GAINS FROM TRADE IN INTERMEDIATE INPUTS IN THE UK FOOD SYSTEM

In this paper we report estimates of the specialisation gains associated with tra e in intermediate agricultural and food inputs. A Vertically Integrated Sectors (VIS) modelling approach is employed to compare the levels of factors require to produce imported intermediate inputs domestically with those required to produce the ''compensating'' exports needed to purchase the imported intermediates. On the basis of the 1979 UK input-output tables, an average of 10.6 per cent fewer factors would have been required in agriculture and 2.2 per cent fewer in food processing with trade in intermediate inputs than without. The results support the view that the promotion of domestic production of agricultural inputs via import substitution would be costly.