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The IUP Journal of Applied Economics :
UK Technology Policy, The New Economy and Productivity in UK Manufacturing Industry
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UK has transited from a situation of technology subsidy in the 1980s to the profit-driven best and fair technology environment in the 1990s. But the question is which has been more significant in terms of long-run influence on the productivity and competitiveness of the UK manufacturing industries. This paper attempts to find the structural differences in UK manufacturing industries during 1970-2005 within the Cobb-Douglas production function framework with R&D as one of the factors. The empirical investigations in the paper confirm the short-run structural impact, and non-significant long-run effects on productivity and competitiveness of the technology policies.

The so-called `supply-side' revolution in the UK, that began in the 1980s, brought with it many changes in economic policy in the UK. None of these was in favor of technical change. Earlier technology policy mainly subsidized large companies' Research and Development (R&D) spending. This was replaced by lower subsidies and the provision of best-practice international technology information to allow companies, if they assessed it to be potentially profitable, to be at the frontier. Along with this important effect on the technological environment of the companies, the speed of technical change itself may have accelerated in the 1990s by the increasing use of computers, the so-called `new economy'.

Has either or both of these had a significant long-run influence on UK productivity or competitiveness? This paper addresses this question by looking at the effects of R&D spending on the efficiency of manufacturing industry over three decades up to the recent past. Arguably, sufficient time has now elapsed since the beginning of their implementation to enable an assessment of the supply-side effects. Relatively little time has passed since the beginning of the new economy, but its possible effect on productivity must also be considered because of its potential importance.

 
 
 

UK Technology Policy, New Economy and Productivity in UK Manufacturing Industry, technological environment, manufacturing industries, empirical investigations, technology policies, economic policy, Research and Development, supply-side effects, international technology.