Economies of scale production and exports in the UK and U.S.A.

The main purpose of our research is to examine the role of economies of scale in influencing the United Kingdom domestic production and its exports and imports. Chapter One discusses the role of economies of scale in the theory of- international trade. Chapter Two discusses the various methods of measuring economies of scale, classified according to different types of cost-curves. In Chapter Three I estimate the minimum efficient firm size in U.K. industries, and also "point elasticities" for scale-economy cost-curves for 1963 and 1972. The scale elasticities were estimated at firm and plant levels. Chapter Four uses the point elasticity estimates to analyse the U.S./U.K. relative exports and imports. In addition I also consider two other explanatory variables, namely skill intensities and import tariffs. The tests were carried out for 1963 and 1972 for three different markets, namely the World, OECD, and non-OECD. In general the independent variables performed well and showed the expected signs. Chapter Five examines whether the average size of plants and capital intensity in British and American industries have a significant effect on productivity within the plants. The test makes use of a weighted average size of plants and weighted average productivity. The tests were undertaken separately at the level of the entire industry and for each of two groups, namely the large and small plants. The regression results were significant for tests on both small and large sized level plants. The co-variance technique was used to see whether the relationship between the variables differs. Chapter Six states the implications, that large firms in the U.K. operate at a disadvantage as diseconomies of scale, such as strike activities, bad labour relations and inadequate managerial control, outweigh the advantages which arise from producing on a large scale. Also, the United Kingdom has a disadvantage in skill requirements, more training courses are needed to increase the number of workers with vocational qualifications