Kavan Choksi Talks About the Prime Enduring Economic Strengths of United Kingdom

Economic Strengths of United Kingdom

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The United Kingdom was the fourth-largest exporter in the OECD or Organisation for Economic Cooperation and Development in 2019, just behind Japan, Germany, and the United States. It also was the fifth largest in the world, and exported almost $900 billion worth of goods and services. Kavan Choksi points out that within this, the UK has a very large specialization in services. The country exported $418 billion worth of services in 2019, which was the second highest in the world. The services share of the UK is almost twice that of the OECD average, as well as about 1.8 times the global share.

Kavan Choksi provides a brief understanding of the major trade specializations of the UK over the years

Within the scope of services specialism, the United Kingdom has a widely know, strong advantage in financial services, insurance, and other business services. It tends to export more than double the global average share, which is about 230 billion across these three service categories. The United Kingdom is also a major exporter of other services, which include personal, cultural, and recreational services. Their export share has been about one-fifth larger than the global average in this regard, totaling to $5.7 billion in 2019. The United Kingdom also earns a lot from charges for intellectual property. This includes royalties to broadcast UK-produced TV shows abroad.

While the country does export a range of services, the United Kingdom also has its strength when it comes to exporting in a number of goods categories. They have a larger than average share of exports in pharmaceuticals, beverages, art, and aircraft. There are certain goods where the country has real relative strengths. Hence, its services sector cannot be considered to be its only strength. However, the services sector does influence its economy to a good extent.

When taken together, the specializations in exports of the UK are quite varied. A leading finance and business expert, Kavan Choksi mentions that on a range of statistical measures, the breadth of the trade mix of the United Kingdom average by the standards of medium-sized industrialized nations. This basically means that the UK is not too diversified or concentrated in its exports. They are a bit more specialized than Germany or France, but less than Japan. The UK additionally is much less specialized than smaller but rich nations like Ireland and Switzerland. The pattern of trade specialization in the UK is not unusually narrow or idiosyncratic.

A lot of developed nations, including the United Kingdom, have not changed their specialism too much over the recent years. For example, prior to the rapid deindustrialization of its economy was complete, the strength of the UK in services was present in 1980. However, it did increase considerably in the late-1990s, around the time of the financial crisis. Among the top ten products in which the UK was most specialized in 1989, seven was in their top ten in 2018. The top two back then, financial services and beverages, are still the top two now. More broadly speaking, the comparative advantage in the majority of the product categories has not tended to change much over time.

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