2 Sectors Lead UK Productivity Growth

Process sectors lead productivity growth

The pharmaceutical and chemical sectors were recently named by the government as the two sectors most responsible for increased productivity in British manufacturing over the past 20 years.

The Office of National Statistics (ONS) presented figures showing that despite manufacturing's share of the overall economy falling from 36% of the economy in 1948 to around 10% in 2013, productivity in the manufacturing industry has risen by around 2.8% a year over the same period, compared with 1.5% in the service industry.

Much of this increase in productivity has occurred since the early 1990s, with the ONS crediting chemical and pharmaceutical products with making the largest contribution.

The manufacturing industry is becoming more productive, despite a steady fall in the number of people employed and broadly stable capital stock, and economic downturns in the 1970s, early 1990s, and notably 2008-9,

There are several factors at work: a better quality and more skilled workforce; a shift from the production of low to high productivity goods; an improvement in the information technology base; more investment in research and development and a more integrated global economy. Exporting firms generally are associated with higher productivity and foreign-owned firms in the UK generally experience higher productivity than domestic firms.

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