Notes on Economic Activity Measurement, GDP, and Economic Growth

CHAPITRE III: MESURE DE L'ACTIVITÉ ÉCONOMIQUE (PARTIE II)

PIB ET CROISSANCE ÉCONOMIQUE

Introduction to Economics - INSAT 2024-2025

Rappel et Intro PIB Partie II

• Rappel Video: Dessine-moi l'éco: Qu'est-ce que le Produit Intérieur Brut (PIB)?

Plan

• PIB nominal et PIB réel
• La croissance économique et les facteurs de la croissance
• Croissance économique et développement

4- PIB Nominal et PIB Réel

\text{Évolution du PIB en valeur} = \text{Variation des prix} + \text{Évolution du PIB en volume} = \text{Croissance}

Application: Calcul du PIB Nominal et Réel

• Scenario: A community of vegetarians consumes only cabbage, broccoli, and carrots.
• 2018: 100 cabbages at $2 each, 50 broccoli bunches at $1.5 each, 500 carrots at $0.1 each.
• 2019: 75 cabbages at $3 each, 80 broccoli bunches at $1.5 each, 500 carrots at $0.2 each.
• Base Year: 2018.
• Task: Calculate nominal and real GDP for 2018 and 2019.

Data

Application Corrigée

• PIB Nominal: Production of the year evaluated at the year's prices.
  • 2018: (100 \times 2) + (50 \times 1.50) + (500 \times 0.10) = 325
  • 2019: (75 \times 3) + (80 \times 1.5) + (500 \times 0.2) = 445
• PIB Réel: Production of the year evaluated at the prices of the base year (2018).
  • 2018: $325
  • 2019: (75 \times 2) + (80 \times 1.5) + (500 \times 0.1) = 320

Le PIB Peut Être Exprimé De Deux Manières Différentes

• En valeur ou nominal ou aux prix courants
  • Expressed in monetary value relative to the price of the current year:
  • PIBt = \sum Q{it} \times P_{it}
    • Where Q_{it} expresses the quantity produced of good (final) i during year t.
    • And P_{it} the price of good i during year t.

Le PIB Peut Être Exprimé De Deux Manières Différentes

• En volume ou réel ou aux prix constants
  • Expressed relative to the prices of a reference year called the base year.
  • PIBr (t / t0) = \sum Q{it} \times P{it0}
    • Where Q_{it} expresses the quantity produced of good i during year t.
    • And P{it0} the price of good i during year t0.

Le PIB Peut Être Exprimé De Deux Manières Différentes

• The interest of expressing an aggregate in volume:
  • To be able to eliminate, during temporal comparisons, the effect of price variation.
  • The aggregate is expressed relative to a single and same period (base or reference year).

Le Déflateur Du PIB= Indice Des Prix À La Production (IPP) Ou DIP

• The volume index of GDP relative to year t (or GDP deflator or IPP) is equal to the ratio of the nominal GDP of year t and the real GDP:
  • Deflateur \text{ PIB }{t/t0} = DIP{t/t0} = IPP{t/t0} = \frac{PIB \text{ nominal}(t)}{PIB \text{ réel}(t/t_0)}
• IPP: Producer Price Index. This index measures the increase in the prices of goods included in the GDP between t_0 and t.
  • Example: IPP (2016/2010) = 1.29
    • Prices increased on average by 29% in 2016 compared to 2010.

La Croissance Économique

• Economic growth measures the increase in wealth produced during a given period. Wealth produced is measured by GDP.

TENDANCE DE LA CROISSANCE EN TUNISIE

• Taux de croissance du PIB, Evolution en % aux prix constants de l'année précédente
• Presentation of the Tunisia GDP growth rate from 2000 to 2020E (-8.8)

Définition de la Croissance

• Economic growth is defined as the sustained increase over a long period of a country's production, the pursuit of which fundamentally implies modifications of economic structures.

• Short term: improvement of the standard of living (if economic growth > demographic growth) and an increase in employment.

• Long term: modification of economic structures, i.e.:

  • Mode of production (new sectors/technologies).
  • Mode of consumption (new needs, new products).

• This notion is distinguished from expansion which is only a cyclical (short-term) increase in production (for example, a good tourist season increases production for a quarter).

• The opposite of growth is recession (negative growth rate).

• Generally, we speak of economic recession when there is a slowdown in economic activity for two successive quarters.

Mesure de la Croissance Économique

• The economic growth rate is the growth rate of real GDP (i.e. at constant prices).
  • Let g_t be the annual growth rate of year t in percentage:
  • g_t = \frac{PIB \text{ réel}(t) - PIB \text{ réel}(t-1)}{PIB \text{ réel}(t-1)} \times 100
  • g_t = (\frac{PIB \text{ réel}(t)}{PIB \text{ réel}(t-1)} - 1) \times 100

Application: Taux de croissance du PIB réel

• Given the following data relating to the Tunisian economy in millions of dinars:
  • Calculate the real GDP growth rate between 2011 and 2010. Comment.
  • What is the base year used? Justify.
  • Calculate the average annual growth rates for the periods 2005-2010 and 2010-2016. Comment

Application: corrigée

1. Let g be the growth rate of 2011
   g = (PIB \text{ réel } 2011 / PIB \text{ réel } 2010 - 1) * 100
   = (61845.6 / 63054.5 - 1) * 100
   = -1.91 %
   g<0 therefore Tunisia experienced a recession in 2011
2. the base or reference year used is 2010 because real GDP is the same as Nominal GDP
3. Let G1 be the average annual growth rate for the period 2005-2010 and G2 that for the period 2010-2016
   G1= ((63054,5 /50499,1) ^{1/5} - 1 )100 = 4,54 % G2= ((69622/63054,5) ^{1/6} - 1 )100 = 1,66%
   On average Tunisia grew by 4.54% per year over the period 2005-2010 and by 1.66% over the period 2010-2016

Mesure de la Croissance Économique

• the average annual growth rate G:
  G= (\frac{PIB{tn}}{PIB{t1}})^{1/N} -1) * 100
  N= tn - t1

Demonstration Taux de croissance moyen

Soient g2, … gn les taux de croissance économique

PIB{t2} =PIB{t1} (1+g_1)

Exemple: croissance de 5%;

PIB{t2} = PIB{t1} * 1,05

PIB{tn} = PIB{t1} (1 + g1)(1+g2)….(1+g_{n-1})

\frac{PIB{tn}}{PIB{t1}} = (1 + G)^N

Où G est le taux de croissance moyen de toutes les périodes d’où

G= (\frac{PIB{tn}}{PIB{t1}})^{1/N} -1) * 100

(en pourcentage) Avec N= tn - t1

Quels Sont Les Facteurs De La Croissance Économique ?:

• L (Labor): the Labor factor,
• K: the capital factor
• Croissance extensive = croissance obtenue par l'augmentation de la quantité de facteurs de production
• Croissance intensive = croissance obtenue par l'augmentation de l'efficacité des facteurs de production
• quantité de L et durée du travail
• quantité de K (investissement de capacité)
• Meilleure organisation et formation du L
• investissement de productivité
• amélioration de K par incorporation du progrès technique
• pour améliorer l'efficacité du L

Croissance et Développement

• Growth is a purely economic progress while development is a Global progress (economic, social, mental, political..)
• Development is measured by: The HDI (Human Development Index)
• The Human Development Index (HDI) is a composite statistical index created by the (UNDP) in 1990 to assess and compare the level of human development of countries around the world.
• The HDI is based on three criteria: economic, health, education

Les 3 Composantes De L'idh (Méthodologie 2010)

• Santé: Espérance de vie à la naissance
• Éducation: Durée moyenne de scolarité and Durée attendue de scolarisation
• Niveau de vie: Revenu National Brut par habitant

IDH

4 indicateurs, 3 dimensions

IDH Classement

• Ranking of countries according to the HDI
• Nb: The UNDP ranks Tunisia in the countries with a high Human Development Index since 2017 (HDI+ 0.7)

Reflexion: Croissance et Développement Durable

• How to define sustainable development?
• How can growth compromise sustainable development?
• Give examples of measures to achieve growth that promotes SD