When John Maynard Keynes, father of modern microeconomics, first formulated the theory of how to increase national product, brass domestic production, and address the issues of inflation and unemployment, government spending was the example that he drew upon as one of the economic solutions in order to escape such problems which had significantly impacted the United States in many European countries and even resulted in the economic Great Depression.
This is important especially for the topic of construction and infrastructure in the United Kingdom because, as the economist had place it, construction and infrastructure projects are the largest government spending economic activities (Begg et al. 2008). Therefore, in the question of economic development for the UK, construction in such public Works by the government is seen as the primary way in order to follow such economic concepts to avoid further microeconomic problems.
However, economics understands that the local projects such as infrastructure that are created by the government in order to deliver services under the umbrella of public goods do not occur in a static situation and there are other external economic variables that are taken into consideration in such an occurrence(Begg et al. 2008). Therefore, especially in today’s global economy, the international economy plays an important role in the construction sector of the United Kingdom and that specific industry.
The area of financing or one of the international economic factors that play a significant role. Remember that government infrastructure and public works projects are often extremely expensive public good initiatives that could not be handled and funded by local governments in that process. In the example of Third World countries, most development and infrastructure projects are gone about by borrowing in international institutions such as the World Bank and international monetary fund.
In the United Kingdom, however, a first world country, even though they’re also funds allocated by the local government for such infrastructure projects, international financing through economic cooperation activities with other countries place the role of funding such government works (Obstfeld et al. 2005). The macro economic multiplier effect for labor and consumption claims that such funds that are borrowed from international economies may be repaid by the exponential growth in reduction in a country which is created by labor growth in labor consumption through production.
Another importance of the international community to local construction projects is that construction and engineering eventually creates knowledge spillovers especially for countries that have made use of the same kinds of infrastructure. Such knowledge spillovers are important especially in the generation of higher-level management and individuals who have knowledge — and eventually economies of scale — in such construction and infrastructure projects. Without previous knowledge, or costly for the United Kingdom to implement construction projects on its own especially for the relevant on the risk public works infrastructure (Caves 2007).
In this respect, the European Union, the larger economic umbrella in the area, is able to address both these issues especially the first one. In international trade theory in economics, there are five levels of economic operations, where a trade union is the highest one that generates international capital mobility as well as international labor mobility among members of such trade union and economic cooperation (Artis & Nixson 2007). Therefore, the existence of European Union significantly contributes to improvements in the public works infrastructure sector of the United Kingdom.
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Topic: International Economy (Eu)& UK Construction Sector
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