Exchange rate appreciation, competitiveness and export performance : the UK experience in the inter-war period
This thesis principally studies the determination of UK export performance between the wars. Several improvements to the measurement of sterling's nominal and real effective exchange rate in the period are implemented, and the path of the exchange rate is related to UK and foreign exchange rate policies. The nature of competitiveness and the demand and supply mechanisms by which it may influence exports are discussed. In the light of this, and the commodity and geographical breakdown of UK exports, we suggest alternative measures of competitiveness which may appropriately be tested in econometric work. Aggregate UK export volume and price equations for the inter- war period are then estimated. Competitiveness, which is in turn influenced by the exchange rate, and the economic position of primary producing countries, are found to have had significant effects on UK export performance. Similarly specified equations are estimated for UK exports in eight industrial sectors. Distinctive characteristics of sectors may lead to substantial divergences between sectoral and aggregate behaviour. This is confirmed in further work on UK coal exports. Nevertheless, measures of the price of UK exports relative to the price of exports of other industrial countries generally give explanations of UK export performance which are superior to other competitiveness measures. A substantial statistical appendix containing data on, inter alia, UK and foreign exchange rates, trade volumes and values (with geographcial and commodity breakdown), labour costs and prices, together with the sources and methods used in their construction, is provided both for historical interest and to facilitate replication of results and further research.