Growth & Development : concepts & measures Flashcards
How does economies grow ?
- new ressources -technological change
Show the production possibilities frontier when u add new ressources
Show the production possibilities frontier when there’s technological change
What is the National Accounts : The Books
Each country has a record of the value of its production
IF an economy is growing, Nation Accounts are going up too.
Definition of Gross Domestic Product (GDP):
The market value of all goods and services produced within a country’s borders in a year.
ONly the final output.
Imputs are not counted : so if u use electricity to produce cars, this electrivity is not counted.
Real GDP
adjusted with inflation
Gross national product
The market value of all goods and services produced by nationals of a given country in a year
Based on ownership
The value that actually stays in the country
What is the advantage of the economic structure by sector
division of GDP by sector
shows the stuctural diffrencde of economies
What are trhe advantage sof the GDP
can show the structure of an economy
and
the evolution of the economy
Good short term measure
5 problems of the GDP
1- does not include the informal sector
Ex: represents 20% of Argentina economy
and in Colombia, drugs represents 5% oft he GDP
( Bias favorising moore the industrialized countries )
2- Does not include the volunterring work
favorises the inmdustrialized countries. again.
3- Doesnt include welfare enhancing and welfare reducing activities
Ex: if there is a huge oil spill int he Ocean. it does not include that there was way more production that year t clean up the mess.
4- No sense of the distributtion of the income
5–Comparisions with developing countries
bc of the exchange rates. in coem countries, one can live for very cheap.
What are the adjustments and alternative income measurements
1- Purchasing power parity (PPP)
Exchange rates and purchasing power
Adjust GDP as if country’s output sold in US
Better comparisons among countries
Value of 1 commun basket of gold
2- Gross national income (GNI)
Incomes received rather than value of goods and services
Remittance and aid
Similar to GDP for large countrie
3- GDP per capita
divided by the population !!!
China 1.374 milliard !1!
4- HDI
Health ( Life expectancy at birth )
Education ( Mean years of shooling + Expected years of schooling )
Living standard ( GNI per capita )
5- Gross National Happiness Index
Why alternative measures have arisen ?
Because GDP a necessary but not sa sufficieny condition for economical society.
It needs to include a measure of growth.
A capitalist society needs to grow and needs to include factors that show how much a society grows.
GNI vs GNP
GNI
Incomes receives rathar than veluen of goods and services
Remittance and aid
similar to GDP for large countries
GNP
Bsed on the ownerships/
It is the value of the GDP that actually stays within the country.
measures of economic output
GNP
GDP
Diffrences in the type of measures
1- Measures of the economic output
GNP
GDP
2- Income measures ( PPP GNI )
3- Alternate mesures of development
HDI
GNHI
GPI
ISEW
Contribution by country/ region to World GDP
40% of the World GDP comes from Asai
30% from China & India
Correlation btw life expectancy and GDP per capita
+
the correlation betwen education and GDP per capita
+ as well as the GPI vs. GDP per capita graphic
shows the importance of introducing measurements of development
true.
How can we assess income inequality
income shares
lorenz curve
gini coefficient
Explain how to calcule the gini coefficient with the Lorenz curve
Gini coefficient by countries
Sweden: 0.250
Canada: 0.326
USA: 0.408
Brazil: 0.519
South Africa: 0.620
How can one calculate HDI
Human development index scores , 2012
Human Development Index scores, 2012
Canada: 0.911 USA: 0.937 Norway: 0.955
Mexico: 0.775 Brazil: 0.730 China: 0.699
Haiti: 0.456 Congo: 0.534 Niger: 0.3040
GNH
how can one calculate guinine progress index
What is the world gini index
0.57 !!!!
Why is it important to know how a country’s income is distributed
bc economic growth + inequality are reallly correlated
When inequality is really high, it beomes anti-growth.
What is the income shares
what share of the total income is taken by what portion of the population
PPP the bigmac index
