonably free of opinions:
BBC website: Budget 2012 at a glance, Farewell 50p tax rate, and Over 65-s tax-free income freeze
The Guardian Budget 2012: welfare cuts, tax cuts too, but retreat on child benefit and for the visual learners a nice graphic version: Tax and spending plans visualised
Unit 2 Macro: Seasonal and Structural Unemployment
This news video from the BBC focuses on a man who has been out of work for over two years in the seaside town of Weston-super-mare a town dominated by tourist businesses where employment is highly seasonal. It provides a strong short case study in the problems of people who have been out of paid employment for a long time. Watch the piece here
Channel 4 news have a special section on the unemployment crisis in the UK economy. Follow this link for fresh teaching and studying resources on unemployment. Follow this link for the Channel 4 News Jobs Report
read more...»Unit 2 Macro: Policies to Drive Economic Recovery
We were looking today in AS macro at the policy options being considered as part of a strategy to drive a stronger recovery in demand, output, jobs and investment in the UK economy.
I am trying to encourage my students to put things into context as soon as possible in their longer essay-style questions. Here are some thoughts on a question on policies designed to bolster growth:
read more...»Unit 1 Micro - Labour Migration and the Economy
Migration from one country to another has become an increasingly important feature of our globalizing world and it raises many important economic, social and political issues. About 200-million people — about 3% of the world’s population — now live in countries in which they were not born. In the United Kingdom in 2010, the number of international migrants as a percentage of the population rose above 10% for the first time after several years of high rates of net inward migration
read more...»Unit 4 Macro: Focus on India - Supply Side Issues
The rapid growth of the India economy has been helped by her economy enjoying a number of supply-side advantages. That said there remain structural supply-side weaknesses that will limit her continued competitiveness and development. This blog looks at the plusses and the minuses.
read more...»Unit 1 Micro: Can the UK Computer Games Industry Grow
Britain is one of the world’s biggest exporters of creative products - from live TV shows and music to books, arts, architecture and films the economy has built up an enviable global reputation for excellence and a growing trade surplus to aid our balance of payments.
Computer games falls squarely into this category but, according to TIGA - the trade association representing the UK’s games industry - unless there is renewed government support, the future of this sector is at risk. TIGA claims that the British games industry is suffering a significant ‘brain drain’ as talented programmers and artists leave the country to work abroad.
read more...»France and Flexible Employment
This article could be useful as an illustration of the EU context in relation to employment in general, and flexible employment in particular. Attracting inward FDI is arguably a significant benefit of UK membership of the EU, and one of the advantages which the UK can offer compared to, say, France is relatively flexible employment laws.
read more...»Unit 2 Macro: Living below the Breadline
This article on the appalling depth of workless households in Liverpool is a reminder of the multiple aspects of relative poverty and economic/social exclusion.
The causes of unemployment are complex - many are structural - but it is hard to draw much if any optimism from reading this article. By some estimates over one third of households in Liverpool have no one in work and second and third generation unemployment is not uncommon. This is a must article for students to read if they want a better awareness of the human cost of non-employment. Read: Below the breadline on Liverpool’s workless estates
read more...»Unit 2 Macro: Videos on Productivity
Here is a selection of short video clips that might be useful when teaching the economics of productivity as part of the AS macro course. I often start with the “Fast Hands” video clip (one minute only) because it raises all kinds of issues about division of labour and the quality of life of people who do these tasks. And the short 25 second clip on the world’s fastest hand is guaranteed to make a mark! If you have some other videos on productivity to share please leave a link in our comment slot at the bottom of the blog.
The Guardian business web site has this excellent photo stream on life inside the Nissan car factory. Follow them on Twitter
read more...»Unit 4 Macro: Competitive Advantage in Trade (Some Videos)
Here is a selection of short video clips that I use when teaching competitive advantage in markets and when introducing the factors that determine the competitiveness of UK producers in global markets. The focus here is on the UK economy but I will add some more videos to the blog as I work my way through this teaching topic.
read more...»Unit 4 Macro: Human Capital and Economic Growth
In A2 macroeconomics the underlying causes of economic growth and development and constraints on both of these are covered in more depth. One of the concepts students might be familiar with is that of human capital.
I have always summarised the idea of human capital as being a measure of the overall quality of the human input available to produce goods and services in an economy. The ONS have published a new study on the value of human capital in the UK and they draw on a definition given by the OECD
read more...»Unit 4 Macro: Does UK Manufacturing have a Future?
Here are links to two superb short reports on prospects for UK manufacturing as the British economy struggles to escape from recession and sluggish growth forecasts in 2011 and 2012. Both are from Channel 4 News that produced a special on the health of the manufacturing sector - excellent for evaluation and for some applied examples to build into essays. The links appear below
read more...»Unit 2 Macro: Will a Youth Jobs Subsidy Work?
The Coalition Government recently heralded a new scheme designed to address the structural problem of high youth unemployment in the UK economy. Under their “youth contract” plan, employers will be given “wage incentives” worth £2,275 to take on some 160,000 18-to-24-year-olds. But will it have much impact on the problem? The independent Office for Budgetary Responsibility says that the net effect on overall unemployment will be close to zero, because the subsidy incentive will lead to a switch in employment away from older workers.
read more...»Unit 2 Macro: Video Clips on Unemployment
I blogged last week about unemployment and made available some updated charts on unemployment for the UK and a range of other countries. Here are some short video news clips on aspects of unemployment that I have been using when teaching unemployment to AS and A2 groups. These clips provide a window on the human and social cost of high rates of unemployment and are especially useful in reinforcing the causes of unemployment and evaluation of policies likely to be most effective in bringing jobless rates down over time.
read more...»Here there be NEETs.
Regional unemployment is seen as a significant economic problem, but employers may be reluctant to relocate if the educational quality of the workforce is below par. The term NEET refers to young people Not in Education, Training and Employment, and it appears that there are significant pockets of NEETs across the mainland of Great Britain.
read more...»Unit 2 Macro: Economic Importance of Investment
Capital investment spending can have a significant effect on both the demand and the supply-side of the economy. We were looking at this issue in class this afternoon and I used a small selection of video clips linking to investment projects across different countries. I have linked to them below:
read more...»
