1. What is wealth?
Wealth is the result of a community’s economic activity, of the production, distribution & consumption of goods and services.
PRODUCTION: production consists of creating goods and services for trade on the market. It excludes work done for oneself.
DISTRIBUTION: Includes all the operations that follow production and precede the purchase of the good by the consumer: transportation, marketing, inventory management, etc.
CONSUMPTION: The use of a good or service by a customer, person or company.
2. How is wealth measured? Give economic and social indicators and define them.
Difference between rich/poor countries can be established with:
Social indicators: Health, education and literacy levels, etc. (population)
Economic indicators: Gross (Raw/before taxes) Domestic Product (GDP), inflation rate (cost of living), etc.
Indicators to categorize countries according to level of wealth:
Emerging economies (BRICS countries): Brazil, Russia, India, China, South Africa *******
‘Regular’ developing countries (Vietnam)
Less Developed (Somalia)
Northern (rich)/Southern (poor) countries
Not necessarily regarding their position on the map.
** Per Capita= per head/person
** To find GDP per capita: GDP ÷ population
** GNI – Individuals
MAIN ECONOMIC INDICATORS:
GDP: Measures wealth created in a given year. Ex: a country’s production of goods & services.
GDP per capita: Measures the standard of living and attributes a value to the population’s purchasing power. Obtained by dividing total GDP by number of inhabitants.
GNI (gross national income) per capita: Average income (salaries & investment income) earned by a country’s population. It includes net income from investments and property held outside of the country.
Annual Growth: Refers to annual growth of GDP. To avoid variations due to price increases, the growth rate is calculated in constant dollars.
Inflation Rate: Measures the overall increase in the price of goods and services for a given period, usually 1 year.
Imports & Exports: Imports are goods and services entering a country from another country. Exports are goods and services a country sells to other countries.
SOCIAL & ECONOMIC INDICATOR:
HDI (Human Development Index):
Value between 0 (lowest/worst) to 1 (highest/excellent)
Obtained by compiling country’s
GDP per capita (1/3): shows a country’s standard of living ‘purchasing power parity (PPP)’ per person (U$)
Life Expectancy at Birth (1/3): shows population’s health
Adult literacy rate (2/9): shows education level of population
Enrollment rate (1/9): shows education level of population % of children at given age (usually 16) that are ‘educated’ (high school diploma or equivalent)
Less Developed Countries: HDI = )0-0.49) decreased in last 20 years
Developing countries: HDI = (0.5-0.79) Emerging economies increased greatly in last 20 years, rest have slightly increased
Developed countries: (0.8-1) Stayed stable in last 20 years
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3. Characterize World Economic Growth since 1945.
Since end of WW2: international economy/trade = growing
Uneven, regional growths
1940s-70s (Glorious 30): USA, Western Europe, Japan (Northern Countries)
1970s-80s: Majority of other Southeast Asian countries (cheap labor, coastal location, geographically close to Japan, USA allies during Cold War)
1990s: BRICS counties & Mexico (developing with emerging economies)
Factors of Economic Growth
Increase in productivity of corporations
Increase in international trade
Improved production techniques
Increased purchasing power
Education & qualification of working force 4. What is globalization? What are the causes? What are some effects of globalization?
Globalization: A phenomenon of accelerated human exchanges at a global level, particularly with respect to the economy and the greater movement of goods,