Why are UK exports price inelastic?
I’m writing an essay, and one of my points was that UK exports, on the whole, are more elastic. I think this is because:
- Other countries have a comparative advantage in more industries, so there are lots of substitutes.
- UK exports are less price competitive, and we generally specialise in luxury industries rather than cheap production, so a change in price has a greater effect
- UK has a weak “brand” compared to Germany and China etc
I can see how UK exports are inelastic, because of the fact that weak exchange rates do not increase export competitiveness much. But I don’t see why this actually happens? Can someone explain to me? Thank you
- Other countries have a comparative advantage in more industries, so there are lots of substitutes.
- UK exports are less price competitive, and we generally specialise in luxury industries rather than cheap production, so a change in price has a greater effect
- UK has a weak “brand” compared to Germany and China etc
I can see how UK exports are inelastic, because of the fact that weak exchange rates do not increase export competitiveness much. But I don’t see why this actually happens? Can someone explain to me? Thank you
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