The general assessment is basically the same as it was in August—namely that the first quarter of 1965 marked the end of a two-year period of relatively rapid expansion. By the fourth quarter of this year, the level of output will probably prove to be no more than 2 per cent above a year earlier : and 2 per cent a year seems to be about the rate at which output is likely to go on rising during 1966. The forecast, therefore, is for a slowly rising trend in output—not for a recession.

Between the end of 1964 and the middle of 1965 there was some increase in the rate of growth of world industrial production, entirely due to the rapid expansion in the United States and Canada. The rate of growth in Europe apparently fell slightly partly owing to the relative stagnation in the United Kingdom, but also because of some slowing down in West Germany and the Netherlands and slight falls in Belgium and France which were not, taken together, fully offset by the upswing in Italy. Japanese production has remained virtually unchanged for a year (table 10).

In quick succession, three sets of figures about the possible future of the British economy have been published. In July, the latest in the series of Programme for Growth volumes, describing the research being undertaken in Cambridge under the directorship of Professor J. R. N. Stone, appeared under the title Exploring 1970. The Cambridge calculations (hereafter referred to as SAM—Social Accounting Matrix) start with the economy as it was in 1960 and present a possibility for 1970 which can be expressed in terms of annual compound rates of growth over the decade for sectors of the national product and for particular industries. The National Institute study, published in September as The British Economy in 1975, (hereafter referred to as BECKERMAN) also starts with the actuality of 1960 but extends the look into the future as far as 1975. The National Plan, published in September, and prepared by the Department of Economic Affairs (hereafter called PLAN), takes the actual figures of 1964 as the base and looks forward to 1970.

The world electronics industry has been one of the fastest growing in the past half century, with a compound rate of growth of over 10 per cent per annum at constant prices since 1935.[1] Within the total, the output of ‘electronic consumer goods’ is no longer rising particularly fast in most advanced countries ; but the output of ‘electronic capital goods’ has been increasing at over 15 per cent a year (in current prices) over the past six yeats, and will probably continue to rise rapidly according to most forward estimates.121 This article is mainly concerned with capital goods ; but for some purposes it is necessary to consider the industry as a whole. Many firms produce both consumer and capital goods, because they use similar components and techniques and draw on a common fund of skilled manpower and research knowledge.

This note analyses the recent experience of the United States electronics industry in terms of a ‘product cycle’ view of international competitiveness. This view starts from the observed fact that, as a product passes from invention to maturity, the rate of growth of demand will vary ; it will begin slowly, accelerate for a time, and then slow down again when the product becomes mature. The proposition put forward here is that these phases of growth tend to be accompanied by changes in the relative importance of the various factors of production-skilled and unskilled labour, capital, and management ability. These changes-set out in abbreviated form in table 1 and chart 1-have implications for international competitiveness.

The NIESR price index numbers (given in table 27 of the Statistical Appendix) were introduced in the first issue of the Economic Review. They have now been substantially revised. First, the weights of the individual prices are now based on the average of the years 1960 to 1962. This reduces the influence of chance fluctuations which may affect a single year's figures; the years 1960-62 were free of any major disturbances. The indices are shown with the year 1961 as 100. Secondly, the price indicators have been substantially revised; the least reliable ones have been dropped and some new prices have been included.