Northeast England and Scotland Economies - Essay Example

Download file to see previous pages... This essay discusses that the unfolding economic crisis in the recent years has had adverse effects in many economies in the globe. The Northeast England and Scotland’s economies have not been an exception. Apparently, the two economies, in common with economies of other developed countries’ economies, have not been immune to the prevalent effects of the major economic recession in the recent years. The Scottish economy has the second largest GVA per capita of all the countries in the U.K after England. Even so, as prevalent with other industrialised economies, Scotland has recorded a decline in the importance of the manufacturing industries. There has however been a rise in the service sector of the economy which has recorded significance growth rate in the past few years. Despite all these, the Scottish economy has been marred by adverse effects of the recent economic recession. As a fact, Scottish economy has veneered falls in output and increased pressures on employment. However, the economy has shown some signs of recovery in the recent years. This can be attributed to the Economic Recovery Plan that will be discussed at length in this paper. On the contrary, the Northeast England has the lowest GVA per capita in England and the second lowest in the whole UK. For instance, its GVA per capita is pegged at about 80% of the U.K average. The North East economy has for many years been contingent of two major industries, coal mining and ship building. This traditional industrial base of mining, ship building, heavy engineering, Iron, Steel and manufacturing have faced tremendous decline in the recent past (Kirby, Barrell & Whitworth 2011 p.128). Perhaps, this accounts for the low economic prospects in the Northeast England. The general productivity of those who work is below the national average. Likewise, the number of people of working age in employment is below the national average. The situation is worsened by the fact that only about twenty four percent of young people in the region access higher education, thus, significantly below the national target of fifty percent. Adam Smith and Michael Porter’s view on optimal development of national economies Adam Smith attacked the antiquated government restrictions. He argued that such government restrictions are responsible for hindering industrial revolution. He accused governments for allegedly interfering with the economic process through various restrictions including tariffs. According to him, this created inefficiency and resulted to high prices in the long run. The second chapter of the book is entitled “of restriction upon the importation from foreign countries of such goods as can be produced at home”. In this chapter, Smith avers that: “by preferring the support of domestic to that of foreign industry, he(an individual) intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention ... by pursuing his own interest, he frequently promotes that of the society more effectively than when he really intends to promote it” (Smith, 2011 p.212). By these words, Smith implies that human beings are naturally rational and often, they are driven by self-interest. In this regard, if left on their own, each individual will follow his and her own ...Download file to see next pagesRead More