Macro Data Flashcards
Why is the end of the cold war a factor which led to globalisation
The end of the cold war between Russia & the West in 1990 opened up former communist countries around the world enlarging the global supply of labour e.g. more than 800,000 people migrated from East Germany to West Germany between 1990 and 1991
What is the UK’s inflation target rate
2%
UK’s unemployment rate
4.4% in July 2024
UK’s debt to GDP ratio
99.5% in June 2024
UK global competitiveness ranking
9th
Strengths and opportunties for UK
- T-levels should help increase number of people with vocational skills
- The UK remains the world’s second-largest exporter of financial services (£94.9bn)
Foreign direct investment into the UK
- Nissan, Sunderland
- Siemens, Hull
- Cummins Pwer Generation, Rumsgate
- AkzoNobel, Ashington
Financial market failure
Example of market rigging (UK)
LIBOR scandal: widespread collusion of fixing interlending banking rates
Fined £9bn
Currency manipulation (traders used chatroom)
£350 tn worth of financial contracts affected by collusion
Financial market failure
Example of externalities (UK)
- GDP loss by 6.3% (deepest recession since WW2)… shrunk by 6%… LRAS shifts right
- Took mibnimum of 5 years to recover the GDP + wages
- Significant negative output
- Unemployment 8.1% in 2011 (2.5mn out of work)
- Significant fall in the UK productivity (15% fall)
- £137bn on bank bailouts
- 1tn guarantees to stabilise the banking system
Financial market failure
Housing market bubble + bitcoin
1996-2007: 200% asset bubble (housing market)
2013-2021: 30% increase in house prices
2017: Bitcoin boom
Why is the UK’s Phillips curve steeper
- Endogenous (internal) supply side shock of Brexit, because this reduced labour supply, creating labour shortages, make wages (and cost push inflation) higher as firms increase output to meet demand (& labour inactivity+covid)
- Falling competition/ contestability in UK markets, which makes it more likely firms willl increase prices when wage costs increase
What is the ‘Red Tape Challenge’ and how can it improve international competitivness (UK)
Aims to simplify regulation for businesses, so it is cheaper and easier to meet environmental targets and create new jobs. It should help to encourage investment and innovation, so domestic firms can become more internationally competitive.
What is the unemployment rate in Zambia
6.1% unemployment rate
What is Zambia’s inflation rate
Inflation Rate in Zambia increased to 15.40% in July from 15.20% in June of 2024
What do Zambia export most of
According to the factor abundance model, Zambia export copper.
Stats on Zambia debt default to China
Zambia owed Chinese creditors nearly $6 billion of the total of $17 billion external debt at the end of 2021.
Debt to GDP ratio is 57%
Benefits of rising ToT for Zambia
Zambia is able to invest this extra revenue to help develop the country, as seen via its life expectancy at birth indicator increasing from 44 in 2000 to 64 in 2019. –> shows there has been significant investment into healthcare. A good example being the ‘Triangle of Hope’ scheme launched by the government in 2005 which led to a lot of FDI inflows into the health sector, as the government realised that the private sector has a comparative advantage in providing health care services. Overall, these have contributed to increased development
Strengths and opportunties for Zambia
- ToT is 117
- Real GDP grew at an average rate of 5.7% in 2021-23, primarily driven by growth in transport, information and communications, finance and insurance, and a rebound in hospitality and education.
- Worlds youngest median population, with population doubling in 25 years (but impact on labour resources and children)
Weaknesses for Zambia
- 59% earn less than $2.15 a day
- Savings ratio over 40% (world average is 23%)
- Large depreciation of currency (over 30%) due to debt issues helped cause inflation
Zambia current account deficit stats
The current account fell into deficit in 2023 due to a contraction in copper production and exports for three consecutive years, significantly reducing foreign currency earnings.
Combined with the uncertainty in finalizing Zambia’s debt restructuring, this put pressure on the exchange rate, leading to 41.8% depreciation in 2023.
At the same, the depreciation fueled inflation to rise way above the Bank of Zambia’s 6–8% target range, despite monetary restraint and fiscal prudence.
China’s unemployment rate
Highest in 2020 at 4% (urban China)
Currently, 5%
China’s inflation rate
0.5%
Deflation, due to lack of consumer and business demand
China’s strengths and opportunities
- 32% of global investment is Chinese
- Second largest economy, behind USA and USA’s largest M come from China
- China is the world’s largest exporter
- Main exports: CA in high end tech: electrical machinery (26.6% of total X), machinery including computers (15.4%) and circuits
What are the environmental impacts of globalisation on China?
- Severe air pollution in cities like Beijing, where air pollution is regularly above the World Health Organisation safe limits.
- Beijing’s six million cars and coal-burning power stations are the source of pollution.
- Around 50% of China’s rivers and lakes and 60% of its groundwater is polluted - unsafe to drink untreated.
- Air pollution in northern china has been estimated to have reduced life expectancy by nearly five years.
- Loss of biodiversity.
Joint ventures in China
Joint ventures are a commonly used company structure in China: many of the well- known companies such as Mcdonalds, Starbucks and most recently the Chinese ride sharing unicorn Didi Chuxing have all adopted a joint venture company structure in China.
