Factors for Economic Growth
Assessment 1
Table of Contents
Workshop Question 1
Gross Domestic Product (GDP) is defined as households by all consumption, businesses by all investment, and government purchases, plus foreigners purchases minus aboard purchases (Vox. 2018). GDP measures the total value good and services produced within the countries. this method is the most popular to measuring an economic output and is therefore to considering a measured size of an economy GDP is an important section to indicator growth rate of the economic performance for all nation. If GDP growing it a good sign are happening or is about to happen in number different areas – people will get more jobs or worker will getting better pay, for example, the company has felt more confidential enough to invests more worker into the company (Vox. 2018).
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Economic well-being is influenced by the part of the Gross Domestic Product (GDP) – consumption, investment, government expenditure, and net export – leisure time, wealth and non-market activity (Bergheim, 2006). According to HDI trends, Australia’s HDI value for 2017 is 0.939 – which put the country in high position human development. Australia HDI between 1990 and 2017 show a figure HDI value from 0.866 in 1990 to 0.939 in 2017, which increases up to 8.4 percent (see appendix 1). During the period between 1990 and 2017 Australia, USA and Norway have an experience different degree of progressing toward to increasing their country HDIs. In 2017, Australia rank 3 in HDI 0.939 increase above an average 0.894 very high human development, while Canada ranks 12 and New Zealand rank 16 (see appendix 2).
Other issues due to inequality the loss in human development give the different of HDI and IHDI. As the inequality number increases in a country, a number of human developments also increasing. Even Australia’s HDI is 0.939. however, when the number decrease due to discounting for inequality has fall 0.861, which a loss of 8.2 percent due to the distribution of inequality dimension of HDI indices. Canada and New Zealand also shown a loss as well due to inequality of 8 percent to 7.7 percent respective. Due to inequality is very high and above average HDI by 10.7 percent and OECD is 11.9 percent. The Australia coefficient inequality is equal to 8.0 percent (see appendix 3).
There are 5 areas well affected to wellbeing such as; quality of human developing, life-course gender gap, women’s empowerment, environmental sustainability, and socioeconomic sustainability. (1) quality of human developing, which contain 3 sections such as; health, educational and standard living (see appendix 4), (2) Life-course gender gap - ages group lifecycle perform (see appendix 5), (3) women’s empowerment – will look at health and family, violence against women and empowerment socioeconomic (see appendix 6), (4) environmental sustainability – this section will cover on environmental threat and sustainability, which will look at a risk across group and species in forest areas (see appendix 7), (5) socioeconomic sustainability – this will cover entire economic section how better or worse country performs (see appendix 8).
In conclusion, after going through all different issues section between Australia, Canada, and New Zealand. We can’t deny that GDP cannot necessarily be equated with human happiness. More GDP increase more good and services measure, which mean more jobs and more income. Most likely people have seemed place with high value. However, as mention GDP is used to measure the product of good and services, which made good and service can produce most of the part, because we as a consumer want them. Within holding back GDP would lead to third recognition of the conceptual and at risk. It is difficulted that inherent using a single number to summarise an output for the entire country economy.
References
- Human Development Indices and Indicators: 2018 http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/AUS.pdf
- Vox. 2018. What does GDP measure? – Everything you need to know about GDP – Vox. [ONLINE] Available at https://www.vox.com/cards/gdp-economic-output/what-does-gdp-measure.
- GDP and Economic Well-Being. 2018. GDP and Economic Well-Being. [ONLINE] Available at https://2012books.lardbucket.org/books/macroeconomics-principles-v2.0/s09-03-gdp-and-economic-well-being.html.
- Bergheim, S 2006. Measures of Well-Being: There is more to it than GDP. Deutsche Bank Research Available at http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000202587.PDF
Appendix
Appendix 1
(Source: Human Development Indices and Indicators: 2018)
(Source: Human Development Indices and Indicators: 2018)
Appendix 2
(Source: Human Development Indices and Indicators: 2018)
(Source: Human Development Indices and Indicators: 2018)
Appendix 3
(Source: Human Development Indices and Indicators: 2018)
Appendix 4
(Source: Human Development Indices and Indicators: 2018)
Appendix 5
(Source: Human Development Indices and Indicators: 2018)
Appendix 6
(Source: Human Development Indices and Indicators: 2018)
Appendix 7
(Source: Human Development Indices and Indicators: 2018)
Appendix 8
(Source: Human Development Indices and Indicators: 2018)
Workshop Question 2
A Keynesian model has determination are the interest of macroeconomic theory, this included two private sectors such as household sector and business sector. The Keynesian model or private sector Keynesian model, has interacted capture between a consumption expenditure and autonomous investment expenditures, also is commonly use to illustrated working with a Keynesian economic, which including equilibrium, disequilibrium and the multiplier (AmosWEB Economics, 2018). The sectors we will look at is (private) sector of the Keynesian model. The private sectors should be more contrasting with the public sector or work more with government sectors to force allocated resource decision of economy through the system such as law, rules, and regulation. As the private sectors have dealt with business sectors contain a private, profit- seeker firmed into the economy, which combines resource scared through a product of want and need to satisfying consumer good and service. The business sectors are responsible for the investment expenditures on GDP (AmosWEB Economics, 2018).
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An implication has improving inventory control for economic stability. Because of continues and even greater important between inventory investment and business cycles. Their inventory control improves that leading to greater instability in production, for example, Saturn automobile their employment had a strike by stop shipments of the part, which arrive just on time, even just in time, it led to a risk. Even eliminate the stock inventories supplies materials, still, production has become more weakened and interrupted in supplies. We can conclude that good grow productions are the less stable rate, but still need more improvement (Economic stability in the 1990s). Thus, uneven of the sale behaviours as we founding that GDP will grow uneven more despites in lower sales-inventory ratio because an inventory will adjust rapidly due to the change of sales. In addition, and most importantly, change in investment inventory are more like to associated with sharper initial GDP declines. Since finding the speed of adjustment inventory increasing sharper recovery of GDP can be expected to accompany initial to surging of sales. Therefore, faster speed adjustment inventories sales will follow more closely than a sale from the past (Economic stability in the 1990s).
There two type of investment expenditure that can support this evidence of theory such as Induce Investment and Autonomous Investment as mention above.
First, we look at Induced Investment is an influence by income or output of economic. Induce Investment is a change which induces national income. Investment function signifies as rises real national income. In the diagram shown that the curve has a positive slope, which indicated that the level of national income has increased from OY1 to OY2, the induction level investment also increased from OI1 to OI2 (see appendix 9). The shift investment curve as shown an increase in profit, but if firm expecting than it needs to induced to investment. The expectation depends on aggregate demand for good and service in economic. On the other side aggregate demand also depend on a national income as well. As mention above the higher level of national incomes, it leads to higher induced investment ().
Secondly, Autonomous Investment this will not change in national income because of it independent from national income. Regards to the autonomous investment size, many basic influences has increased in their populations. Manpower, technology and role of interest, is the expectation of economic growth in future and capacity role utilization. The diagram is shown autonomous investment curve in a horizontal line. For example, national income OY1 is an autonomous investment $10 trillion. When national income increasing to OY2 the autonomous investment will remain the same as $10 trillion (see appendix 10) ().
In conclusion, the private sectors drive a system. In contrast, investors in the Keynesian model income could determination decide if they need to invest. Plus, Induced Investment aggregate demand depends on national income and national income also depend on aggregate demand. Autonomous Investment as expected from economic growth.
References
- Economic stability in the 1990s: The implications of improved inventory control. By: Bechter, Dan M., Stanley, Stephen, Business Economics, 0007666X, Jan1993, Vol. 28, Issue 1
- AmosWEB is Economics: Encyclonomic WEB*pedia. 2018. AmosWEB is Economics: Encyclonomic WEB*pedia. [ONLINE] Available at http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=two-sector+Keynesian+model.
- Concept of Investment – Investment Expenditures – Types of Investment – Induced Investment – Autonomous Investment – Definition – Explanation – Diagram – Economicsconcepts.com . 2018. Concept of Investment – Investment Expenditures – Types of Investment – Induced Investment – Autonomous Investment – Definition – Explanation – Diagram – Economicsconcepts.com . [ONLINE] Available at http://www.economicsconcepts.com/concept_of_investment.htm.
Appendix
Appendix 9
Induced Investment
(Source: Economicsconcepts.com, 2018)
Appendix 10
Autonomous Investment
(Source: Economicsconcepts.com, 2018)
Workshop Question 3
The Free Trade always considered as one of the major vehicles of an economic growth. Free Trade is international import and export which removing a barrier to trade with another country to increase economic integration, stronger trade facilitates and commercial ties (Department of Foreign Affairs and Trade. 2018). In my view, Free Trade can benefit all countries using the comparative advantage trade.
The reason that supporting free trade using the comparative advantage. because free trades are enabled to lowers pricing for consumers, increasing an export, which there will get a benefit from economy scale and greater choice of goods. By specialising in goods where other countries have lowered their opportunities cost, this can be increased in economic welfare. For example (Krugman, Paul and Wells, Robin, 2008), the USA is able to produce 2,000 textiles if it produces 0 fish or 1,000 tons of fish if it produces 0 textiles. Meanwhile, Vietnam can produce 1,000 textiles if it produces 0 fish or 2,000 tons of fish if it produces 0 textiles. It is concluded that the USA has the more comparative advantage of textiles and Vietnam has the more comparative advantage of fish; therefore, USA can produce more textile and consume fish from Vietnam, while Vietnam can produce fish more and consume textiles from the USA (Economics Help. 2018).
This can be seen that Free Trade has benefits to all their trading partners by increase a global output and economic growths. The whole world gaining from both sides of the trade and trading partnership at least with some trade or no trade. By using comparative advantage trade has brought the highest welfare possible in other participants countries by facilitating product in specialisation across other national boundaries. Thus, an outcome in term of Free Trade regimen with a promotion of reciprocally of labour profitable division, which greatly improved for their real potential of national product across the nation. Ultimately, therefore, with a Free Trade reciprocally has valence result in higher living standards and a worldwide reduction of poorness.
In conclusion, Free Trade has brought an increase in demand for labours as Free Trade allowed a country to import goods intensive-skill and export more intensive- goods of labour. This will increase a labour for demand and reduction of poorness.
Reference
- Krugman, Paul and Wells, Robin, 2008. Economics, 2ndedition. Worth Publishers, New York, pp, 195-205.
- Department of Foreign Affairs and Trade. 2018. What are FTAs? – Department of Foreign Affairs and Trade . [ONLINE] Available at https://dfat.gov.au/trade/about-ftas/Pages/what-are-ftas.aspx.
- Economics Help. 2018. Theory of Comparative Advantage | Economics Help. [ONLINE] Available at https://www.economicshelp.org/trade2/comparative_advantage/.
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