Statistical analysis of the impact of profitability in the manufacturing and service sectors on the UK Economy’s Growth
Department of Project Management, Salford Business School, University of Salford, 43 Crescent, Salford, Manchester, UK.
Research Article
World Journal of Advanced Research and Reviews, 2024, 24(01), 1555–1571
Article DOI: 10.30574/wjarr.2024.24.1.3176
Publication history:
Received on 04 September 2024; revised on 15 October 2024; accepted on 17 October 2024
Abstract:
The UK economy's performance is closely tied to the profitability of its Manufacturing Sector (MS) and Service Sector (SS). Understanding these sectors' dynamics is crucial for effective policymaking. Integrating sustainable practices in both sectors enhances profitability and operational efficiency while contributing to economic growth and reducing environmental impact. This study investigates the relationship between UK economic growth and profitability in the MS and SS from 1998 to 2022. The primary objective is to examine how profitability influences the UK's growth trajectory. Employing various statistical methods, including correlation, regression, cointegration, and variance decomposition analyses, the study aims to provide insights into the interplay between GDP and sector profitability. A quantitative approach using secondary data on GDP and profitability from reliable sources is adopted. Correlation analysis explores relationships between these variables, while regression analysis assesses the impact of MS and SS profitability on GDP. Cointegration tests identify long-term equilibrium relationships, and variance decomposition analysis reveals the variability of GDP and sector profitability over time. The correlation matrix indicates positive associations between GDP and both sectors, with the SS showing a stronger correlation. Regression analysis confirms significant effects of both sectors on GDP, with the SS exerting a positive influence and the MS a negative impact. Cointegration tests highlight long-term stability, and variance decomposition analysis emphasizes the dynamic nature of these relationships. This study elucidates the intricate link between UK economic growth and sector profitability, underscoring the SS's critical role in driving expansion while addressing challenges in the MS. Policy recommendations include enhancing productivity and innovation in both sectors, informed by evidence-based decision-making. Overall, the study contributes valuable insights into the UK economy's growth dynamics, guiding sustainable economic development strategies.
Keywords:
Cointegration; Sector interplay; Sustainable economic development; Variance decomposition
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