Module 7 - economic & socioeconomic forces

largest economy in the world in 2050

China, India, US

Analysts use data published by

World Bank

Gross National Income (GNI)

total value of all income generated by all residents including both domestic and from abroad

Gross Domestic Product

total market value of goods and services within the nation

better measure of economical capacity of a nation

GNI

High Income Economies

Europe, Japan, Swiss, Iceland (older, developed countries)

Upper-middle income economies

growing economy

lower-middle income economies

potential is low, no growth

Developed Economies

Industrialized, service-based countries

developed economies examples

US, Germany, Britain

Emerging Market Economies

low to middle range income

emerging market examples

China, India

developing economies

lower income

Purchasing Power Parity (PPP)

adjusting the exchange rate for two currencies

Market currency exchange rate

international demand for currency

PPP Exchange Rate

exchange rate based on goods purchased

Underground Economy

business transactions that are under or unreported

Which type of countries have high growth rate?

emerging & developing countries

Gini Index

an income distribution system that measures inequality of income

What Gini index is good for low volume, high price luxury goods?

higher number/red areas (larger income inequality)

Disposable Income

after tax personal income

discretionary income

the amount of income left after paying tax and making necessary purchases

Unit Labor Cost =

Compensation/Productivity

Compensation

preferred low compensation

Productivity

preferred high productivity

What is international debt

government borrows money from other countries

What is the consequence if you do not have enough foreign currency reserves?

cannot purchase from other countries, high inflation, and interrupted production

Factors that make a country good to invest in

young population, large population, high fertility rate

Total Fertility Rate (TFR)

average number of children per woman

developing countries + fertility rate

higher fertility rate and younger population

developed countries + fertility

lower fertility rate and slower economic growth