Real Profit Consciousness and the Investment Decision
Abstract
Most serious analysis of the problems currently experienced by manufacturing industry in the UK agrees on two main points: both the level of investment and the incremental output capital ratio in productive industry are much too low. In other words, not only do we invest less, in aggregate, than any of our major competitors but the increase in production obtained from each marginal increase in investment is also far less than might be reasonably expected abroad. The reasons advanced for these two related problems are legion but it is upon the former failure that attention is focussed here. Certainly there can be no doubt as to the truth of the diagnosis. The evidence confirms Britain's relative failure on this score throughout the post World War II period. Between 1955 and 1964, for example, whereas gross investment in Japan and West Germany (always the yardsticks used in such comparisons) averaged 28·8 per cent and 23·7 per cent of gross national product respectively, the comparable British figure was a niggardly 15·8 per cent. Since then the problem has become further compounded. In 1972, for example, per capita investment in new plant and machinery in America was 1·49 times the British figure, in Sweden 1·66 times, in France 1·72 times and in West Germany 1·90 times greater than in Britain.
Citation
Barry, D. and Edwards, J.R. (1977), "Real Profit Consciousness and the Investment Decision", Managerial Finance, Vol. 3 No. 2, pp. 97-105. https://doi.org/10.1108/eb013399
Publisher
:MCB UP Ltd
Copyright © 1977, MCB UP Limited