R&D Innovation and Trade Performance

International competitiveness is determined by price and non-price factors. Over the years the emphasis in empirical work has tended to be on prices, largely because these are more readily observed and measured. However, there is now a major body of research that shows that a lack of non-price competitiveness is a major influence on trade performance (Kravis and Lipsey, 1971; Goodman and Ceyhun, 1976) in particular on the worsening performance of the UK (NEDC, 1963; Schott and Pick, 1984). Work for the National Economic Development Council and for the NEDC Sector Groups has been at the forefront of establishing that evidence and sorting out the practical ways forward.