Trade Unions, Product Quality and the Structure of International Trade

The falling UK share of world trade in manufactures is one of the great empirical regularities of economics, worthy to stand beside other ‘stylised facts’ like the rising capital-output ratio. Those who have studied the matter empirically seem agreed that non-price factors- such as failure to innovate, poor marketing and after-sales service — should bear the brunt of the blame. Much anecdotal evidence supports this view. There is also quantitative evidence in the shape of the low unit values, relative to competitors, of many categories of UK exports which suggest relatively low quality or less sophisticated products (Posner and Steer, 1979; Stout, 1979).