UK is one of the major centers for commerce and international business in the world. It is one country that has had to raise its economy through free trade and other business related portfolios. It later developed to principles of liberalization of international trade and investments in order for it to expand and grow especially in the 20th century. It has been able to attract large investments from multinational countries in order to meet the demand for the larger British population thereby minimizing unemployment rates.
This paper will therefore examine the investment opportunities and challenges in UK (Office for National Statistics, UK 2006). Foreign investments Opportunities The UK has very many opportunities in terms of foreign investments. It is one of the fifth largest economies in the world and second in the European Union. The country’s capital, which is London, is considered a haven of investments especially in the financial sector. The country has a GDP of $ 2. 1 trillion and a GDP growth rate of 2 %. (2007 estimates).
Most of the opportunities lie in the service sector (Office for National Statistics, UK 2006) Industries UK has very many industries that can be invested in by any foreign country and the major ones are; agriculture, telecommunications, manufacture, fishing and tourism. The UK is one of the leading countries in agricultural exports and this is the main driving force for its economy. (Bailey, 1999) International trade statistics Major exports The dollar value for most of the export trading has been improving due to increase in demand for exports going by recent statistics on total exports from the UK.
The trend however has been found to be fluctuating and that it depends on other factors such as; political stability, foreign policies etc. (Office for National Statistics, UK 2006) The major exports the country has been undertaking are the agricultural produce; wheat, rice, maize and tea. In the manufacturing the sector, the country exports agricultural machinery such the tractors and its implements, food, tobacco, paper, printing, textiles, paper and publishing.
In the service sector, the country has developed high-tech networks in the telecommunications industry. The leading company in this sector is Vodafone and it has also gone global in its service provision. Major imports The major imports that are imported to the country include automobiles, horticultural produce, tea, coffee, and oil. The dollar value for most of the imports is low as the demand for the products reduces in the country. The dollar value increases when oil products become scarce due to international demand. (Bailey, 1999)
Balance of payments situation According to the Office of National statistics, the manufacturing industry accounted for approximately 19% of all the national output in UK last year and also made up to 16% of all the employment in the country. The British economy does not however depend entirely on this and it may decline in the next two to three decades. Other industries are coming up especially the service sectors with a view to balance payments situation in regard to treasury bills. (Office for National Statistics, UK 2006) Exchange rates
Exchange rates in the UK have been changing since the year 1999 and today, the exchange rates are way below the 0. 54 mark. This can be attributed to the changing events of the decade and globalization (Bailey, 1999). The following table shows the changing exchange rates-over the counter- for the Sterling pound, Euros and the dollars. Year ? /USD USD/? ?/EUR EUR/? 2005 ? 0. 5500 $1. 821 ? 0. 6842 €1. 463 2006 ? 0. 5426 $1. 859 ? 0. 6815 €1. 467 Source: Office for National Statistics, UK 2006 Trade restrictions 1. Embargoes
Embargoes are political trade tools that are put by trading bodies or governments in order to support a justified peace process. Trade embargoes in the UK has been used to support either the EU or the UN in order to deny individuals the opportunity to use money from international trade in buying weapons of mass destruction. This will be used for the purpose of containing retrogressive countries the financial capability to use trading activities for insecurity purposes. Such countries which have been blacklisted by the UK include; Iraq, Iran, Sudan, Zimbabwe etc. (Neid, 1988) 2. Quotas
Tradable quotas are policy instruments aimed at restraining trade of certain commodities in the UK. Limiting the production or importation of non-environmentally friendly automobiles can reduce taking for example greenhouse gases. The UK has been able to meet its environmental objective through the implementation of quotas systems. (Neid, 1988) 3. Import taxes Import taxes are designed to protect local industries from international competitors who may be financially stronger than them. This strategy has been utilized by the UK in order to protect vulnerable sectors of its economy.
Although it allows importation of textiles, the country charges high import taxes on all unprocessed hides and skins to protect its local industries. (Lawrence, 2002) 4. Tariffs Trade tariffs are the main hindrance to trading between two countries. These trade tariffs depend with policies formulated by individual countries concerning how the countries wish to conduct its trading. The United Kingdom has however developed a smooth and business free environment for most countries in Africa, Asia and the U. S. this has made investment more conducive for many multinational firms. (Neid, 1988) 5.
Licensing Licensing is one of the techniques used to promote international trading. The UK has been able to utilize licensing agreements with other international firms to boost its trading. The country has also been able to license many international firms to operate in the country as a means of encouraging investments. (Lawrence, 2002) 6. Custom duties Custom duties are one of the main sources misunderstandings between countries due to the fact that they favor the home-based industries. Custom duties are usually employed by the government top curb influx of external products into the country.
The UK has been able to utilize this remedy effectively especially in sectors which the government feels threatened such as energy, education, transport and manufacturing. (Bailey, 1999) Extend of economic activity not included in cash income transactions The extent, to which other economic activities which does not include cash income transactions, is not wide and especially that the economy is entirely dependent on two core industries. I. e. service and manufacturing. The rest which may not involve cash transactions. (Neid, 1988) Counter trades
The UK has used counter trade strategies to improve their international presence in almost all its sectors. Counter trades function effectively when the trading countries agree on issues such as import duties, taxes and tariffs (Bailey, 1999). Labour force The UK labor force currently stands at 31 million going by 2007 statistics. Majority of this labor force are concentrated in the private sector and some of them in the public sector. Most of the employees in sectors such as the health sector may have been imported to the country to serve as nurse this has been caused by the worldwide shortage of the same.
The unemployment rates in UK currently stand at 5. 4 %( 2007 estimates) most of whom are fresh graduates and the poorly educated young men and women in the country. (Office for National Statistics, UK 2006) Inflation rates The inflation rate for the UK as at 31st December, 2006, was 2. 3% and a poverty rate of 17 % by then. The inflation however, fluctuates depending on the economic situation of the country (Office for National Statistics, UK 2006) Developments in science and technology UK is one of the European counties which have invested heavily on innovation and technology.
Almost all sectors of its economy are coping up with changes in technology. The country is using technology as means of out-competing its competitors in the manufacturing and service sectors. That is why most firms in the country are investing in research and development. The government has been able to utilize 5. 4 % of the GNP on R&D in the last fiscal year ending March 31, 2007. The technological skills of the current labor force in the UK can be rated good depending on which sector one is referring to. With reasonable levels of literacy (79% at the moment), the country’s population can improve.
(Office for National Statistics, UK 2006) Conclusion There is a team of science and technology promoters under the department of UK Trade and Investment whose role is to help firms realize their international potential through partnership support and knowledge transfer. It mainly enhances competitiveness of companies trading in the UK and also those involved in international trade. The UK has been able to attract high quality foreign direct investments through this department which offers guidance and direction including available opportunities and marketing.
References Bailey, M.(1999): Exchange rate trends and trade performance; Waldwick Archive, Vol 12 Ferguson, N (2004): Empire, The rise and demise of the British world order and the lessons for global investments. Basic Books, Oxford, p 90 Lawrence H. (2002): Exchange rate between the United States dollar and forty other countries and its effects on investment, Macmillan, Washington. P 34-40 Neid H. (1988): Multinational investment strategies in British Isles, Routlegde, UK. P 122-131 Office for National Statistics (UK 2006): The Official Yearbook of the United Kingdom of Great Britain and Northern Ireland. P 45-57
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 1 December 2016
We will write a custom essay sample on International Marketing
for only $16.38 $12.9/page