The UK has evolved into mainly a service sector economy and less of a manufacturing economy. Why?

Question

What economic factors have led to this? How has this affected productivity of the UK as compared to other Western european countries ?

Answer 1

This is the result of something called comparative advantage in economics terms. Its not that the UK can't do manufacturing jobs. Its a simple matter that these manufacturing jobs can be done more effectively elsewhere. Many service sector jobs require certain special skills. For example, not just anyone can perform welding or do electrical work. These are things that require that certain skills be acquired, many of which take many years and much training to acquire. Thus, individuals who possess these skills often wish to be paid a higher wage, regardless of what job they are actually doing, just as individuals who have a college degree want to receive more money than their counterparts that have only a high school diploma receive. Thus, these individuals would be far too costly to employ in a manufacturing job. These jobs are given to individuals who would require a lower wage to perform these. Thus, jobs are outsourced to places such as China, where the population includes a larger number of individuals who do not possess the skills needed to perform the services found in the service sector economy. Because there are more people who would qualify to do manufacturing jobs and would not qualify for many other types of work, there is a larger supply. With a larger supply, prices for this labor are kept down, and thus the producer is able to keep his costs down as well.

In general, a service sector economy is the sign of an advanced economy in the current times. This obviously would change as all countries became more advanced. If all countries obtained all the skills that the service sector economy had and the service sector economy did not increase its skills beyond this point, then all would be equal and wages for manufacturing jobs would be the same cost everywhere. Thus, producers would not outsource these jobs, wages for these jobs would rise, and prices would likely go up somewhat.