Contents

Page

Introduction

    Nowadays, international integration is so advanced that most countries are multinational, even though in the 15th century to see people from other countries and even cities can be quite rare, most of these were merchants. That is why trade was the beginning of international integration. It began to tie trade to international relations between countries, it helped to expand the range of goods and services, increase employment, as well as, in principle, increase the number of people in the world. Britain is one of the most important countries in trade, because of the developed transport system. The United Kingdom has always played an important role on the world stage. It has been mother country of the industrial revolution, which marked the beginning of mass production. Therefore, the role of Britain in international trade is a serious problem, especially in the context of world crisis, because who knows, maybe the United Kingdom will play an important role in overcoming the crisis.

    The situation of Great Britain in world trade has not been reviewed yet by anyone directly. Maksakovsky V.P. and Lomakin V.P. examined the role of Britain in the global economy. Khesin E. engaged in a problem of general provisions of the United Kingdom in the world and the world economy. The Internet also gives some statistics that should be systematized.

    The purpose of my course work is to identify the role of Britain in international trade. To achieve this goal I set myself goals:

    - consider the impact of economic development for the provision of world trade;

    - to describe the international trade and identify the impact of global economic crisis on it.

    The object of my research is the United Kingdom of Great Britain and Northern Ireland. The subject - external situation of the country. To achieve this goal, I reviewed the literature on this topic, as well as systematized statistical information from the Internet.

    Course paper consists of two chapters, introduction and conclusion.

1. Economic development as a factor of external trade

1. Agriculture

    Britain's land surface is minimal compared to many other nations, but British agriculture is very intensive and highly productive. During the 20th century output rose steadily, although the increase slowed toward the end of the century, and agricultural labor became more productive. The improvement was due to innovations in farm machinery, biological engineering of seeds and plants, and the increased use of fertilizers, pesticides, and herbicides. Consequently, imports of food, feed, and beverages dropped from 36 percent of total imports in 1955 to 11 percent in 1985, and to 10 percent by 1994. Compared to other nations in the European Union, Britain's agricultural sector is much smaller in terms of employment and contribution to the GDP. In the early 2000s agriculture employed approximately 1.4 percent of the workforce and contributed 1.0 percent of the GDP.¹

    Many of Britain's full-time farms are devoted to livestock farming-raising cattle for dairy products or beef, or raising sheep for wool and meat. The treatment of farm animals became a growing concern in Britain in the late 20th century. Factory farming of chickens produced protests, as did the practice of raising calves in confined spaces. Concerns over animal welfare have led some British citizens to become vegetarians.

    Grave concern arose in the 1980s over cattle infected with bovine spongiform encephalopathy (BSE), popularly known as mad cow disease. Human beings who eat infected beef may develop Creutzfeldt-Jakob disease (CJD). BSE was first discovered in Britain in 1986, and the British government took steps to eradicate the disease and compensate farmers for lost cattle. Consumer confidence in British beef declined, and in 1996 the European Union banned Britain from exporting any beef or beef by-products. After considerable action by the government to halt the spread of the disease, the EU lifted the ban in 1999.

    Livestock farmers in Britain faced another crisis in 2001, when several cases of foot-and-mouth disease were detected in a British slaughterhouse. The highly infectious viral disease, which rarely infects humans, can quickly cripple cattle, sheep, pigs, and other animals with cloven hooves. The dangers of foot-and-mouth disease are largely economic, since infected animals often lose weight or stop producing milk. As the outbreak spread across the British countryside, the British government ordered the slaughter of more than 1 million animals to contain the virus. Cases of the disease were also detected in Belgium, France, and Ireland, leading to the destruction of herds in those countries.

    Most crop farming in Britain takes place in eastern and south central England and in eastern Scotland. The leading crops in the early 2000s were wheat, sugar beets, potatoes, barley, and rapeseed. As concern has grown about the use of fertilizers, pesticides, and biologically engineered seeds and their effect on the environment, some farmers have turned to organic farming, with support from the government.²

    The British government began subsidizing the prices paid for agricultural products after World War II as a way to make farming profitable. In 1973 Britain joined the European Economic Community (EEC, now the European Union), and since then agricultural policy has been determined primarily by the EU's Common Agricultural Policy (CAP).³ This policy seeks to keep the agricultural market stable, ensure that farmers earn a fair living, and provide consumers with affordable food supplies. As a result of EU policies, products coming into Britain from non-EU countries are taxed, surplus products are bought and stored for later sale, and the cost of exports is subsidized if prices are low.

    The British have criticized CAP, primarily because the British farming sector is smaller than the farming sectors of most EU nations. British farmers receive less monetary support from the EU than British taxpayers and consumers pay into CAP, and some British taxpayers and consumers feel they are supporting inefficient European farmers.

    Criticism has increased as greater agricultural yields around the world have led to more CAP subsidies for European agriculture. CAP implemented various reforms in 1992 to reduce costs, subsidies, and stockpiles of foodstuffs, such as the surpluses of butter and wine in the 1970s and 1980s. Farmers have been encouraged to take land out of production, to adopt environmentally sound farming methods even though this may decrease production, and to place production quotas on certain products in an effort to reduce the amount of subsidy money they receive. Even so, CAP policies designed to protect small farms, particularly in France and Germany, continue to anger British taxpayers.

2. Manufacturing

    The history of manufacturing in Britain is unique because of Britain's role as the birthplace of the Industrial Revolution. During the Middle Ages the production of woolen textiles was a key industry in Britain. In the 16th and 17th centuries, new industries developed. These included silk weaving, garment making, and the manufacturing of hats, pottery, and cutlery.⁴ All of these operations were generally conducted in small craft shops and were labor-intensive.

    In the 18th century a number of changes in British society prepared the way for the Industrial Revolution. Colonial and commercial expansion created markets in North America, Africa, and parts of Asia. Coal and iron mining developed as Britain's dwindling forests created the need for another energy source, and new smelting techniques made iron implements cheaper to produce. An agricultural revolution in the 18th century introduced new crops and crop rotation techniques, better breeding methods, and mechanical devices for cultivation. This coincided with a rapid increase in population, in part due to better hygiene and diets, providing both consumers and workers for the new manufacturing operations.

    During the Industrial Revolution new methods of manufacturing products were developed. Instead of being made by hand, many products were made by machine. Production moved from small craft shops to factories, and population shifted to urban areas where these factories were located. Cotton textile factories using newly developed steam-powered machines produced more goods at a lower cost per item. Textiles, shipbuilding, iron, and steel emerged as important industries, and coal remained the most important industrial fuel. The Industrial Revolution dramatically raised the overall standard of living.

    The structure of British industry changed substantially in the last half of the 20th century. The coal mining and cotton textile industries declined sharply. As coal production declined, oil production replaced it as a major industry. Motor vehicle production became a significant part of the industrial base but was subject to severe foreign competition. As incomes increased, consumer demand rose for durable goods such as cars and kitchen appliances. British industrial production also expanded into communications equipment, including fiber optics, computers, computer-controlled machine tools, and robots. Growing industries in recent decades include paper products and publishing; chemicals, such as pharmaceuticals; rubber and plastics; and electronic and optical equipment.

    Scotland is also a major producer of computers. The so-called Silicon Glen between Glasgow and Edinburgh employs thousands of people in the electronics industry and is the site of many overseas computer firms. Scotland and Northern Ireland are still noted for their production of whiskey and textiles, especially linen from Northern Ireland and tweed from Scotland.

    About 12 percent of the workforce was engaged in manufacturing in the early 2000s, and manufacturing accounted for about 16 percent of the gross domestic product (GDP).⁵

3. The service sector

    One sign of a highly developed nation is a large and sophisticated service sector. When a nation's economy matures, its service sector grows rapidly while its manufacturing sector stabilizes or diminishes. This was the case with Britain. In the early 2000s Britain's service sector accounted for nearly three-fourths of the GDP and employed almost fourth-fifths of the workforce. The service industries include finance, retailing, wholesaling, tourism, business services, transport, insurance, investment, advertising, public relations, market research, education, administration, and government and professional services.

    Britain developed sophisticated banking, financial, insurance, and shipping operations as early as the 17th century to support its expanding international ocean trade. Lloyd's of London, an early insurance house, began when a number of people willing to underwrite, or insure, the success of voyages gathered regularly at Lloyd's Coffee House in London to share shipping news. Lloyd's now insures approximately half of the world's shipping and cargoes as well as much of the aircraft industry.

    Banking and financial services have always played an important part in London's economy, and levels of specialization and expertise have been high. This has attracted ever-larger amounts of business from an increasingly global economy. Today, London has the largest concentration of international banks in the world and is the world's leading center for currency trading. Leeds, Manchester, Cardiff, Liverpool, Edinburgh, and Glasgow have developed as financial centers in recent decades. London is also the world's leading center for insurance and handles 20 percent of the world's insurance business. The financial services sector expanded especially rapidly after the deregulation of the stock exchange in 1986. By the early 2000s financial and other business services, including real estate, accounted for more than one-quarter of Britain's GDP and employed nearly one-fifth of the workforce.⁶

    Several significant developments in the service sector took place toward the end of the 20th century. Telecommunications became a dynamic growth industry, and independent retailing declined sharply.

    The leisure industry grew dynamically, commanding an increasing proportion of consumer spending. Organizations catering to international conferences and exhibitions also have been a growth area. These organizations have been particularly successful because Britain is one of the world's top locations for business meetings and trade shows.

    Tourism has become an increasingly important economic sector in Britain, employing at least 7 percent of the workforce. Britain is one of the world's top tourist destinations, annually attracting about 25 million overseas visitors in the early 2000s—more than a 50 percent increase over the early 1980s. Under the Development of Tourism Act of 1969, a government organization, the British Tourist Authority, was set up to attract overseas visitors and to improve tourist accommodation and travel conditions.⁷

4. Transportation

    Britain has historically been an innovator and world leader in many forms of transportation, from shipping to rail systems to aviation. Transport services make near 8% GDP of the United Kingdom. In their grant, including contiguous industries, about 1.4 million persons are busy.⁸

    Because Britain is an island, shipping has been important for centuries. The irregular coastlines of the British Isles provide many natural harbors, and Britain's gentle, navigable rivers have always been conducive to shipping. Seafaring skills were directly connected to Britain's growth as a naval power. As early as the 16th century Britain defeated Spain, its greatest rival at sea. In the 17th and 18th centuries France was defeated, then Germany in the early 20th century. Prior to World War II, Britain had the largest merchant fleet in the world, a fleet that sailed throughout the vast British Empire and was protected by the Royal Navy. Britain continued to be the world leader in shipping until World War II, when submarine attacks by Germany sank many British vessels and the tremendous output of the American shipbuilding industry made the United States the world leader.

    Today many British shipping firms operate under foreign flags to avoid the more stringent British shipping regulations, including higher wages for crews. Most British passenger shipping involves ferry trips to the continent of Europe or to Ireland. Tankers carrying oil and dry bulk cargo make up the majority of oceanic shipping. British ports were nationalized in the late 1940s, and in recent years most have moved into the private sector or are governed by independent trusts. The most important port in the United Kingdom is London; other important commercial ports are at Forth in Scotland, Grimsby and Birmingham in eastern England, Liverpool in western England, and Southampton and Dover in southern England.

    Canals were built in Britain to link rivers, and most of Britain's canals were built as part of the transportation revolution that took place between 1750 and 1840. Canals were built by gangs of laborers known as navigators, a name that came from their task of creating channels of inland navigation. This term was soon shortened to "navvies." The canals were important during the Industrial Revolution for transporting goods, but by the 1830s they had to compete with the new railways, which quickly surpassed them. Thereafter, canals were used to carry extremely bulky materials.⁹

    Today Britain has about 3,200 km (about 2,000 mi) of canals and navigable rivers, of which about 620 km (about 390 mi) are commercial waterways. The most important of these are the Manchester Ship Canal, which is the largest canal in Britain; the Thames; and the Caledonian Canal across northern Scotland, which provides a navigable waterway linking the North Sea and the Atlantic Ocean. The rest of the rivers and canals are used for recreation and form part of Britain's historical heritage.¹⁰

    The Victorian era was also known as the Railway Age. The railroad can be considered the child of the British coal mines because carts on tracks were used to haul coal. These precursors of the railroad were then combined with steam engines, which led to further technological innovations. An added advantage in the development of railroads in Britain was that the most populated parts of the country, where this mode of transportation was needed, were relatively flat.

    The world's first public railway was the Stockton and Darlington, which opened in 1825. A period of hectic railway building followed for the next quarter century as different companies competed to lay track. It was a massive undertaking that employed vast armies of laborers and altered the British landscape by digging through hills and constructing bridges and tunnels. In a short time the basic grid of Britain's railways was in place.¹¹

    Over the ensuing century smaller railway companies were absorbed or merged into a few large companies. In 1948 the government nationalized the four remaining companies, and in the 1960s they became the British Railways Board. In 1955 a modernization program began to replace steam trains with diesel and electric ones. The last steam locomotive was withdrawn in 1968. Around this time intense competition from road transport made it necessary to cut costs, and many unprofitable branch railway lines closed.¹²

    Railroads were part of the wave of privatization that took place in the early 1990s. The complicated procedure was based on the Railway Act of 1993. The infrastructure, including tracks and train operations, was put into the hands of Rail track, a government-owned company that was privatized by selling stock to private investors. Passenger operations were split into 25 operating units, each franchised to a private firm given the right to provide passenger service to a particular region of Britain.¹³ In 1995 freight operations in Britain were divided among private companies based in different parts of the country. The government appoints a rail regulator and a franchising director to ensure that rail arrangements are fair to companies and passengers. The moves to fully privatize BR were highly contentious and generated considerable criticism within Britain.

    The fractured nature of rail organization was forcefully brought home in the late 1990s and early 2000s with a series of high-profile rail accidents. The accidents were blamed in part on the separation of ownership of rail and rolling stock and on the needs of privatized companies to provide shareholder income at the perceived expense of passenger safety. After a crash in 2000 in Hertfordshire caused by faulty rails, the entire railway network was examined and track replaced, leading to severe delays to rail journeys for months. Rail track was replaced in 2003 by Network Rail, a not-for-profit company.¹⁴

    A railway tunnel beneath the English Channel was completed in 1993, connecting England and the European continent. The main Channel Tunnel, which is 50.4 km (32 mi) long, runs from Folkston, England, to Calais, France. Trains carry both passengers and freight through the tunnel. Motorists can drive their cars on and off the train. The trip through the tunnel takes about 35 minutes.¹⁵ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2. Foreign trade

1. The foreign trade turnover, exports, imports

    In 2007, Britain's foreign trade turnover decreased in comparison with 2006 by 2.5% and amounted to 521.1 mlrd.f.st. In 2007, there has been a significant increase in absolute value of the negative balance of trade of Great Britain (at 31.6 mlrd.f.st.) to 89.8 mlrd.f.st.¹⁶

    The value of exports fell by 10.2% and amounted to 218.9 mlrd.f.st., with its volume decreased by 1.0%. Reduced average export prices were 9.3% and had a decisive influence on the dynamics of British exports in general. In 2007, the UK largest share of exports accounted for by machinery and equipment (24.3%), vehicles (13.8%), mineral products (10.9%), products of chemical industry (16.0%).¹⁷

    There was an increase in export shipments for broad product groups such as animal and vegetable fats and oils (12.6%), miscellaneous manufactured goods (9.9%), products of vegetable origin (9.6%), base metals and articles of them (9.1%), transport (8.2%), live animals, animal products (6,5%), precious metals and stones (6.2%), prepared foodstuffs (6.1%) , paper pulp (5.8%), chemicals (3.2%). In 2007 he dropped the British exports of machinery, equipment and machinery (at 36.9%), instruments and apparatus (by 5.5%), wood (at 3.2%), mineral products (by 3,2%).¹⁸

    The value of imports increased by 2.2% and reached 308.9 mlrd.f.st., while its volume increased by 1.2%, while average import prices - by 1.1%. The basis of British imports was machinery and equipment (23.4%), vehicles (15.0%), mineral products (10.4%), chemicals (9.9%).¹⁹

    There was an increase in imports of timber (at 14.3%), precious metals and products thereof (13.1%), various industrial products (12.6%), animal and vegetable oils and fats (11.5%), products chemical industry (9.5%), finished food products (73%), transport (7.2%), products of vegetable origin (6.7%), plastics and products thereof (5.3%) textiles and textile products (1.8%), mineral products (1.1%). At the same time reduced the import of instruments and apparatus (by 8.7%), machinery, equipment and machinery (7.1%), precious metals and stones (5.1%).²⁰