Definition of Foreign Direct Investment (FDI). FDI is the net transfer of funds to purchase and acquire physical capital, such as factories and machines, e.g. Nissan, a Japanese firm, building a car factory in the UK. In recent years, foreign direct investment has also widened to include the purchase of assets and shares which give …
Labour productivity measures the output per worker in a period of time. Labour productivity is an important factor in determining the long-run trend rate of economic growth; tax revenues, inflation and real wages. Since the start of the great recession in early 2008, UK labour productivity growth has remained very low – well below the …
In the past two decades, the UK has experienced a steady flow of net migrants into the economy. The 2016 Brexit vote has led to a sharp fall in net EU migration, but to a large extent this has been offset by a rise in non-EU migration. This net migration has had a wide-ranging impact …
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A look at factors affecting the demand and supply of housing. In summary. Demand-side factors 1. Affordability. Rising incomes mean that people are able to afford to spend more on housing. During periods of economic growth, demand for houses tends to rise. Also, demand for housing tends to be a luxury good. So a rise …
Is there a link between government debt and the interest rate on government bonds? One argument we often hear is that if government borrowing increases – we can expect higher bond yields. Investors demand higher yields to compensate for the risk of government default. However, other economists argue this is misleading. If inflation is low, …
Nominal values are the current monetary values. Real values are adjusted for inflation and show prices/wages at constant prices. Real values give a better guide to what you can actually buy and the opportunity costs you face. Example of real vs nominal If you receive an 8% increase in your wages from £100 to £108, …
Readers Question: explain how economists define ‘full employment’? The first definition of full employment would be the situation where everyone willing to work at the going wage rate is able to get a job. This would imply that unemployment is zero because if you are not willing to work then you should not be counted …