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Dimensions of the Economy…

Welcome to class of Economic Forces Dr. Satyendra Singh Professor, Marketing and International Business University of Winnipeg Canada s.singh@uwinnipeg.ca http://abem.uwinnipeg.ca www.abem.ca/conference. Dimensions of the Economy…. Important Economic Indicators Gross National Income (GNI)

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Dimensions of the Economy…

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  1. Welcome to class of Economic ForcesDr. Satyendra SinghProfessor, Marketing and International BusinessUniversity of WinnipegCanadas.singh@uwinnipeg.cahttp://abem.uwinnipeg.cawww.abem.ca/conference

  2. Dimensions of the Economy… • Important Economic Indicators • Gross National Income (GNI) • GNI/capita • Purchasing Power Parity • Income Distribution • Private consumption • Unit labor costs • Exchange rates • Inflation rates • Interest rates • Balance of payment (BOP)

  3. Dimensions of the Economy • Gross National Income (GNI) • The measure of the income generated by a nation’s residents from international and domestic activity • Preferred over GDP • GNI/Capita • Used to compare countries with respect to the well-being of their citizens and to assess market or investment potential

  4. Kinds of Economy… • Formal economy • Visible, Recorded, Audited • What % of GDP is owned by government • UK: 10%  4% • China: 80%  50% • Chie: 75%  25% • Mexico: 66%  33%

  5. Informal Economy (Street, undocumented…)

  6. Underground Economy • Illegal!, USA (10%)

  7. Why Privatize? • To get $ from firms • Increase firm profitability • Ideological reasons • Preserve jobs • … • Unfair because government firms • ↓price unfairly • ↓financing rate • ↑Get government contract • Expert assistance • ↓wages • ↑Has more resources

  8. Characteristics of Economy • Developed countries spend twice on • Food • Clothing • … • Developing countries spend twice on • Transportation • White goods • Healthcare • Wine/ cigarette

  9. Effects of Economy • Sales  willingness to purchase low • Wage rate • Labor supply • Union contract

  10. Wal*Mart Economy • $+450b sales • 4000 stores • 30 countries • Only 40 countries (out of 227) above Wal*Mart • Ghana $40b (ppp 80b) • Manitoba $50b

  11. Economic development Measurement (GNI/Capita), World Bank • Low Income (<$1000) • Mower middle income ($1000-$3000 • Upper middle income ($3000-$9000) • Higher income (>$10000) • Canada  $40,000 • India  $4,000 • China $9,000 • Ghana $3,000

  12. Levels of Economic Development • Developed • Nations that are the most technically developed • Newly industrialized economies (NIEs) • The fast-growing upper MIG and HIG economies such as Taiwan, Hong Kong, and Singapore • Newly industrializing countries (NICs) • Brazil, Mexico, Malaysia, Chile and Thailand • Developing • Nations that are less technically developed • Emerging Markets • Transformation from controlled to market economy

  13. Purchasing Power Parity (PPP)… • The number of units of a currency required to buy the same amount of goods and services in a domestic market that $1.00 would buy in the U.S. • Helps to make comparisons possible across economies CIA Fact Book

  14. Purchasing Power Parity (PPP) If, 1 Lt. Milk US $1.00 1 Lt. Milk India Rs. 20.00 Then, PPP: US $1 = Rs. 20 Reality: US $1 = Rs. 40 ie Rs. is 50% undervalued – artificially?! However, PPP is based on consumer expenditure on basket of essential goods

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