UK levels of foreign direct investment (FDI)

UK levels of foreign direct investment (FDI)

Foreign direct investment involves the transfer of funds to be involved in capital investment in a foreign company. For example, if a Japanese firm, like Toyota builds a factory in the UK, this counts as inward investment into the UK. Foreign direct investment does not include portfolio investment, e.g. Chinese saving money in UK banks or buying bonds FDI and balance of payments Inflows of inward investment count as a credit on the capital (financial) account of the balance of payments. However, if profit from the investment goes back to the…

Cost and benefits of EU in perspective

Cost and benefits of EU in perspective

I wrote a while back that I was a rather unenthusiastic supporter of remaining in Europe, and perhaps it wasn’t that important. In recent weeks, I have become more committed to staying in Europe, and feeling leaving the EU would be a regressive step. Bigger perspective The EU was formed out of the Second World War and a continent continually fighting amongst itself. The EU has played a role in changing the European continent for the better. It’s easy to take this for granted, but it is quite an achievement. The second…

Framing political and economic messages

Framing political and economic messages

In economics, the framing effect states consumer choices will be influenced by how information is presented. One of the challenges of an economist is to find correct statistics and present them in a way which offers a meaningful and fair portrayal of the situation. Everyone has certain political bias and it can be tempting to present statistics which portray your viewpoint in the most flattering light. For example, even the difference between real GDP growth and real GDP per capita can be important. Another skill is to be aware of…

Can you talk yourself into a recession?

Can you talk yourself into a recession?

George Osborne has recently stated that leaving the EU could leave a black hole in public finances of £30bn and this would lead to sharp budget cuts – tax rises and spending cuts. This raises the interesting question of whether you can talk yourself into a recession. Do predictions of recession become self-fulfilling? How can you talk yourself into recession? If influential people talk about an upcoming recession, it makes people nervous about their economic future. Therefore, they cut back…

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Fiscal impact of immigration

If you are interested in fiscal impact of net migration, this study “Fiscal effects of immigration to the UK” is worth reading. Some highlights EU migrants cost the UK government £408.12 per second in public expenditures, and contribute £463.35 per second in revenue. Of all EU migrants, nearly nine in ten are of working age. According to long-term international migration data collected by the ONS, around 48.9 % of EU migrants that came to the UK in 2013 were between the ages of 15 and 24. Meanwhile, 40.9%…

The economic effect of immigration on the NHS

The economic effect of immigration on the NHS

A big issue is how net migration is affecting the National Health Service. Does an influx of migrants place greater strain on the NHS? Is migration a convenient excuse for the more long-term issues facing the NHS? To what extent do migrants work for the NHS? If we cut migration levels would that affect taxation and spending on the NHS? National Heath Care under pressure The first factor in determining the health of the National Health Care system is how many resources are put into it. The government has often stated that…

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Neoliberalism

Neoliberalism is a term commonly used to describe free-market economics. Neoliberalism involves policies associated with free trade, privatisation, price deregulation, a reduced size of government and flexible labour markets. Recently, neoliberalism has been associated with the policies of austerity and attempts to reduce budget deficits – usually by cutting government spending on social programmes. Neo-liberalism is closely associated with the Washington Consensus – the free market approach of the IMF and other institutions. It also closely overlaps with the classical economic philosophy of laissez faire. The origin of Neoliberalism Neoliberalism…

Population density

Population density

Population density is the average number of people living per square mile / km. A high population density implies that the population is high relative to the size of the country. Countries, such as as Belgium and the Netherlands have a high population density. Large countries, such as Australia and Canada have very low densities. Though this low density is skewed by the fact large areas of Australia and Canada are considered inhospitable places to live,…