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UK 4 GDP and Trade Profile

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Added on  2021-04-17

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Running Head: COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGE 6 6 Comparative Advantage Name of the Student Name of the University Author note Introduction 2 Background 2 Hypothesis 3 Methods and data 3 Analysis 4 Recent trade statistics of UK 4 Trade Profile of UK 4 GDP and export 10 Comparison between goods and service trade 11 Comparative advantage and Policy implication 13 Conclusion 14 Reference list 15 Data Source 15 Introduction David Ricardo proposed the theory of comparative advantage to address the problem arose from

UK 4 GDP and Trade Profile

   Added on 2021-04-17

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Running Head: COMPARATIVE ADVANTAGEComparative AdvantageName of the StudentName of the UniversityAuthor note
UK 4 GDP and Trade Profile_1
COMPARATIVE ADVANTAGE1Table of ContentsIntroduction......................................................................................................................................2Background......................................................................................................................................2Hypothesis.......................................................................................................................................3Methods and data.............................................................................................................................3Analysis...........................................................................................................................................4Recent trade statistics of UK.......................................................................................................4Trade Profile of UK.....................................................................................................................4GDP and export.........................................................................................................................10Comparison between goods and service trade...........................................................................11Comparative advantage and Policy implication........................................................................13Conclusion.....................................................................................................................................14Reference list.................................................................................................................................15Data Source...................................................................................................................................15
UK 4 GDP and Trade Profile_2
COMPARATIVE ADVANTAGE2IntroductionDavid Ricardo proposed the theory of comparative advantage to address the problemarose from the most fundamental trade theory of absolute cost advantage. The theory suggeststhat one country enjoys a comparative advantage over other when it faces a comparatively loweropportunity cost. It is then mutually beneficial for both countries to specialize in goods followingthe principle of comparative advantage (Levchenko and Zhang 2016). The report focuses ontrade pattern of United Kingdom. It tries to investigate whether the trade pattern in UK followsthe theory of comparative advantage. In today’s world, countries engage in both visible andinvisible trade. The gain from trade depends on relative cost advantage and degree ofspecialization. The paper is organized as follows- background or motivation, researchhypothesis, method and data, analysis and conclusion. BackgroundLong since United Kingdom has been involved in international trade. Trade accountsnearly half of the UK’s GDP. The external sector has accounted rapid growth in the last fewyears. The main exported goods of UK include machinery, automobiles, transport equipment,chemicals, electronic equipment and oil. One major area where UK enjoys a comparativeadvantage is in different services (Meyer 2017). Of the services that UK exports financialservices constitute a lion share making positive contribution to the UK’s balance of trade. In fact,the service sector has enjoyed a surplus in the BOP account as against deficit in goods trade. Theimported items of UK mainly include transport equipment, machines and food stuffs.
UK 4 GDP and Trade Profile_3
COMPARATIVE ADVANTAGE3HypothesisAfter discussing the UK’s trade background and basic trade framework the followinghypotheses are framed. Hypothesis 1H01: There is no statistically significant relation exists between real GDP and export HA1: A statistically significant relation exists between real GDP and export Hypothesis 2H01: The mean trade balance from good is not significantly different from mean trade balancefrom services.HA1: The mean trade balance from service is greater than the mean trade balance from services.In addition to the two main hypothesis, the others areas of interest of the research paperare whether any other trade pattern apart from comparative advantage exists in UK, major importand export partners and the associated trade policies.Methods and data The first hypothesis is about testing whether a statistically significant relation existsbetween net export and real GDP. In order to test this inference a regression analysis needs to beconducted using data analysis tool in excel. The second hypothesis is about where the tradebalance from service sector is greater than that from goods sector. For this, independent twosample t test is conducted using excel software (Chatterjee and Hadi 2015). To address otherareas of research graphs and charts are made in excel and the obtained results are evaluated incontext of UK economy.
UK 4 GDP and Trade Profile_4

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