http://www.tutor2u.net/blog/index.php/economics/ en tutor2u.net Copyright 2012 2012-02-11T19:04:45+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-focus-on-india-supply-side-issues http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-focus-on-india-supply-side-issues#When:19:15:32Z 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. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Emerging Economies, Development Economics, Indian economy, Cycles and Shocks, Aggregate Supply, Economic Growth, Global Economy, Health Economics, Macroeconomic Policies, Supply-side policies, Teaching of Economics, 2012-01-25T19:15:32+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-can-the-uk-computer-games-industry-grow http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-can-the-uk-computer-games-industry-grow#When:22:17:37Z 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. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Economic Growth, Economics of Technology, GCSE Economics, Government Intervention, Subsidies, Macroeconomic Policies, Supply-side policies, Market Failure, Factor Immobility, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, UK Economy, Regional Economics, Unemployment, 2012-01-24T22:17:37+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/france-and-flexible-employment http://www.tutor2u.net/blog/index.php/economics/comments/france-and-flexible-employment#When:10:03:05Z 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. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, Business Economics, Competitive Markets, European Economy, Labour Market, Macroeconomic Policies, Supply-side policies, OECD Economies, French Economy, Teaching of Economics, 2012-01-22T10:03:05+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-living-below-the-breadline http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-living-below-the-breadline#When:00:12:49Z 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 AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Labour Market, Macroeconomic Policies, Supply-side policies, Market Failure, Factor Immobility, Poverty and Inequality, Teaching of Economics, UK Economy, Regional Economics, Unemployment, 2012-01-20T00:12:49+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-videos-on-productivity http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-videos-on-productivity#When:08:46:56Z 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 AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Business Economics, Economic Growth, Macroeconomic Policies, Supply-side policies, UK Economy, 2012-01-17T08:46:56+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-competitive-advantage-in-trade-some-videos http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-competitive-advantage-in-trade-some-videos#When:11:43:21Z 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. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, AS Macro, Balance of Payments, Emerging Economies, Business Economics, Cycles and Shocks, Aggregate Demand, Economic Growth, Economics of Technology, Global Economy, International Trade, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, Regional Economics, 2012-01-12T11:43:21+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-human-capital-and-economic-growth http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-human-capital-and-economic-growth#When:16:06:44Z 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 AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Micro, AS Macro, Emerging Economies, Development Economics, Economic Growth, Labour Market, International Trade, Macroeconomic Policies, Supply-side policies, Teaching of Economics, Tuesday Talks, UK Economy, Unemployment, 2011-12-23T16:06:44+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-does-uk-manufacturing-have-a-future http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-does-uk-manufacturing-have-a-future#When:11:11:47Z 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 AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Business Economics, Management Issues, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, Teaching of Economics, UK Economy, Regional Economics, Unemployment, 2011-11-30T11:11:47+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-will-a-youth-jobs-subsidy-work http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-will-a-youth-jobs-subsidy-work#When:11:03:38Z 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. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Supply, Government Intervention, Subsidies, Labour Market, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, Unemployment, 2011-11-30T11:03:38+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-video-clips-on-unemployment http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-video-clips-on-unemployment#When:12:53:51Z 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. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Supply-side policies, Keynesian Economics, Market Failure, Factor Immobility, Teaching of Economics, UK Economy, Regional Economics, Unemployment, 2011-11-06T12:53:51+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/here-there-be-neets http://www.tutor2u.net/blog/index.php/economics/comments/here-there-be-neets#When:10:00:16Z 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. AS and A2 Specifications, A2 Macro, AS Macro, Demography, Labour Market, Macroeconomic Policies, Supply-side policies, UK Economy, Regional Economics, Unemployment, 2011-11-04T10:00:16+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-economic-importance-of-investment http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-economic-importance-of-investment#When:14:41:47Z 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: AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Business Economics, Macroeconomic Policies, Supply-side policies, UK Economy, 2011-10-19T14:41:47+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-bicycle-a-merit-good-and-an-integral-part-of-sustainable-transport-solu http://www.tutor2u.net/blog/index.php/economics/comments/the-bicycle-a-merit-good-and-an-integral-part-of-sustainable-transport-solu#When:18:19:53Z A recent economic study1 found that bicycle ownership can boost household income in sub-Saharan Africa by 35%.  I may be biased given my passion for cycling but I think there are indeed some very strong economic arguments for encouraging more bicycles both in the developing and the developed world. The bicycle: more than just a mode of transport Beyond the Bike - the Economic Cycle, A2 Macro, A2 Micro, AS Macro, Emerging Economies, African Economy, Economic History, Environmental Economics, Macroeconomic Policies, Monetary Policy, Supply-side policies, Market Failure, Externalities, Merit & De-Merit Goods, Transport Economics, Unemployment, 2011-10-05T18:19:53+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-science-cities-and-external-economies-of-scale http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-science-cities-and-external-economies-of-scale#When:12:14:59Z This feature article from the BBC web site is essentially about the vital importance of high-knowledge industries in sustaining competitiveness and growth in a globalising world. Europe lags behind many emerging countries in terms of the resources devoted to science and technology, research and development and creative industries in particular. But the article makes reference to the expansion of science cities - knowledge clusters that bring together higher education expertise and entrepreneurial zeal - their number continues to grow from California and Boston in the USA, Cambridge in the UK, Education City in Qatar, Science City in Zurich and Digital Media City in Seoul. All good examples to use of the commercial leverage from external economies of scale in high-tech industries. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Emerging Economies, Business Economics, Economies of Scale, Economic Growth, Economics of Technology, European Economy, Single Market, Global Economy, International Trade, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, Teaching of Economics, UK Economy, 2011-09-29T12:14:59+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/childcare-cost-means-that-working-doesnt-pay http://www.tutor2u.net/blog/index.php/economics/comments/childcare-cost-means-that-working-doesnt-pay#When:09:08:00Z I don’t think this dilemma is anything new, but Aviva’s Family Finance Report presents some up-to-date figures which show how difficult it can be for working parents to fund the cost of the childcare that makes it possible for them to take a job. Based on average pay rates, they estimate that a parent of two children working full time would only keep £120 a month of their pay after paying all the costs associated with work, including travel as well as childcare, while those who take a part-time job may actually be £98 a month worse off. The trade-off faced by working parents if they decide to swap the unpaid role of full-time childcare at home for paid work outside the home, which necessitates paying for some other form of childcare, has always been an issue, but the gap between the gain in pay and the loss in costs seems to be getting more difficult to manage. The report also looks at costs for child-related expenses such as school trips, clothes and sporting activities which have risen by 6.9% over the past year. Compare this with the fall in family incomes estimated at 2% between May and August this year - and the strain on family budgets is very clear. This report goes on to give some more data about the burden of unsecured debt and the measures government is taking to try to make working a more affordable option for families, which will be useful when looking at government intervention to deal with the poverty trap and the distribution of income. A2 Macro, Government Intervention, Labour Market, Macroeconomic Policies, Supply-side policies, Poverty and Inequality, Standard of Living, 2011-09-04T09:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-savings-and-banking-to-enhance-development http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-savings-and-banking-to-enhance-development#When:08:40:00Z A hat tip to Patrick North from Crown Woods College for spotting this excellent article on growth and development strategies in Mozambique. The piece focuses on the efforts of Mozambique to increase participation in the banking system to boost savings, investment and ultimately growth and is a good illustration of the Harrod-Domar growth model. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Emerging Economies, Development Economics, Cycles and Shocks, Aggregate Demand, Saving, Macroeconomic Policies, Supply-side policies, Teaching of Economics, 2011-08-16T08:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/transport-economics-rail-investment http://www.tutor2u.net/blog/index.php/economics/comments/transport-economics-rail-investment#When:16:59:00Z Here is a super short transport cost benefit analysis example regarding plans to re-open a rail link between Oxford and Milton Keynes could generate millions of pounds for the economy. In total it would cost £178m and then £11.6m a year to run, but Oxford Economics says it would bring an economic benefit to the area which it estimates at £32m a year. This BBC news video would make for a good short introduction to the example, and here are some other links to coverage of the Oxford Economics research in the local papers. Oxford Mail: Rail link could be worth £38m a year Official web site East West Rail   AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, AS Micro, Cost Benefit Analysis, Macroeconomic Policies, Supply-side policies, Teaching of Economics, Transport Economics, UK Economy, Regional Economics, 2011-08-12T16:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/where-theres-muck-theres-brass http://www.tutor2u.net/blog/index.php/economics/comments/where-theres-muck-theres-brass#When:06:08:00Z I am cross-posting this from the Business Studies blog, so apologies to those who read both - but I think it is a good story for both subjects. I have changed a few of the terms and themes to cover the different emphasis for an economics student. On the face of it, this is a good end-of-term case study which is bound to raise a smirk or a grimace from most students, but actually there is a wealth of good solid theory in it. In answer to the question “What to do with 12,000 tonnes of pig poo?” a farm in Gloucestershire has taken advantage of government grants to set up their own biogas generator, which enables them not only to provide their own power for the farm and farmhouse, but also to sell about 2.2 million kilowatts of electricity each year to the National Grid, and even better, to save money on fertiliser as the by-product has been broken down into a form that can be used on the fields. Even better, the process prevents huge amounts of methane from being released into the atmosphere - apparently each year it saves the equivalent of almost 9,000 return flights from London to New York. So lots of good positive externalities there. A2 Micro, AS Micro, Agriculture, Business Economics, Environmental Economics, Government Intervention, Macroeconomic Policies, Supply-side policies, Market Failure, De-Merit Goods, Externalities, Merit & De-Merit Goods, Teaching of Economics, 2011-07-06T06:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/protection-of-british-jobs http://www.tutor2u.net/blog/index.php/economics/comments/protection-of-british-jobs#When:06:01:00Z Is this protectionist, or is it common sense? Today’s headlines are all about Ian Duncan Smith’s speech in which he urges British employers to give young unemployed workers in the UK a ‘level playing-field’ and a better chance of getting the jobs which are being created. A2 Macro, Government Intervention, Labour Market, Macroeconomic Policies, Supply-side policies, UK Economy, Unemployment, 2011-07-01T06:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/do-you-agree-that-the-government-should-provide-support-to-the-uk-car-indus http://www.tutor2u.net/blog/index.php/economics/comments/do-you-agree-that-the-government-should-provide-support-to-the-uk-car-indus#When:09:25:00Z This is a fairly classic A2 macroeconomics question, and one that the European Automobile Manufacturers Association has been considering at their meeting in London last week. Their conclusion? That non-European governments should scale back assistance for their own automotive industries, but at the same time governments in Europe should support the industry’s efforts to cut car emissions. A2 Macro, Emerging Economies, Business Economics, Competitive Markets, European Economy, Government Intervention, Subsidies, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, 2011-06-12T09:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-supply-side-policies http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-supply-side-policies#When:07:00:00Z Here is a streamed presentation of a revision talk on the economics of supply-side policies. The Unit 2 macro syllabus places a heavy emphasis on the supply-side as a driver of economic growth, improved trade balances as a better trade-off between unemployment and inflation. Make sure that you are secure on the main supply-side policy approaches and also the impact of such policies on LRAS. You ought to be aware too of some of the limitations of supply-side policies - and the importance of having a sufficiently high level of aggregate demand. I have linked below to some revision blogs on supply-side topics. Revision presentation on supply-side policies AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, OCR AS Economics Unit F582, AS Macro, Macroeconomic Policies, Supply-side policies, UK Economy, 2011-05-25T07:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-brain-drain http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-brain-drain#When:15:20:01Z A brain drain is a term that describes the movement of highly skilled or professional people from their own country to another country where they can earn more money. It has been used to describe net outward migration of people from several European Union countries in recent times (notably Ireland, Greece and Spain) - another phrase for this is human capital flight. A sizeable brain drain can bring economic costs and benefits for the sending nation. One disadvantage is that countries lose out on the benefits that might have accrued from the resources used in educating people who leave. Add to this the loss of tax revenue from those who choose to live and work overseas. A sizeable loss of skilled workers (many of whom may be younger and therefore more geographically mobile) could lead to labour shortages in the sender country, putting upward pressure on wages and labour costs. Some of this income earned overseas returns to the sender country in the form of remittances (adding to GNP) and many skilled migrants often leave only for a year or two - the percentage of permanent migration inside the EU is relatively small. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Supply, Demography, Labour Market, Macroeconomic Policies, Supply-side policies, 2011-05-22T15:20:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-chinese-investment-in-the-eu http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-chinese-investment-in-the-eu#When:13:23:00Z There is much focus on Chinese foreign direct investment in Africa and Latin America - China is also making huge investments in Australia as my friend Mark Johnston writes about in this blog. Here Euro News looks at investment in the European Union by Chinese owned businesses. New motorways in Poland ahead of the 2012 European Football Championships, co-financed by the EU, are being built by Chinese companies. The Chinese are also buying up public debt, in Greece, Spain and Portugal. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Supply, Economic Growth, European Economy, EU Enlargement, Single Market, Global Economy, Macroeconomic Policies, Supply-side policies, OECD Economies, Poland, Teaching of Economics, 2011-05-03T13:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/consequences-of-one-child-policy-play-out http://www.tutor2u.net/blog/index.php/economics/comments/consequences-of-one-child-policy-play-out#When:21:58:00Z There has been much coverage in the last few days of the latest data on China’s population trends and in particular strong evidence about the ageing of her population. The demographic dividend of the fast population growth during the Mao era is well and truly over. The annual growth of the Chinese population is falling away - the average annual growth was 0.57% over the last decade, down from 1.07% in 1990-2000. And when the age structure of the population is analysed, we find that the number of people over the age of 60 rose by about 48m, reaching 13.3 per cent of the population. China’s total population is now 1.339bn – up 5.84 per cent from the last decade. The number of old people in China has grown by more than the population of Spain over the last ten years and there is growing pressure for a reversal of the controversial one-child policy. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, China Economy, Demography, Economic Growth, Global Economy, Labour Market, Macroeconomic Policies, Supply-side policies, Teaching of Economics, 2011-04-30T21:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/discrimination-and-distribution-of-income-news-resources http://www.tutor2u.net/blog/index.php/economics/comments/discrimination-and-distribution-of-income-news-resources#When:18:46:01Z If you are nearing the end of an A2 microeconomics syllabus and looking for current resources to help with issues of distribution of income and discrimination, the BBC came up with a couple of helpful items yesterday. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Labour Market, Macroeconomic Policies, Fiscal Policy, Supply-side policies, Poverty and Inequality, Teaching of Economics, 2011-03-29T18:46:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/timetric-total-employment-in-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/timetric-total-employment-in-the-uk-economy#When:23:06:00Z The level of employment fluctuates over time as an economy progresses through the business cycle and because of structural changes in economic performance, labour market activity and the total population. Our Timetric chart tracks total employment and shows the extent to which jobs were lost during the recession and whether they are recovering sufficiently well as we head into the upturn. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Labour Market, Macroeconomic Policies, Supply-side policies, UK Economy, Unemployment, 2011-03-10T23:06:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/patent-box-or-innovation-box-as-innovation-stimulant http://www.tutor2u.net/blog/index.php/economics/comments/patent-box-or-innovation-box-as-innovation-stimulant#When:19:54:00Z The UK coalition government does not yet have a growth strategy worth the name but they have invested plenty of capital in the idea of a Patent Box. This involves a lower corporation tax on profits drawn from patented products) and is a supply-side policy to make UK an attractive location for innovative industries. One proposal is that royalties and other profits from patented products and technologies would be taxed at just 10 per cent. But many economists argue that this is at best an ineffective way of lifting the amount of research and development in the British economy. They look instead to the Netherlands where an Innovation Box has had a significant impact - it reflects the view that patents are only a small part of the innovation process - you dont necessarily have to patent an idea to make small scale innovations commercially viable. Channel 4 news tonight visited Sandwich in Kent where the Pfizer research and development facility is set to close. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Supply, Economic Growth, Economics of Technology, Government Intervention, Subsidies, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, Teaching of Economics, UK Economy, 2011-03-02T19:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/chinese-and-indian-railways-importance-of-infrastructure http://www.tutor2u.net/blog/index.php/economics/comments/chinese-and-indian-railways-importance-of-infrastructure#When:21:11:00Z Two videos show the stark contrast between rail networks between China and India! Good for understanding a little more about the importance of rail network investment (high speed and conventional) as a platform for economic growth and development.   AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, Development Economics, China Economy, Indian economy, Cost Benefit Analysis, Global Economy, Macroeconomic Policies, Supply-side policies, Teaching of Economics, Transport Economics, 2011-02-25T21:11:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economic-growth-presentation http://www.tutor2u.net/blog/index.php/economics/comments/economic-growth-presentation#When:14:11:00Z Here is a streamed version of my notes from the LSE presentation last night on “Where is economic growth going to come from”? PDF Handout available here A copy of Professor John van Reenen’s powerpoint presentation is available to download. Download ‘Where is Future Growth Going to Come From?’ AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Economic Growth, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, 2011-02-18T14:11:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/never-mind-plan-b-we-need-plan-v-for-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/never-mind-plan-b-we-need-plan-v-for-the-uk-economy#When:00:12:00Z George Osborne is convinced that the Coalition does not need a plan B. But for growth to be nurtured and sustained in the years ahead we need a Viagra-style boost to our competitiveness and capacity - Plan V. This was one of the main themes from a talk given by Professor John Van Reenen at a packed Hong Kong lecture theatre at the LSE (London) last night. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, A2 Macro, AS Macro, Business Economics, Management Issues, Economic Growth, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, Teaching of Economics, UK Economy, 2011-02-18T00:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/government-has-a-role-in-building-growth http://www.tutor2u.net/blog/index.php/economics/comments/government-has-a-role-in-building-growth#When:20:17:00Z The government retains a crucial role in helping to shape and sustain the eco-system needed to foster innovation and growth. This is one of the key arguments of Will Hutton in his piece in the Observer today, essentially a review of a new book by Tyler Cowen. “Invention and innovation, we are discovering, are much too important to be left to the tender mercies of markets.” More here AS and A2 Specifications, AQA Economics Unit 4, A2 Macro, AS Macro, Economic Growth, Economics of Technology, Macroeconomic Policies, Supply-side policies, UK Economy, 2011-02-13T20:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/5-fresh-links-videos-to-attract-fdi http://www.tutor2u.net/blog/index.php/economics/comments/5-fresh-links-videos-to-attract-fdi#When:19:04:00Z I am teaching European and Global context for A2 macro this term and one of the key topics is the economics of EU enlargement. The opportunities to attract inflows of direct investment is one of the major attractions for new EU countries as they enter the single market. Here is a selection of videos promoting FDI into a selection of European nations. AS and A2 Specifications, AQA Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, European Economy, EU Enlargement, Single Market, Macroeconomic Policies, Supply-side policies, Trade Policies, Teaching of Economics, 2011-02-04T19:04:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/james-dyson-on-innovation http://www.tutor2u.net/blog/index.php/economics/comments/james-dyson-on-innovation#When:07:56:00Z This is a must read article for every student who wants to appreciate the impact of innovation on competitiveness and growth. Writing in the Business Guardian, James Dyson argues that “For me, the UK economy shouldn’t be built entirely on the City of London or the next digital fad. We need substance – patentable exports. They bring new money into our coffers. And what will generate economic growth is not just talk of spending cuts, but creating the right environment for research and invention.” Dyson is a strong supporter of tax credits and lower corporation tax for research and development projects and also for science and maths graduate teachers to be paid more. More here: Innovation: Britain’s other deficit Tories look to Dyson on hi-tech economy (BBC news video) AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Economic Growth, Economics of Technology, Global Economy, Government Intervention, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, OECD Economies, Teaching of Economics, UK Economy, 2011-02-01T07:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/migration-caps-and-the-supply-side-of-the-economy http://www.tutor2u.net/blog/index.php/economics/comments/migration-caps-and-the-supply-side-of-the-economy#When:20:51:00Z The Coalition’s plans to bring down annual net inward migration into the “tens of thousands” is running into some well organised, influential lobbying from business and academic organisations who complain of the impact this will have on the UK’s competitiveness. It is neither equitable or efficient for highly paid (often under-performing) footballers to be given an exemption under the migrant cap but not for skilled scientists from non-EU countries who may well become the distinguished future leaders of our scientific community. This report last night on Newsnight by BBC Science Editor Susan Watts makes the argument clearly and persuasively. Migrant controls damage the supply-side potential of the economy. AS and A2 Specifications, AQA Economics Unit 4, A2 Macro, AS Macro, Business Economics, Cost Benefit Analysis, European Economy, Labour Market, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, Unemployment, 2010-11-04T20:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/video-resources-on-uk-economic-growth http://www.tutor2u.net/blog/index.php/economics/comments/video-resources-on-uk-economic-growth#When:09:00:00Z I have been discussing growth policies for the British economy with my A2 macro groups. Here are some of the short news videos and audios that have been used as a stimulus to discussion AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Economic Growth, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, Regional Economics, 2010-10-06T09:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/what-would-adam-smith-think-of-a-graduate-tax http://www.tutor2u.net/blog/index.php/economics/comments/what-would-adam-smith-think-of-a-graduate-tax#When:06:40:01Z The Institute of Directors reports that a graduate tax would be bad for the UK’s competitiveness. How well would a Graduate Tax fare when scrutinised by Adam Smith? He developed his four Canons of Taxation to determine how ‘good’ a tax will be. The four are: 1. The cost of collection must be low relative to the yield 2. The timing and amount to be paid must be certain to the payer (It should all be open and above board and clearly set out so that people know what their obligations will be.) 3. The means and timing of payment must be convenient to the payer 4. Taxes should be levied according to ability to pay However much the undergraduates of the future may dislike the idea, a direct tax which is collected with standard income tax and based on the level of income generated by those with degrees would seem to meet those pretty well. Government Intervention, Government Failure, Macroeconomic Policies, Fiscal Policy, Supply-side policies, OECD Economies, Greece Economy, UK Economy, 2010-09-22T06:40:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/macroeconomic-developments-in-the-uk-economy-september-2010 http://www.tutor2u.net/blog/index.php/economics/comments/macroeconomic-developments-in-the-uk-economy-september-2010#When:21:29:00Z Here is an updated version of the keynote tutor2u teacher presentation on key developments in the UK Economy… AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR AS Economics Unit F582, A2 Macro, AS Macro, Global Economy, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, Trade Policies, OECD Economies, Teaching of Economics, UK Economy, Recession Watch, 2010-09-04T21:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ceo-summit-focuses-on-supply-side-support http://www.tutor2u.net/blog/index.php/economics/comments/ceo-summit-focuses-on-supply-side-support#When:06:36:00Z The Times is sponsoring a ‘CEO Summit’ this week, with about a hundred Chief Executives including Sire Terry Leahy of Tesco, Sire John Rose of Rolls Royce and Steven Hester of RBS. It provided their main headlines yesterday and several pages of coverage, which contain a great deal of comment about the opinions of the delegates about the Coalition Government’s plans to cut the deficit. The summit has been attended by George Osborne, David Cameron and Vince Cable as well, providing plenty of opportunity for analysis of fiscal policy and the discussions at the G20 over the weekend. A2 Macro, AS Macro, Government Intervention, Macroeconomic Policies, Fiscal Policy, Supply-side policies, UK Economy, 2010-06-30T06:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/innovation-to-get-the-british-economy-growing-again http://www.tutor2u.net/blog/index.php/economics/comments/innovation-to-get-the-british-economy-growing-again#When:15:12:01Z Larry Elliott in this latest piece for the Guardian turns his attention to the importance of innovation as a catalyst for competitiveness, growth and new jobs. The basis for the article is the speech given last week by the new Business Secretary Vince Cable who is charged with finding the right incentives to encourage domestic and externally-owned businesses to invest and commit to sufficient research and development to speed up the process of innovation in the UK. As a nation our spending on R&D is painfully low and has been for years despite the best efforts of successive governments. Many emerging market countries are streets ahead in terms of R&D spending as a share of their national income. Successful innovation brings benefits on the demand and supply-side of the economy. And most of it will flow from the private sector - so how best to achieve this? The Elliott article links to a new report from NESTA - available here which focuses on the need to re-balance the British economy to provide a stronger platform for sustainable growth and new jobs. Re-balancing the economy has become a buzz phrase in recent months. “Economic ‘balance’ has come to refer to many things, including the balance between imports and exports, the balance between the public and private sectors, the balance between public spending and tax receipts, and the balance between the South East and the rest of the country. This report focuses on one particular aspect: the balance between different sectors in the economy. There are some super charts showing the changing contribution of manufacturing and other sectors to output and trade. This will be a good resource for teachers wanting to update their notes on manufacturing and competitiveness.   AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, Economic Growth, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, 2010-06-07T15:12:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/how-can-supply-side-policies-help-in-an-economic-recession http://www.tutor2u.net/blog/index.php/economics/comments/how-can-supply-side-policies-help-in-an-economic-recession#When:06:31:00Z Recessions are often the result of negative demand-side shocks that hit real incomes of consumers and demand and profits for businesses. The consequences show through in higher unemployment, a fall in capital investment and an increasing rate of business failures. Most macroeconomic policies in a recession centre on boosting demand and confidence in a bid to generate a rebound in output, jobs and incomes within the circular flow. What role can supply-side policies play during an economic downturn? AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Macroeconomic Policies, Supply-side policies, UK Economy, Recession Watch, 2010-06-06T06:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/specific-supply-side-policies http://www.tutor2u.net/blog/index.php/economics/comments/specific-supply-side-policies#When:12:18:01Z Its always good to be able to refer to real economic policies when teaching supply side policies, rather than referring to them in the abstract, such as “increase real expenditure on R&D and education”. Here is a good current example of a supply side policy - the government last week began the long process of distributing its £200m UK Innovation Investment Fund (IIF), which will be focused on life sciences, digital and advanced manufacturing businesses. Lord Drayson, the science minister, also outlined plans to tackle the bureaucracy and red-tape that creates a log-jam for initial public offerings of high-tech companies, which have dried up in the last two years, creating problems for venture capital groups. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, 2010-06-05T12:18:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-policies-to-control-inflation http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-policies-to-control-inflation#When:11:32:00Z This revision blog focuses on policies that can be used to control the rate of inflation. Our starting point is that inflation comes from more than one source. Rising prices are not simply the result of increasing aggregate demand but also from higher costs of production and the direct and indirect effects of changes in government policies. It is also important to note that many inflationary impulses come from outside the domestic economy - namely from external shocks in the global economic system - many of which an individual country has no control to change. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Inflation and Deflation, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, UK Economy, 2010-05-31T11:32:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-cutting-begins http://www.tutor2u.net/blog/index.php/economics/comments/the-cutting-begins#When:14:14:01Z The first round of government spending cuts were announced earlier today amounting to £6.2 billion. Whilst this is not “austerity” of the sort that Greece has been talking about recently, they are genuine cuts, albeit further measures are still required to tackle the huge black hole in the public purse. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Economic Growth, Government Intervention, Indirect Taxes, Regulation, Subsidies, Macroeconomic Policies, Fiscal Policy, Supply-side policies, Keynesian Economics, UK Economy, Regional Economics, 2010-05-24T14:14:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-a2-revision-where-next-for-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/as-a2-revision-where-next-for-the-uk-economy#When:06:44:00Z Students wanting to demonstrate up-to-date understanding of the UK economy should find this streamed revision presentation really useful.  It was delivered by Geoff at our AS & A2 Economics workshops in London & Manchester.  It provides a comprehensive coverage of recent developments in the UK economy and highlights some potential downsides and upsides as the economy attempts to sustain a recovery during 2010 and 2011. Has the era of macro economic stability been replaced by a new phase of macro economic uncertainty, slower growth and a recovery constrained by debt? Or are there grounds for being more optimistic about the near-term future for the British economy? Revision Presentation on the UK Economy AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR AS Economics Unit F582, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Saving, Aggregate Supply, Economic Growth, Exchange Rates, Inflation and Deflation, International Trade, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, Trade Policies, Keynesian Economics, Manufacturing Industry, Monetarism, UK Economy, Recession Watch, 2010-05-02T06:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/detail-of-the-deepest-spending-cuts-since-the-1970s http://www.tutor2u.net/blog/index.php/economics/comments/detail-of-the-deepest-spending-cuts-since-the-1970s#When:05:51:00Z Following on from Geoff’s blog below about recent IFS reports, their latest research released yesterday looks at the scant detail that the three main political parties have given of their plans for spending cuts and tax rises, if elected. This could be introduced with this video of writer Will Self, who reckons the parties are in denial about the real challenges which face them after the election, and the IFS report adds the numbers to this suggestion. Macroeconomic Policies, Fiscal Policy, Supply-side policies, Poverty and Inequality, Teaching of Economics, UK Economy, 2010-04-28T05:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/links-to-recent-ifs-research http://www.tutor2u.net/blog/index.php/economics/comments/links-to-recent-ifs-research#When:17:36:00Z The Institute for Fiscal Studies occupies a lofty place in any coverage of the fiscal crisis facing the British economy. Their independent research is frequently quoted and the fiscal plans of the three main parties are scrutinised in the context of the dispassionate analysis that the IFS brings to bear. Some seriously good economists have cut their teeth at the IFS before moving onto other things. Here is the link to the recent research publications from the IFS. Among the various election and budget reports there are some good documents on what has happened to productivity during the recession and an analysis of what has happened to poverty during the 13 years of the Labour government. Macroeconomic Policies, Fiscal Policy, Supply-side policies, Poverty and Inequality, Teaching of Economics, UK Economy, 2010-04-27T17:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/super-fast-broadband-slows-down-again http://www.tutor2u.net/blog/index.php/economics/comments/super-fast-broadband-slows-down-again#When:07:31:00Z Figures comparing growth in UK productivity consistently show us falling behind our major competitors. As Geoff highlighted in this recent blog, there are many underlying factors on the supply-side of the economy and one of them is infrastructure bottlenecks caused by, among other things, slow broadband speeds. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, AS Micro, Business Economics, Economic Growth, Economics of Technology, Government Intervention, Macroeconomic Policies, Fiscal Policy, Supply-side policies, Market Failure, Merit & De-Merit Goods, UK Economy, Regional Economics, 2010-04-08T07:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/broadband-and-economic-growth http://www.tutor2u.net/blog/index.php/economics/comments/broadband-and-economic-growth#When:14:52:00Z Investment in broadband capacity and speed has a strong impact on economic growth according to new research. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, Economics of Technology, International Trade, Macroeconomic Policies, Supply-side policies, OECD Economies, US Economy, 2010-04-03T14:52:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ask-the-chancellors-debate http://www.tutor2u.net/blog/index.php/economics/comments/ask-the-chancellors-debate#When:08:50:00Z If you missed the live election debate between the Chancellors, you can watch it here on Channel4OD; or read a review of it at the FT here. A2 Macro, AS Macro, Government Intervention, Regulation, Macroeconomic Policies, Fiscal Policy, Supply-side policies, Keynesian Economics, UK Economy, 2010-03-30T08:50:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-supply-side-indicators-for-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-supply-side-indicators-for-the-uk-economy#When:17:02:00Z This updated revision presentation should be really useful for colleagues and students addressing the crucial supply-side issues during revision for AS and A2 Economics… AS and A2 Specifications, Economics Presentations, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Government Intervention, Labour Market, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, Teaching of Economics, UK Economy, Unemployment, 2010-03-14T17:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/withdrawing-the-drugs http://www.tutor2u.net/blog/index.php/economics/comments/withdrawing-the-drugs#When:17:58:00Z An excellent article in last week’s Economist magazine, which focuses on the difficult task of weaning the world economy off its fiscal and monetary stimulus. In recent years, Interest rates have plummeted, and budget deficits soared; whilst quantitative easing has come out the woodwork; but last week’s announcement that the Fed raised the discount rate in its first step of contractionary policy in quite some time as well as our own general election around the corner, where fiscal prudence is high on the agenda and it seems that the beginning of the next phase in economic policy has begun. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Economic Growth, Government Intervention, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, Keynesian Economics, 2010-02-23T17:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-laffer-curve-comes-to-life-50-of-nothing-is-nothing http://www.tutor2u.net/blog/index.php/economics/comments/the-laffer-curve-comes-to-life-50-of-nothing-is-nothing#When:21:54:00Z Three linked articles in The Times today looks at the efforts HMRC is putting into chasing down top earners and ensuring that they pay the full amount of tax that they owe. The issue revolves around the definition of residency – those who are classified as non-resident and not ordinarily resident – and the way in which earnings both in the UK and worldwide are treated for tax reasons as a result. There is a team at the Revenue of about 500 staff who each investigate about ten wealthy individuals, and whose work apparently yielded £373m in tax revenues last year. Those who are being investigated can expect that their offshore trusts and companies in particular will be under scrutiny, using new computer systems and a budget of £1bn to carry out the enquiries. This appears to have been a successful initiative which has generated a far higher revenue from those higher earners – but the suggestion is that this close scrutiny will drive those individuals away from the UK so that their earnings are no longer eligible for UK tax. A number of comments within the article focus on accusations that the Revenue keeps changing their rules, which makes it impossible for wealthy UK individuals and foreign nationals coming to the UK to undertake ‘legitimate’ tax planning and comply with the rules. A2 Macro, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, Supply-side policies, UK Economy, 2010-02-18T21:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-stimulus-for-the-chinese-economy http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-stimulus-for-the-chinese-economy#When:11:53:00Z A top-down programme to encourage bottom-up growth of entrepreneurship in China’s rural areas. We have become accustomed to the enormous size of infrastructure projects in China designed to maintain domestic demand and employment and sustain a minimum growth rate of 8 per cent. China’s investments in new factories and properties surged 67 percent last year to 15.2 trillion yuan, more than Russia’s gross domestic product. This is another approach focusing on enterprise in rural areas. The Chinese Government has spent about $40 billion training people from the countryside to run their own business. The Government’s scheme provides free skills training, tax free loans of up to $8,000 and two years of support.   A2 Macro, AS Macro, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Economic Growth, Global Economy, Macroeconomic Policies, Supply-side policies, Teaching of Economics, 2010-02-17T11:53:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/utopia-and-the-21-hour-working-week http://www.tutor2u.net/blog/index.php/economics/comments/utopia-and-the-21-hour-working-week#When:10:19:00Z The authors of the New Economics Foundation’s report into the length of the working week have suggested that working hours should be limited to a maximum of 21 hours per week. But the unemployment data from the ONS last month shows that such a change is being imposed on thousands of workers whether they like it or not; part-time employment rose by 99,000 in the three months to November 2009, replacing most of the 113,000 full-time jobs lost over the same period. A2 Macro, Economic Growth, Labour Market, Macroeconomic Policies, Supply-side policies, Poverty and Inequality, Unemployment, 2010-02-13T10:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-a-question-of-confidence http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-a-question-of-confidence#When:07:23:00Z This new revision presentation examines the implications of changes in consumer and business confidence for the UK economy Launch revision presentation on a Question of Confidence Download printable slide handouts Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Macroeconomic Policies, Supply-side policies, UK Economy, Recession Watch, 2010-01-29T07:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/focus-on-the-national-minimum-wage http://www.tutor2u.net/blog/index.php/economics/comments/focus-on-the-national-minimum-wage#When:20:30:00Z This blog provides some updated links on the minimum wage - a government intervention in the labour market. A2 Micro, AS Micro, Business Economics, Government Intervention, Minimum Prices, Labour Market, Macroeconomic Policies, Supply-side policies, Market Equilibrium and Price, Price Mechanism in Action, Inter-related Markets, Standard of Living, Teaching of Economics, UK Economy, Unemployment, 2010-01-24T20:30:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/over-investment-in-china http://www.tutor2u.net/blog/index.php/economics/comments/over-investment-in-china#When:07:21:00Z John Gapper’s blog in the Financial Times today focuses on the risks that come from excessive capital investment in the Chinese economy. Bloated by an ultra-low cost of capital, many heavy industries have boosted their capacity to enormous levels and then relied on double digit annual growth in exports to absorb this capacity and maintain output and jobs. But this excess investment has made China vulnerable to the world financial crisis (not least the slump in world trade) and it has been a key factor behind global trade imbalances and the rise of protectionism. Capital investment of up to 40% of GDP is a reflection of a deeply skewed development model and one that is unsustainable. “The result is huge over-capacity in heavy industries that soak up excess capital, which was hidden until last year by strong export demand for steel and the other affected products. But it also makes Chinese industry vulnerable to shocks such as the financial crisis.The Chinese government itself accepts - at least in theory - the need to switch away from a pure reliance on exports to fuel growth, to boost domestic consumption and to make growth more balanced.” More here - China’s over-investment is its Achilles’ heel An FT editorial today develops the discussion and highlights the waste of scarce resources that occurs when investment is made in capacity that will probably never be used: “At the end of 2008, China’s steel capacity was 660m tons against demand of 470m tons. This difference is much the same as the European Union’s total output. Yet, notes the report, “there are currently 58m tonnes of new capacity under construction in China”. To the extent that gross domestic product is driven by such absurd spending is a measure of waste, not of economic welfare.” The rest of the editorial can be found here George Magnus also writes on China in his piece in the Times       A2 Macro, AS Macro, Emerging Economies, Development Economics, China Economy, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, Global Economy, International Trade, Teaching of Economics, Supply-side policies, 2009-11-30T07:21:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-permanent-scars-of-recession http://www.tutor2u.net/blog/index.php/economics/comments/the-permanent-scars-of-recession#When:11:49:01Z Chris Giles was on excellent form in this article in the Financial Times considering the economic fall-out from the recession. He looks at the causes of hysteresis effects arising from the recession - including a long term fall in employment rates, reduction in the size of the capital stock, a weaker pace of innovation and reductions in productivity. “The emerging consensus - for the advanced world at least - is that they will be deep and long-lived. In its recent World Economic Outlook, the International Monetary Fund examined 88 historical banking crises between 1970 and 2002 and found, on average, that countries do not earn back all the lost ground after the recession slips into people’s memories. In its database, it found that seven years after a crisis, output had fallen by 10 per cent compared with the pre-crisis path. Economic growth generally returned to the pre-crisis rate, but the loss of output seems permanent.”   A2 Macro, AS Macro, Cycles and Shocks, Teaching of Economics, UK Economy, Recession Watch, Credit Crunch, Supply-side policies, 2009-11-26T11:49:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-government-subsidies http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-government-subsidies#When:08:46:00Z This new AS economics revision presentation looks at the use of subsidies by government for producers and consumers. Launch interactive presentation on Economics of Government Subsidies Download pdf handout of slides AS Micro, Agriculture, Government Intervention, Subsidies, Market Equilibrium and Price, Price Mechanism in Action, Supply-side policies, 2009-11-19T08:46:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-great-fiscal-policy-debate-this-one-will-run-and-run http://www.tutor2u.net/blog/index.php/economics/comments/the-great-fiscal-policy-debate-this-one-will-run-and-run#When:21:44:00Z Stephanie Flanders, the BBC Economics Editor, is assessing what might happen to fiscal policy after the election next year. She has produced reports for the BBC news which can be accessed from her Stephanomics blog, and produced a discussion piece which draws upon current opinion as well as historical evidence to predict the likely differences and similarities between the political parties. As she says, both parties would expect to announce tough budget plans if elected - and both would tend to delay most of the pain until 2011 or 2012, when the economy is more firmly on the mend. There is a nice historical piece about Geoffrey Howe’s tax raising budget in 1981, and a reference to the pro’s and con’s of Vince Cable’s proposal to raise revenue by a “mansion tax” on houses worth more than £1m - one problem being that there are rather fewer of those houses now than there were a few months ago. Many A level students will be voting for the first time in this most important of elections, in which fiscal policy is surely going to be one of the hottest topics, and I would love to give them some of the elements of this discussion to evaluate as they prepare to be some of the better informed new generation of the electorate. A2 Macro, UK Economy, Fiscal Policy, Supply-side policies, 2009-11-17T21:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/deflation-teacher-presentation http://www.tutor2u.net/blog/index.php/economics/comments/deflation-teacher-presentation#When:08:44:00Z This new revision presentation examines the causes and effects of deflation and the possible economic policy responses. Launch interactive presentation on deflation Download pdf handout of presentation slides A2 Macro, Inflation and Deflation, UK Economy, Monetary Policy, Supply-side policies, 2009-11-17T08:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/rwanda-invests-in-connecting-the-young http://www.tutor2u.net/blog/index.php/economics/comments/rwanda-invests-in-connecting-the-young#When:14:14:00Z A deeply encouraging and inspiring report from Rory Cellan Jones on the One Laptop per Child policy being rolled out in Rwanda - a policy that aims to equip 100,000 students with access to the internet. Are there more important priorities than building an IT infrastructure such as meeting people’s basic needs and wants? Or can technology transform the economy just fifteen years after the genocide? A2 Macro, Economic Growth, Global Economy, Standard of Living, Teaching of Economics, Development Economics, Supply-side policies, 2009-10-24T14:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-broadband-in-the-slow-lane http://www.tutor2u.net/blog/index.php/economics/comments/uk-broadband-in-the-slow-lane#When:10:25:00Z The relatively slow speed of the average broadband connections for most UK businesses and households will act as a contsraint on future competitiveness and growth. This report from BBC news finds that a study of the global state of broadband has put the UK 25th out of 66 countries in terms of the quality and reach of its networks. Rory Cellan Jones follows up the report with his own observations “Britain has done well in the first broadband wave, using a pretty efficient copper network and DSL technology to get homes across most of the country connected. But other countries are moving forward more rapidly to build next generation networks using cable and fibre-optics.” Investment in broadband can have significant demand and supply-side effects - the real consequences of under-investment will become more painful and obvious as time goes on - but who should pay for the extra capital spending needed? Will the new broadband tax make any noticeable difference? A2 Macro, AS Macro, Business Economics, Economic Growth, Economics of Technology, Government Intervention, Indirect Taxes, International Trade, UK Economy, Supply-side policies, 2009-10-20T10:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/human-and-social-capital-and-pathways-to-prosperity http://www.tutor2u.net/blog/index.php/economics/comments/human-and-social-capital-and-pathways-to-prosperity#When:21:17:00Z Tom Aedy picks an article by Michael Milken in the FT and focuses on the importance of human capital in a competitive global economy - Milken calls this the world’s most valuable asset. A2 Macro, AS Macro, Emerging Economies, Cycles and Shocks, Aggregate Supply, Economic Growth, International Trade, Teaching of Economics, Supply-side policies, 2009-10-14T21:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/businesses-call-for-youth-jobs-subsidy http://www.tutor2u.net/blog/index.php/economics/comments/businesses-call-for-youth-jobs-subsidy#When:10:05:00Z High and rising youth unemployment is one of the most important economic and social policy issues of the day. The CBI has called for extra funding from the government for a youth jobs subsidy - a £2500 per head payment for businesses that offer apprenticeships. The aim is to widen access to apprenticeships and equip school and college leavers with extra skills to improve their human capital and occupational mobility. If the lobbying proves effective, this is a good example to use of an active-labour market policy whose objectives are firmly on the supply-side of the economy. According to CBI Chairman Richard Lambert, ““Young people leaving education this summer face the toughest job market in a generation. We know from previous recessions that a lack of employment after leaving education can damage young peoples’ long-term prospects at a critical point as they move from education to the world of work.” Their 5-point programme for reducing youth unemployment is available here. Given that the government was quick to introduce a £2000 car scrappage incentive (paid paid for by the motor industry) - it might make for interesting discussion in the classroom to weigh up the relative benefits and costs of using a similar pot of cash for a direct subsidy for consumers contrasted with an employment and training subsidy for employers. Who should pay for training? Why is the free-rider problem relevant here? This Guardian article argues that “Apprenticeships are an out of date idea. The only reason that they are back on the agenda is because of the TV show.” A2 Macro, AS Macro, Business Economics, Cost Benefit Analysis, Government Intervention, Subsidies, Labour Market, UK Economy, Recession Watch, Unemployment, Supply-side policies, 2009-08-26T10:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/taking-the-pulse-around-the-uk-economy-are-the-anti-virals-working http://www.tutor2u.net/blog/index.php/economics/comments/taking-the-pulse-around-the-uk-economy-are-the-anti-virals-working#When:18:54:00Z Here is a whole feast of reports about the current state of the UK economy from the BBC – albeit some of them quite unpalatable. On the day on which the Labour Force Survey shows the biggest quarterly rise in unemployment since records of the ILO measure began in 1971, the BBC has a survey that shows that two out of three people know someone who has lost their job due to the recession, and 40% fear losing their own job. The survey is part of their feature ‘Taking the Pulse around the UK’ which is being covered on TV, radio and the website today. As well as the survey there is a series of video reports; in one from a Northampton market where a fruit and vegetable trader says he has never worked so hard for so little, while a clothes stall owner says she has altered the clothing she sells, stocking cheaper goods than before, in order to survive. In another, Hugh Pym summarises key indicators about the state of the economy, and a third has Stephanie Flanders debating the state of the economy with herself. The set of reports are well worth browsing through, and following the links to related items. Environmental Economics, Government Intervention, Labour Market, Manufacturing Industry, UK Economy, Recession Watch, Unemployment, Credit Crunch, Supply-side policies, 2009-07-15T18:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/innovation-a-driving-dynamic-for-the-economy http://www.tutor2u.net/blog/index.php/economics/comments/innovation-a-driving-dynamic-for-the-economy#When:20:08:00Z Innovative products and processes are the lifeblood of a competitive economy. With attention focused on the likely depth and duration of an economic recession, across the country there are many businesses who have one eye fixed firmly on the recovery and on continuing to develop and test new products. This superb and spirit-lifting BBC video pays a visit to Cambridge Consultants a business that has enjoyed its best ever year during a year of recession - ideas and investment businesses that can gain access to the finance that remains available look well placed to reap the benefits of their innovations - always providing they can get the products to market. The video features a ‘virtually waterless’ laundry washing machine prototype developed by Xeros. By saving up to 90% of water compared to conventional machines, the Xeros process has the potential to reduce the cost of washing whilst also dramatically cutting carbon emissions. A2 Macro, AS Macro, Economic Growth, Economics of Technology, UK Economy, Supply-side policies, 2009-07-11T20:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-productivity-gap http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-productivity-gap#When:17:23:00Z The productivity gap is a phrase to describe a sustained difference in measured output per worker (or GDP per person employed) between one country and another. Economics Q&A, Q&A - Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Economic Growth, Macroeconomic Policies, Supply-side policies, UK Economy, 2009-06-01T17:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-labour-market-failure-presentation http://www.tutor2u.net/blog/index.php/economics/comments/revision-labour-market-failure-presentation#When:08:21:00Z Here is a revised streamed presentation on market failure in the labour market A2 Micro, Labour Market, Market Failure, Factor Immobility, Supply-side policies, 2009-05-27T08:21:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/guy-hands-heads-for-the-islands http://www.tutor2u.net/blog/index.php/economics/comments/guy-hands-heads-for-the-islands#When:20:28:00Z A very brief piece in The Times today reports that the new 50% tax rate for Britain’s top earners is starting to have its predicted effect, of persuading some of those top earners to take their income elsewhere. Guy Hands, owner of EMI and the Terrra Firma private equity company, is leaving the UK to move to Guernsey and take advantage of its lower ‘tax haven’ rates. This is a textbook response - supply-side fiscal policy would suggest that a reduction in tax rates will encourage entrepreneurs and high earners into a country. Many city analysts predicted that the opposite would happen as a result of the ten percent rise in the top rate of tax, and that is what appears to have happened. A2 Macro, AS Macro, UK Economy, Fiscal Policy, Supply-side policies, 2009-05-11T20:28:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/obamas-pledge-on-rd http://www.tutor2u.net/blog/index.php/economics/comments/obamas-pledge-on-rd#When:21:19:00Z “I am here today to set this goal: we will devote more than 3% of our GDP to research and development,” If Obama succeeds in his aim, the US economy will raise investment in research and development as a share of national income - AS students might consider some of the likely demand and supply-side effects of such an aim. A good article to use when teaching supply-side policies. The UK of course is some distance below the US levels when it comes to research and development spending. AS Macro, Cycles and Shocks, Aggregate Supply, Economic Growth, UK Economy, US Economy, Supply-side policies, 2009-04-27T21:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/first-hints-of-the-brain-drain-effect http://www.tutor2u.net/blog/index.php/economics/comments/first-hints-of-the-brain-drain-effect#When:06:19:00Z The government’s decision to increase the top rate of income tax from 40% to 50% is pure political opportunism from a party that has given up any realistic hope of power at the next election. Cue a chance to stick a few poorly aimed knives into the body of up and coming entrepreneurs for a measure that will raise a little extra revenue but which will also do huge long term damage to enterprise in the British economy. From next year anyone earning more than £150,000 a year will pay 50% income tax. The move replaced the 45% tax bracket threatened in the pre-budget report last November. Here are the first signs of a brain drain effect taking hold. And even more worrying is the threat of a brain blockade - as highly skilled people in industries such as technology, medicine, industrial research and so son may now shun coming to the UK in favour of competing locations. Those with a cushion of wealth are best placed to relocate, in a digital age the barriers to conducting business off-shore are so much lower. The Telegraph provides a handy guide for those searching for an atlas and airline timetable this weekend. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Government Intervention, Government Failure, UK Economy, Fiscal Policy, Supply-side policies, 2009-04-26T06:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/causes-and-consequences-of-russias-shrinking-population http://www.tutor2u.net/blog/index.php/economics/comments/causes-and-consequences-of-russias-shrinking-population#When:11:00:00Z This excellent BBC news article considers the background to Russia’s shrinking population. “By 2050, Russia’s population could shrink from the current figure of 142 million people to 100 million, according to a United Nations sponsored study published last year.” Staggeringly high mortality rates (life expectancy for males barely touches sixty) and low birth rates lie at the heart of this particular demographic time bomb. Students might be asked to consider the likely demand and supply-side effects of a long term decline in the size of the population. And also which policies are likely to be most effective in reversing it. AS Macro, Emerging Economies, Russia Economy, Economic Growth, GCSE Economics, Labour Market, Supply-side policies, 2009-04-07T11:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/australias-broadband-superhighway http://www.tutor2u.net/blog/index.php/economics/comments/australias-broadband-superhighway#When:10:34:00Z It is ambitious, expensive and will take years to roll out - but the Australian government’s newly announced $43 billion project to extend super-fast broadband across the country is the type of government funded infrastructure project that makes you sit up and take notice. This article in the Times could be a good one to use when teaching about the supply-side consequences of government spending. And it is another example of how fiscal policy can be used to kick start domestic demand with the creation of thousands of ‘shovel-ready’ jobs. “The project, which will start in Tasmania next year, requires the installation of fibre cables across Australia - a vast undertaking that the Government said would create 25,000 jobs a year during the eight years of construction.” More here from the BBC A2 Macro, AS Macro, Cost Benefit Analysis, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, Global Economy, Unemployment, Fiscal Policy, Supply-side policies, Keynesian Economics, 2009-04-07T10:34:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-real-apprentice-scheme http://www.tutor2u.net/blog/index.php/economics/comments/a-real-apprentice-scheme#When:11:46:00Z Forget the hapless, hopeless bunch of shallow ‘apprentices’ on the BBC programme - a group of supposed high-flyers who cannot cost a van load of cleaning equipment. Here is a warmer story of the return of apprenticeship schemes at Doncaster College as the mining industry shows tentative signs of a stronger recovery in prices, production and jobs. Expanding the apprenticeship programme is a really important supply-side policy for the labour market. Labour Market, Supply-side policies, 2009-03-30T11:46:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/infrastructure-and-growth-2 http://www.tutor2u.net/blog/index.php/economics/comments/infrastructure-and-growth-2#When:16:15:00Z A hat tip to my colleague Jon Mace for spotting this rather good BBC news article that considers the role that investment in infrastructure can have in sustaining and promoting economic growth. It is a good example of how government spending (fiscal policy) can affect both aggregate demand and long run aggregate supply. And it raises important questions about how such projects are funded. A2 Macro, AS Macro, Cost Benefit Analysis, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, GCSE Economics, US Economy, Fiscal Policy, Supply-side policies, 2009-03-25T16:15:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-policy http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-policy#When:10:08:00Z Supply-side policies and indicators - this is a fast-moving and important specification area where the supply-side data changes are significant and rapid. Here are some updated resources for use once we return after half-term… A2 Macro, AS Macro, Cycles and Shocks, Economic Growth, Teaching of Economics, UK Economy, Recession Watch, Supply-side policies, 2009-02-18T10:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-indicators-for-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-indicators-for-the-uk#When:10:17:00Z I am about to start teaching supply-side economics with my AS students so the time has come to update some of the charts I use to illustrate aspects of supply-side performance. This is available to download as a PowerPoint file below. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, UK Economy, Supply-side policies, 2009-02-15T10:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/programme-on-unemployment http://www.tutor2u.net/blog/index.php/economics/comments/programme-on-unemployment#When:17:02:00Z A quick heads up on Dispatches on Monday 16th February, 8pm, Channel 4: Four months after leaving his post as Minister of Trade, Lord Digby Jones examines how the government is tackling the unemployment crisis. He analyses each of Gordon Brown's pledges to help people back into work and training, to see whether the system for handling the newly unemployed is working. A2 Macro, AS Macro, Poverty and Inequality, Teaching of Economics, Unemployment, Supply-side policies, 2009-02-13T17:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/defence-of-the-car-manufacturers-loan-guarantee-package http://www.tutor2u.net/blog/index.php/economics/comments/defence-of-the-car-manufacturers-loan-guarantee-package#When:22:36:00Z On BBC i-player you can listen to a 10-minute interview with Lord Peter Mandelson on the Radio 5 ‘Drive’ programme this evening; after opening this link move the ‘fast forward’ cursor towards the bottom left of the screen from the 0.00 time to 2.14.30 to find the start of the interview. Lord Mandelson defends the measures to help the automotive industry which he announced today against criticism that the measures won’t go far enough to help the suppliers of car manufacturing, or the jobs which are being lost right now throughout the industry, and that other industries may be equally deserving of help to survive the recession. A2 Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Credit Crunch, Fiscal Policy, Supply-side policies, 2009-01-27T22:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/apprenticeships-and-economic-performance http://www.tutor2u.net/blog/index.php/economics/comments/apprenticeships-and-economic-performance#When:12:32:11Z My Monday morning edition of the Financial Times carried an important article on the prospects for apprenticeships during the economic downturn. The broad thrust of the piece was encouraging - a number of Britain’s biggest companies have said that they do not plan to curtail the number of apprenticeship programmes on offer to school and college leavers. It is not simply a case of altruism - a number of studies have shown that investing in the human capital of the workforce can achieve a positive payback in just a few years. “Recent studies have shown that investing in an apprentice is often cheaper than recruiting qualified workers from rivals and then having to retrain them in the procedures of their new employer…...BT had “calculated a net financial benefit of over £1,300 ($1,910) per apprentice a year when compared with non-apprentice recruitment”......A more recent study by Warwick university for the taskforce’s successor, the Apprenticeship Ambassadors Network, found that it cost £28,762 to train an engineering apprentice but the “employer’s investment was, on average, paid back in less than three years”. Why is the success of apprenticeship schemes important for the longer-term health of the UK economy? Many of the benefits of vocational programmes show through on the supply-side of the economy: A lower risk of structural unemployment through lower occupational immobility Less pressure on the welfare benefits system resulting from long term unemployment A reduction in the number of unfilled vacancies for skilled workers Higher productivity and better paid jobs - which then boosts aggregate demand Ultimately - higher profits for businesses with successful apprenticeship schemes Reduced dependence on inflows of migrant workers Better skilled workers will improve the quality of work and provide a stronger platform for greater innovation in their chosen fields Improved customer service e.g. in industries such as gas supply, plumbing and construction The FT article can be found here The website of the Apprenticeship Ambassadors Network is also worth visiting A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Supply, Economic Growth, GCSE Economics, Labour Market, Market Failure, Factor Immobility, UK Economy, Unemployment, Supply-side policies, 2008-12-29T12:32:11+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/has-competition-in-postal-services-delivered http://www.tutor2u.net/blog/index.php/economics/comments/has-competition-in-postal-services-delivered#When:19:25:00Z Two years on from the liberalisation of the postal services industry, has this supply-side policy to make the market more contestable made any noticeable difference to the quality of service, prices and investment in delivery? A new report casts doubt on the changes to the industry since the market opened up to competition at the start of 2006 to businesses such as UK Mail. Robert Peston reports for the BBC in this video clip. His feature asks whether the universal service provision is a millstone round the neck of the Royal Mail which remains in deep financial trouble. A2 Micro, AS Micro, Business Economics, Competitive Markets, Supply-side policies, 2008-05-07T19:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-supply-side-of-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/revision-supply-side-of-the-uk-economy#When:12:51:00Z This revision note recaps short run and long run aggregate supply and looks at some of the key supply-side policies together with a brief evaluation of the recent supply-side performance of the UK economy. Designed for both AS and A2 students. I have also attached a PowerPoint presentation with a selection of supply-side indicators for the UK. Revision Note (pdf format) Revision_Supply_Side_Policies.pdf PowerPoint Charts Supplyside_Performance_2008.ppt A2 Macro, AS Macro, UK Economy, Supply-side policies, 2008-04-04T12:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-innovation http://www.tutor2u.net/blog/index.php/economics/comments/revision-innovation#When:19:45:00Z Innovation has been defined by the OECD as “The transformation of an idea into a new, improved product, process or service.” This revision mind map looks at the micro and macroeconomic importance of innovation. Successful innovation can be a driving dynamic of a modern, competitive economy. A range of supply and demand-side policies can be used to foster innovative behaviour. Of key importance is the type of market structure in which innovation within the private sector can be encouraged. We must not forget too the potential for innovation in the public sector and in collaborative ventures between countries. A2 Macro, AS Macro, Supply-side policies, 2008-03-24T19:45:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/foreign-retailers-help-uk-productivity http://www.tutor2u.net/blog/index.php/economics/comments/foreign-retailers-help-uk-productivity#When:22:18:00Z For some years there has been strong evidence that inflows of foreign investment into our manufacturing sector have served to drive higher output worker. But perhaps the same is happening on the high street and in the shopping malls? A new paper by Dr Dolores Anon Higon and Dr Nicholas Vasilakos presented at the Royal Economic Society’s March 2008 annual conference finds that foreign-owned retailers may improve the productivity of the retail sector as a whole if they are more productive than British retailers and they have the effect of forcing UK retailers to raise their own game with benefits for consumers in the longer term. A summary of their findings is available here from the RES web site. Supply-side policies, 2008-03-18T22:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/quality-rather-than-price http://www.tutor2u.net/blog/index.php/economics/comments/quality-rather-than-price#When:17:16:01Z The Financial Times carried an article today which I will use when discussing the different strategies British manufacturing firms can adopt when trying to compete in competitive global markets. A2 Macro, AS Macro, Supply-side policies, 2008-03-03T17:16:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/public-goods-essays http://www.tutor2u.net/blog/index.php/economics/comments/public-goods-essays#When:21:16:01Z Thanks for the ideas for essays on public goods. I settled on giving the students a choice of one from three… AS Micro, Market Failure, Public Goods, Supply-side policies, 2008-02-25T21:16:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/innovation-leaders http://www.tutor2u.net/blog/index.php/economics/comments/innovation-leaders#When:18:52:00Z Those in Britain who believe that innovation is one of the most important supply-side determinants of economic growth, improved trade performance and rising living standards will be cheered by the latest 2007 Innovation Scoreboard for the twenty-seven nations of the EU. Sweden, Switzerland, Finland, Israel, Denmark, Japan, Germany, the UK and the US are ranked as Europe’s ‘innovation leaders’. The EU press release says that ‘The UK performs particularly strongly in Innovation & entrepreneurship with a relatively high level on the indicator of Early-stage venture capital. It performs below the EU average in the dimension of Intellectual property with a relatively lower level on the indicators of Triad patents and Community designs. The analysis of innovation efficiency suggests that the UK is above the EU average in transforming innovation inputs into Applications, but below average in transforming such inputs into Intellectual property outputs.’ I produced a revision mind map on innovation a couple of years ago, it is still available on the web site here (in pdf format) A2 Macro, European Economy, Supply-side policies, 2008-02-24T18:52:00+00:00