Welcome to class of Economic Forces Dr Satyendra

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) § GNI/capita § Purchasing Power Parity § Income Distribution § Private consumption § Unit labor costs § Exchange rates § Inflation rates § Interest rates § Balance of payment (BOP)

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

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%

Informal Economy (Street, undocumented…)

Underground Economy – Illegal!, USA (10%)

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

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

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

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

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

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

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

Purchasing Power Parity (PPP) If, 1 Lt. Milk US India $1. 00 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