In this post we will discuss foreign trade of the English economy. First we briefly discuss the evolution of English foreign trade and secondly discuss some important facts that are occurring today.
For a mature economy like the English, external openness has brought a number of positive effects originating from the advantages that trade poses to the growth of an economy. Countries specialize in activities that are more efficient by taking advantage of resource endowments or technological innovations from other countries. As well as companies take advantage of economies of scale and benefit from access to wider markets.
If we analyze the evolution of trade in the English economy, we can say that since 1960 the English economy has benefited from the positive effects of international trade. We say this has been the result of hard work done by the economic liberalization English in the process of integration in the EU between 1980 and early 1999.
Since early 1986, full integration, English exports have maintained an upward trend, with the strongest growth between 1992 and 1997, as a result of the devaluations that were still possible of the peseta, which shows an increase competitiveness of our products. But after 2000 the percentage share of our exports in GDP begins to fall due to loss of competitiveness of the economy. Imports also continued an upward trend over time, especially in the mid 90's. With the characteristic that although exports are also growing, imports are always kept at a higher rate of growth, we could say that today is a normal data as we discuss later. The difference between the percentage of exports and imports caused the trade deficit volume reached their peak in 1988-92 and 1999-2003 periods.
the English economy in 1959 was a very closed economy to the outside. After a liberalization effort to its entry into the EU (1986), the English economy has become today one of the most competitive economies worldwide. English trade policy was geared towards the import substitution model in 1970, and after this liberalization process was more oriented towards foreign markets.
The English economy made a tariff dismantling process that successfully took the EU to become his main client and supplier. Within EU countries the most prominent clients include France, Germany, Portugal, United Kingdom and Italy. Out of these highlights the Eastern European countries and Latin America. Showing a very small weight of exports to Japan and China.
For English imports are the EU countries leading suppliers. Out of these highlights the important role OPEC, responsible for just over 6% of imports of the English economy. Reflecting what goes on today, is that the English economy is an economy heavily dependent on imports, especially imports of energy products.
is true that the English economy, still very closed to the outside, made a major effort underway liberalizing tariff disarmament very important, which led her to grow and be a competitive economy. But now the English economy continues to show some inefficiencies do not let it grow at a pace that could make it a competitive economy such as ours.
The data for 2004 compared to external demand are as follows, imports (9.31%) have a higher rate than exports (3.32%). Data should not be very surprising to us because of the weight of the import for our economy, and we are very dependent on imported products as they are relevant to our production. These products are mainly the energy, the technology, raw materials and intermediate products. For the year 2005, imports of goods and products continue to be higher than exports.
a fact that if we must call attention is that the growth rate of our Exports of services by the year 2005 compared to 2004 has decreased. Our economy has always been an exporter of services, which has softened the usual deficit in our trade balance, this is because we have a very competitive service sector, and now these results must call attention, because our exports is falling while increasing imports. The fact that reducing the surplus in the services sector can be alarming for the economy. With what we can say that the contribution of external demand in the English GDP remains negative.
Our trade has been largely protected from the outside, they saw no need English business have to export their products. Production levels were sufficient to supply the domestic population and therefore make little investment in technological innovations that made them more competitive abroad. This high protectionism of our trade had a positive effect as forcing the economy to develop major sectors which did not have but also had negative effects and contribute to inflation and therefore we were not competitive in the external sector. From here and started a permanent external imbalance importing more than exporting.
Our main imports are energy products, which to us are almost otherwise impossible to get different import. The strong dependence we have on these products is hurting other sectors of the economy. Today the English economy is experiencing inflationary period, and one of the main reasons is the rising price of oil, of which we are very dependent. The rise in the price of this input is reflected in increases in final prices of products that use oil as an input to production. In fact, the sectors showing most inflationary behavior are those that depend mainly on the right. Such is the case of transport. From my point of view I think that the English economy could replace products other energy products were more readily available and not showing those price spikes that produce so much instability in our economy. In this sense in some parts of Spain and is being carried out using water mills or solar heating. And I think this is a good measure. In my opinion I think it would be great that our economy was able to replace most of our products imported products.
We have to say that today our exports are growing but growth is insufficient to absorb the high percentage of imports, this is due to the strong dependence que tenemos del exterior.
En este momento el sector exterior, se está comportando de manera negativa, lo que hace que perdamos 2 puntos porcentuales en el crecimiento de nuestra economía. Desde el año 2004 perdemos competitividad en nuestros productos y puede ser debido a que nuestros productos tienen que competir con productos de terceros países, en la Unión Europea. Estos productos son muy competitivos y de bajo coste debido a la dotación de recursos de estos países y que les hacen conseguir ventajas competitivas con las que nuestros productos no pueden competir. Lo que ha producido una desviación de la demanda exterior hacia estos tipos de productos de terceros países, lo que ha provocado una disminución de nuestras exports. This may also explain the investment efforts of our industries in equipment today, and they are renovating their production systems in order to offer more competitive products and adapted to new needs demand.
I also think that the agricultural system is a bit forgotten, when it comes to having a little more attention, as far as production subsidies or incentives are concerned. Our agricultural system is different from the rest of the EU, since the characteristics that our agriculture has not have the other economies, such as sun and weather patterns. I guess you could ensure that our agricultural sector to increase its exports and increased competitive advantage. I think our traditional agriculture is very characteristic and because of the tensions that are occurring in the sector, more and more farmers for whom the situation becomes untenable and forced to abandon business. I think we could have an agricultural system stronger and more competitive.
