Woche 2
Economic Environmet
Economic Environmet
Set of flashcards Details
| Flashcards | 27 |
|---|---|
| Language | Deutsch |
| Category | Micro-Economics |
| Level | University |
| Created / Updated | 02.12.2023 / 09.01.2024 |
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What does Gini measure?
The Gini coefficient varies between 0 and 1, where 0 represents absolute equality (everyone has the same income) and 1 absolute inequality (one person has all the income, everyone else has none).
- Gini shows income inequality in a society
- Gini can also be used to measure the distriution of wealth or life expectancy
- In development Countries and LDC's (Least developed countrys) where income is often hard to guess, looking at consumption might be better indicator
Whats does GDP measure?
How high (as percentage of GDP is the size of shadow economy and what is he biggest informal sector?
- Production (for example manufacturing)
- Advanced economies: 10-20%
- Emerging economies: 30-35%
- CIS countries (Commonwealth of Independent States); An alliance of former Soviet republics: 40% or more
- Biggest informal sector is helping someone else out
What is the difference between GDP and GNI (Gross National Income)?
Which nations will show a significant difference between GNI and GDP?
- GDP (BIP) measures output -Production inside the country
- GNI (Bruttonationaleinkommen): Measures Income. Is defined as "GPD plus net receipts from abroad of compensation of employees, property income and net taxes less subsidies on production"
- Nations with substantial FDI, foreign corporate presence, foreign aid (ODA-Official Development Assistance) or remittances (Geldüberweisungen)
What are the 3 Dimensions of the Human Development Index?
What are reasons for lower life expectancy?
- Health: Life expexpectancy at birth
- Education: Mean of schooling for adults aged 25 and more and expected years of schooling for children of school entering age
- Standard of living: GNI per capita
- No healt insurance / No acess to hospitals/medicine / bad nutrition / War
What does a Better Life Index measured?
The Better Life Index contains a range of metrics that better reflect well-being: (Interview)
- Housing costs
- Time with family and friends
- Financial insecurities
- Life Satisfaction
- Satisfaction on how spend time
What does the GDP not show?
- The wellbeing or health of a country
- Costs of economic growth (z.B evironmental degradation / climate change) is not reflected
- It does not tell how the income from economic activity is distributed
- Income may not even stay in the economy and goes to investors abroad (For example Apple in Ireland)
Is there a numerical covention to determine whether a economy is advanced or not?
No, advanced economies are usually defined as having :
- A high level of per capita income
- Varied export base
- A financial sector thats integrated into the global finance system
Which are the 3 develpoment status? (for instance at the WTO in Geneva)
- Developed country members
- Developing country members
- Least developed country members
Problem: The countries announce forthemselves wether they are "devel0ped" or "developing"
What is the Three-Sector Hypothesis and how is it divided in different coutries?
In CH:
- Service Sector: 74%
- Industry: 25%
- Agriculture: 1%
For what is the Korean economy famous for?
Nr. 1
- in Digital Transformation of the Public Sector
- ICT Infrastructure
- Households with Internet access
why is the manufactering sector critical to rapid economic transformation of poor countries?
- Beacause of the poor countries bigges constraint: The shortfall of high productivity level human skills often needed in services
- Because manufactures are much more freely traded in the world than services
<the global market in manufactures also constitutes the natural conduit for a quick technological learning process
Case study: Economic Development of South Korea
Which steps took South Korea to transfor from a poor agrarian nation to one of the worlds largest economiey in less than 50 years?
Step 1, 1962-66: Export strategy - Low value-added and labor intensive products (textiles and shoes)
Step 2, 1967-71: Shipt into heavy industry (steel, macchine tools and shipbuilding)
Step 3-4, 1972-81: Investment in hig value industries (seel, automobiles, machine tools, shipbuilding, electronics, construction)
Step 5-7, 1982-96: Investment in even higher value-added industries (electronics, precision machinery, bioengineering and IT)
Step 8, 1996-today: Investment in service sectors (music, film, tourism, medicine) and in. high-end consumer goods
Notes on the Case study G-20
- Platform of exchange without immediate impact (informal) such as G7(USA, Kanada, Frankreich, Deutschland, Italien, UK, Japan) some of the biggest Industry nations), G20, BRICS (Brazil, Russia, India, China, and South Africa), European political community
- EU has always 2 represantatives
- G20: Key place that shapes the global environment
- Switzerland is not directliy involved: Usually invited to the finance meetings
- Lower middle Income G-20 Counties: India / Indonesia
Name 3 established methodes and 3 new approaches of measuring Wealth and wellbeing:
Established methods:
- GDP (Gross Domestic Product)
- GNI (Gross National Icome)
- Gini coefficient
Newer approaches:
- Human Development Index
- Better Life Index
- Ecosystem Accounting
What does PPP mean?
purchaising power parity: Considers the actual prices of goods and services in the individual countries.
Largest economies:
Population:
- India
- China
- USA
GDP:
- USA
- China
- India
GDP PPP:
- China
- USA
- India
GDP per capita:
- Switzerland
- USA
- Russia
GDP per capita PPP
- Switzerland
- USA
- Russia
What are the 5 predicted largest countries in 2050'
- China
- USA
- India
- Indonesia
- Germany
What is the biggest infromal sector in switzerland?
- Helping someone out (no money payed, no reseit, nothing registrated)
Example of Misleading GDP growth in Ireland:
- Irelands GDP grew rapidly because Apple shifted to the country (headquarters in Cork, Ireland, key location for Apple's operations, including manufacturing, distribution, and various business functions.
- GNI vs GDP
- Which countries will show a signifficant difference between GNI/GDP?
- GNI: Calculates income
- GDP: Measures output
- Only nations with substantial FDI, foreign corporate presence, foreign aid (ODA), or remittances
Describe 3 qualitative, comprehensive meausurements of well-being
- OECD (Organisation for Economic Co-operation and Developmen) Better Life Index
- Human Development Index
- Eco System Accounting (Growth compaired to Sustainability)
describe the difference of per capita nominal vs per capita PPP
- Per capita nominal GDP divides the total economic output by the population without adjusting for price differences
- Per capita PPP GDP, on the other hand, adjusts for the relative cost of living and currency exchange rates, providing a more accurate comparison of living standards among different countries.
What are the 3 sectors of economic development? (simplefication)
- Agriculture
- Industry
- Service Sector
5 steps in economic development to climb up the value chain:
- Productivity increase in the 1st sector
- Shift of workers from the 1st to the 2nd sector
- Export driven growth strategy
- Work up from the bottom to the top of the value chain
- Shift labor force from the 2nd to the 3 rd sector
Why are some nations become rich while others remain poor? (Two hypothesis)
Porductivity - A countrys ability to improve its standard of living over time depends almost entirely on its ability to rais its output per worker (Paul Krugman)
Three-Sector-Hypothesis - When economies develop and mature, there is a shift of three sectors to climb up the value chain. Acriculture - Industry - Service. With each step productivity/Wealth ioncreases. (Colin Clark and Jean Fourastié)
Where are the world most poorest states located?
How many countrys classified as "advanced" and "emerging and devolping economies"
- 33 in Africa
- 9 in Asia
- 1 in Carribean
- 3 in Pacific
- 41 advanced / 155 emerging and developing economies
Institutions that work with GNI:
- EU calcultaes member state contribution via GNI
- HDI is based ond GNI figures
- World Band (Classification by income levels based on GNI per capita)
