Download GDP Analysis: World Geographic Economic Differences Keith L

Wealth
GDP Analysis: World Geographic
Economic Differences
Keith L. White/RSK HS
TC, Arizona Geographic Alliance
Macroeconomics
 The part of economics that looks and
deals with the economy as a whole
 Population and labor force, education
and training
 Economic systems and politics
 Resources and trade
Economic Indicators
Economic Indicators
 Used to “check the health” of an
economy
 Comparative to other countries and
economic systems
 Over 50 economic indicators: most
popular and common: CPI
(Inflation), Unemployment claims,
Housing starts, Inventory, DJIA, S&P,
and GDP.
Why does the USA have great
wealth?
 Most of the worlds population suffers
with limited education opportunities,
poor health care, unclean drinking
water, limited conveniences, few
employment options, no home
ownership.
 How can we compare the USA to
other world countries?
GDP: Gross Domestic Product
 Value of all FINAL goods and services
produced within a country’s borders in
a given year
 C+I+G=Nx=GDP
 Consumer spending + Business Investment
(and Inventory) + Government Purchases
= Net Exports (Exports – Imports or x – m)
= GDP
 In USA GDP is calculated by US Dept. of
Commerce.
Get Real! Real vs. Nominal GDP
 Real GDP is adjusted for inflation if
you are comparing growth to previous
years.
 Nominal GDP is current GDP that is
not adjusted for inflation and would
not be accurate compared to previous
years.
GDP or GNP?
 GDP measure all final goods within a
countries borders regardless of ownership.
With globalization, it is much more accurate
on a comparative basis
 Gross National Product calculates by
countries ownership inside and outside of
borders which dilutes in production
accuracy and analysis and is rarely used
today my most economic sources.
GDP: What is NOT included?
 Intermediate Goods
 Illegal Activities (Stolen Goods, illegal
drug trade, prostitution, etc.)
 Unpaid “non market” activities (Chores,
household, charity, unpaid labor, etc.)
 Used goods
 Gifts, loans, welfare, taxes (nothing
produced)
 Financial Transactions (Stock
Market/Deposits/Paper Transactions)
Who Cares?
 GDP is a major leading economic
indicator of the health in an economy.
 A growing GDP is reflective of “good
health” and prospering economy
 A declining GDP is reflective of a
“sick” economy usually accompanied
by high unemployment, low wages,
poverty, homelessness, hunger and
suffering
Comparative GDP
 Per capita = population / nominal GDP
 Compare per capita (per person)
 China and India both have a healthy, fast
growing GDP and estimates should they will
pass us the USA within 20-years.
HOWEVER:
 China and India have huge populations and
when divided into their nominal GDP the
per capita comparisons are much more
accurate
World Population
World GDP
USA / World GDP by State
Per Capita GDP
USA
2006 Nominal GDP = 13 trillion plus
Population = 300 million (Approx.)
Per Capita GDP = $43,444
Real GDP (adjusted for inflation has
enjoyed steady growth of 3-5% year
 Growing US trade deficit (xm=exports-imports) is biggest
inhibitor to growth




Locate and Label:
Top 10 Per Capita GDP (2007)
CIA World Fact Book
(www.cia.gov)
1- Luxembourg
2- Qatar
3- Bermuda
4- Jersey
5- Norway
6- Kuwait
7- UAE
8- Singapore
9- USA
10-Ireland
80,800
75,900
69,900 (UK)
57,000 (UK)
55,600
55,300
55,200
48,900
46,000
45,600
Bottom 10 Per Capita GDP (2006)
CIA (www.cia.gov)
221222223224225226227228229230-
Central African R 700
Niger
700
Ethiopia
700
Solomon Islands 600
Comoros
600
Somalia
600
Guinea-Bissau
600
Liberia
500
Zimbabwe
500
Dem Rep Congo 300
Other Per Capita GDP of Interest
(2007) CIA (www.cia.gov)







184- Haiti
165- India
130 China
85- Mexico
75 Russia
34- Japan
21- Canada
1,900 (Lowest in NA)
2,700
5,300
12,500
14,600
33,800
38,200
World Map Activity
 Using a blank world map and Atlas for
reference: find and label the 10 ten
and bottom 10 per capita GDP
countries.
 Shade each group using a color key
 Identify and label on the world map
5-more per capita GDP countries you
are interested in.
Interrelationships & Meaning
 What are possible geographic,
economic, resource, or political
reasons for a high per capita GDP?
 What are possible geographic,
economic, resource, or political
reasons for a low per capita GDP?
 What steps could be taken to assist a
country with a low per capita GDP?
Geographic Connections to low GDP









Natural disasters and destruction
Politics and disputes, wars, turmoil
Poor health care options (mortality rate)
Poor education opportunities, employment
training
Private property rights/land ownership
Economic Freedom/profit motive
Location and natural resources
Low production rates
Climate changes/weather issues
World Bank
 One of the primary functions of The World
Bank is to lend money for capital
improvements to low per capita GDP
producing nations.
 Loans are used to educate the labor force,
train in food production and distribution,
utilize and develop available resources,
invest in transportation and utility
infrastructures.
Overnight Research Assessment
 Select a country in the bottom 50 of per capital GDP.
 Research the nominal GDP, current population, labor
force, mortality rate, and resources available.
(www.cia.gov go to the fact book)
 Write a 1 page letter to The Word Bank requesting
consideration for a 10-billion dollar loan.
 Begin the letter with a overview of your country, its
location, and current problems.
 Conclude the letter with an explanation why the loan
would help develop your country and improve the
standard of living for your population.
Assessment Rubric
1-Poor
(4)
2-Fair
(6)
3-Good
(9)
4-Excellent
(12)
Limited or no
research
Some research
attempted by key
areas were missed
Most facts & details
were researched
Outstanding
research, resource
facts, and details
No clear purpose of
The World Bank
loan request
Few facts listed in
letter requesting
loan
Most facts & details
were listed in the
letter
Excellent overview
of facts and details
which clearly
defined purpose of
letter
No clear outline of
why loan would
specifically help
Few benefits of loan
were outlined
Good overview with
a few specifics as to
why loan would
benefit
Excellent review
and detail of why
loan would benefit
and improve
conditions
Arizona Extensions & US GDP
 How does Arizona contribute to
the US GDP growth?






Tourism
Farming (Cotton, Vegetables, Citrus)
Ranching (Cattle, Sheep)
Mining (Copper, Silver, Gold)
Housing construction/growth
Electronics manufacturing
GDP Closure
 Per Capita GDP shows relative
comparisons
 Poverty, unemployment, hunger,
homelessness, and standard of living
 Continent of Africa suffers with many
countries very poor
 China and India nominal GDP vs. per
capita GDP