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World Economy

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Fraser McQueen

on 17 October 2014

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Transcript of World Economy

Case, K.E., Fair, R.C. and Oster, S.M. (2009) – Principles of Macroeconomics, 9th ed, Pearson

Mackinnon, D & Cumbers, A (2011) - Introduction to Economic Geography: Globalization, Uneven Development and Place, 2nd ed, Pearson

World Bank (2014) The World Bank Available at: http://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG [Accessed: February 7th 2014]

Lemmon, G (2014). 'Education Employment and Youth today.' Development Channel, 7th Febuary 2013. Available at: http://blogs.cfr.org/development-channel/2014/02/07/education-employment-and-youth-today/ [accessed 8th February 2014]

United Nations (No Date). 'Education For All (EFA).' Available at: http://www.un.org/en/globalissues/briefingpapers/efa/ [accessed 8th February 2014]

Appelbaum ,B (2014). 'Will Saving on Health Care Hurt the Economy.' Available at: http://www.nytimes.com/2014/02/09/sunday-review/will-saving-on-health-care-hurt-the-economy.html?_r=2 [accessed 8th February 2014]

(Avrrox, 2008) Consequences of a high rate of Economic growth http://www.studymode.com/essays/Consequences-Of-a-High-Rate-Of-153392.html [9/02/14]

(Zhang Jinming, 2012) The Negative effects of Chinas Economic Model http://www.china.org.cn/opinion/2012-06/16/content_25658927.htm [9/02/14]

(BBC, 2011) Beijing 'plans congestion charge' to ease traffic woes http://www.bbc.co.uk/news/world-asia-pacific-14761711 [9/02/14]

(Time World, 2013) Beijing Chokes on Record Pollution, and Even the Government Admits There’s a Problem http://world.time.com/2013/01/14/beijing-chokes-on-record-pollution-and-even-the-government-admits-theres-a-problem/ [10/02/14]

(Civil Aviation, 2008) Top 10 Country In Air Traffic http://www.airliners.net/aviation-forums/general_aviation/read.main/4103858/ [10/02/14]

Katja Rasic, Fraser McQueen, Peter Elliot and Barbara Mesquita
Economic Growth
Increase in the total output of an economy

Increase in real GDP

Increase in living standards

Sustainable economic growth

Trend growth
A Society's Production Possibility Frontier
Should Economic Growth be the Foremost Objective of Government Policy?

Economic Growth

Governments Main Objectives

Economic Issues

Negative Consequences

Economic Growth vs. Economic Development
USA GDP: 2.8%
Brazil GDP: 0%
Africa GDP: 3.5%
India GDP 3.2%
China GDP: 7.8%
Japan GDP 2.1%
Russia GDP: 3%
UK GDP: 0.1%
German GDP: 0.6%
Economic growth shifts PPF out to the right
Circuit of Capital
Industrial Revolution
GDP Levels
Gross Domestic Product is the "value
of all final goods and services produced
in a county in 1 year"


Convergence theory

Main objectives of the Government
Reach full employment or low unemployment

Obtain a stable inflation

Maintain high and sustainable economic growth

Create a surplus opposing its debt

Reduce inequality

Protect the environment
Employment and Unemployment
Natural rate of unemployment
Employment Economic Productivity
Economic growth stimulates more jobs
Low stable inflation

Reduce costs by not raising wages with inflation

Economic Stability

Education and training policy

Distribution of income and wealth
Reduction of resources


Increased industrialization effects the environment

Increased carbon emitted by Chinese businesses
Economic Growth vs. Economic Development
New production and new capital increases productivity which leads to higher returns

Improved productivity also comes from technological change and innovation

Real GDP
GDP per capita
Economic Growth
Richest countries' growth decreased from annual 4% to 0.02% (after-crisis)

Middle income have maintained healthy growth

Low-income have had the highest improvement and have shown continuous growth

Economics on a social level

The use of policies to improve the economic and social
well-being of people

The economic developer will recruit manufacturers with large
capital investments (steel and chemical plants) 

Aims to improve:
economic well-being and quality of life for a community
literacy rates
life expectancy
poverty rates

Economic Development
Why are emerging economies experiencing faster and greater economic growth?
Young working-age population

Large availability of labor workforce -> cheap

Trade surpluses -> love government debt

Increased household income

Natural resources

Prudent fiscal policies

Low diminishing returns

"Catch up" process

Economic Growth happens
of economic development

Without economic development there is no economic growth

The Issues of Health and Education
Freeing up resources
Breaking the poverty cycle
Economic growth
Education and Health
Both contribute to economic development

Without them economic growth would be hard to sustain
Negative Consequences
Excessive use of non renewable resources
Potential risk of increased inflation
Should Economic Growth be the Foremost Objective of Government Policy?
Yes, but it ultimately depends on the country.
How is this happening?
Monetary and fiscal policies
, regulation of financial institutions, trade, tax policies to achieve price stability, high employment, expanded tax base, and sustainable growth

2) Infrastructure and services such as highways, parks, affordable housing, crime prevention, and educational programs and projects

Job creation and retention
through specific efforts in business finance, marketing, neighborhood development, small business start-up and development, business retention and expansion, technology transfer, workforce training and real estate development

Economic development encompasses three main areas of focus:
• Britain 19th century

• Efficiency and productivity

• A rural society became an urban society

• Globalization

Increased deficit between the rich and poor
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