National Income

1
National Income Standard of Living

• Economic Growth and the Paradox of Happiness

2

• Yesterday the University played host to Professor
  Mohammed Younis an economist from Bangladesh who
  has received fame an honour - including the Nobel
  Peace Prize for his establishment of the Gramin
  Bank an institution providing micro-credit to
  support the economic initiatives of people in
  developing countries initially in Bangladesh
  with the aim of raising material living
  standards. He is a disciple of social business
  for the world at large. His initiative along
  with others has made an impact on the well-being
  of people in Bangladesh, but lets look at some
  statistics.

3
Bangladesh

• GDP (purchasing power parity) 208.3 billion
  (2007 est.)
• GDP (official exchange rate) 72.42
  billion (2007 est.)
• GDP - real growth rate 6.3 (2007
  est.)
• GDP - per capita (PPP) 1,400
  (2007 est.)
• GDP - composition by sector agriculture 19
• (2007 est.) industry 28.7
• services 52.3
• Labor force 69.4 million

4
United Kingdom

• GDP (purchasing power parity) 2.13 trillion
  (2007 est.)
• GDP (official exchange rate) 2.773 trillion
  (2007 est.)
• GDP - real growth rate 3.1 (2007 est.)
• GDP - per capita (PPP) 35,000 (2007 est.)
• GDP - composition by sector
• (2007 est.) agriculture 0.9
• industry 23.4
• services 75.7
• Labor force 30.89 million
• Labor force - by occupation agriculture 1.4
• (2006 est.) industry 18.2
• services 80.4
• Unemployment rate 5.3 (2007 est.)

5
GDP / Head (PPP)

• 1 Qatar 87,600 2007 est.
• 2 Luxembourg 79,400 2007 est.
• 3 Bermuda 69,900 2004 est.
• 4 Jersey 57,000 2005 est.
• 5 Kuwait 55,900 2007 est.
• 6 Norway 53,300 2007 est.
• 7 Brunei 51,000 2007 est.
• 8 Singapore 49,900 2007 est.
• 9 Ireland 46,600 2007 est.
• 10 USA 45,800 2007 est.
• 11 Guernsey 44,600 2005
• 12 Cayman Islands 43,800 2004 est.
• 13 Hong Kong 42,000 2007 est.
• 14 Iceland 40,400 2007 est.
• 15 Switzerland 40,100 2007 est.
• 16 Austria 39,300 2007 est.

6
GDP / Head (PPP)

• 17 Netherlands 39,000 2007 est.
• 18 Andorra 38,800 2005
• 19 Canada 38,600 2007 est.
• 20 British Virgin Islands 38,500 2004 est.
• 21 Gibraltar 38,200 2005 est.
• 22 Sweden 37,500 2007 est.
• 23 Australia 37,300 2007 est.
• 24 Denmark 37,200 2007 est.
• 25 United Arab Emirates 37,000 2007 est.
• 26 Belgium 36,200 2007 est.
• 27 Finland 36,000 2007 est.
• 28 Isle of Man 35,000 2005 est.
• 29 United Kingdom 35,000 2007 est.
• 30 Germany 34,100 2007 est

7
GDP / Head (PPP)

• 31 San Marino 34,100 2004 est.
• 32 Bahrain 33,900 2007 est.
• 33 Spain 33,600 2007 est.
• 34 Japan 33,500 2007 est.
• 35 European Union 32,700 2007 est.
• 36 France 32,600 2007 est.
• 37 Faroe Islands 31,000 2001 est.
• 38 Italy 30,900 2007 est.
• 39 Greece 30,600 2007 est.
• 40 Taiwan 30,100 2007 est.
• 41 Monaco 30,000 2006 est

8
GDP / Head (PPP)

• 195 Chad 1,500 2007 est.
• 196 Bangladesh 1,400 2007 est.
• 197 Zambia 1,400 2007 est.
• 198 Benin 1,400 2007 est.
• 199 Lesotho 1,400 2007 est.
• 200 Ghana 1,400 2007 est.
• 201 Haiti 1,300 2007 est.
• 202 Tanzania 1,300 2007 est.
• 203 Gambia, The 1,200 2007 est.
• 204 Burkina Faso 1,200 2007 est.
• 205 Comoros 1,100 2007 est.
• 206 Guinea 1,100 2007 est.
• 207 West Bank 1,100 2006 est.
• Mali 1,100 2007 est.
• 209 Gaza Strip 1,100 2006 est.
• 210 Afghanistan 1,000 2007 est.
• 211 Uganda 1,000 2007 est.
• 212 Nepal 1,000 2007 est.

9
GDP / Head (PPP)

• 213 Tokelau 1,000 1993 est.
• 214 Madagascar 900 2007 est.
• 215 Togo 900 2007 est.
• 216 Eritrea 800 2007 est.
• 217 Rwanda 800 2007 est.
• 218 Malawi 800 2007 est.
• 219 Mozambique 800 2007 est.
• 220 Central African Republic 700 2007 est.
• 221 Niger 700 2007 est.
• 222 Ethiopia 700 2007 est.
• 223 Guinea-Bissau 600 2007 est.
• 224 Sierra Leone 600 2007 est.
• 225 Somalia 600 2007 est.
• 226 Liberia 500 2007 est.
• 227 Burundi 300 2007 est.
• 228 Congo, Dem Repub oF 300 2007 est.
• 229 Zimbabwe 200 2007 est.

10

• How good an indication can we get from GDP
  (National Income) figures of the
• standard of living
• quality of life economic welfare
  happiness
• of the citizens of a country?

11
A. What does GDP measure?B. How do we
calculate it? C. How do we use GDP statistics?

• In calculating Gross Domestic
• Product we are trying to measure the value of
  the goods and services available to citizens in a
  national economy over a period of time usually
  one year

12

• It can be calculated at three points in the
  circular flow of economic activity total
  output total income total expenditure.
• C. GDP is used to make comparisons over time in
  a country (economic growth) and between
  countries. It also offers the basic information
  for economic policy-making.

13
GDP ? Head is used to indicate standard of
living but how good an indicator is it of human
well-being?

• GDP only takes account of those things that can
  be valued in money terms using market prices
• Issues include
• Undocumented Transactions
• the informal economy
• Non-marketed goods services
• DIY subsistence farming etc.
• Compensatory activities
• eg. Cleaning up pollution

14

• Nonmarket Gains and Losses
• o Social
• o Environmental -
• o Household Production
• o Work hours Leisure Time
• o Working conditions
• Income Distribution sharing material
• well-being ?

15
UN Human Development Index

• Wealth is evidently not the good we are seeking,
  it is merely useful for the the sake of something
  else. Aristotle
• What? Opportunity to realise human potential?
• The HDI takes account of educational and health
  indicator as well as income (GDP/Hd)

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UN Human Development Index

• High Human Development
• 1. Iceland 2. Norway 3. Australia 4. Canada
  5. Ireland 6. Sweden
• 7. Switzerland 8. Japan 9. Netherlands 10.
  France 11. Finland
• 12. United States 13. Spain 14. Denmark 15.
  Austria
• 16. United Kingdom 17. Belgium 18. Luxembourg
  19. New Zealand
• 20. Italy 21. Hong Kong, China (SAR) 22.
  Germany 23. Israel
• 24. Greece 25. Singapore 26. Korea, Rep. of
  27. Slovenia
• 28. Cyprus 29. Portugal 30. Brunei Darussalam
  31. Barbados
• 32. Czech Republic 33. Kuwait 34. Malta 35.
  Qatar 36. Hungary
• 37. Poland 38. Argentina 39. United Arab
  Emirates 40. Chile
• 41. Bahrain 42. Slovakia 43. Lithuania 44.
  Estonia 45. Latvia
• 46. Uruguay 47. Croatia 48. Costa Rica 49.
  Bahamas 50. Seychelles
• 51. Cuba 52. Mexico 53. Bulgaria 54. Saint
  Kitts and Nevis
• 55. Tonga 56. Libyan Arab Jamahiriya 57.
  Antigua and Barbuda
• 58. Oman 59. Trinidad and Tobago 60. Romania
  61. Saudi Arabia
• 62. Panama 63. Malaysia 64. Belarus 65.
  Mauritius
• 66. Bosnia and Herzegovina 67. Russian
  Federation 68. Albania
• 69. Macedonia, TFYR 70. Brazil

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Medium Human Development

• 109. Turkmenistan 110. Nicaragua111. Moldova
  112. Egypt 113. Uzbekistan
• 114. Mongolia115. Honduras 116. Kyrgyzstan 117.
  Bolivia 118. Guatemala
• 119. Gabon 120. Vanuatu 121. South Africa 122.
  Tajikistan
• 123. São Tomé and Principe 124. Botswana 125.
  Namibia 126. Morocco
• 127. Equatorial Guinea 128. India 129. Solomon
  Islands
• 130. Lao, People's Dem. Rep.131. Cambodia 132.
  Myanmar 133. Bhutan
• 134. Comoros 135. Ghana 136. Pakistan 137.
  Mauritania 138. Lesotho
• 139. Congo 140. Bangladesh 141. Swaziland 142.
  Nepal 143. Madagascar
• 144. Cameroon145. Papua New Guinea146. Haiti 147.
  Sudan 148. Kenya
• 149. Djibouti 150. Timor-Leste 151. Zimbabwe 152.
  Togo 153. Yemen
• 154. Uganda 155. Gambia
• Low Human Development
• 156. Senegal 157. Eritrea 158. Nigeria 159.
  Tanzania, U. Rep. of 160. Guinea
• 161. Rwanda 162. Angola 163. Benin 164. Malawi
  165. Zambia
• 166. Côte d'Ivoire 167. Burundi 168. Congo, Dem.
  Rep 169. Ethiopia
• 170. Chad 171. Central African Republic 172.
  Mozambique 173. Mali
• 174. Niger 175. Guinea-Bissau176. Burkina
  Faso177. Sierra Leone

18
What about happiness?

• Scitovsky - The Joyless Economy
• Bhutan - gross national happiness
• Layard - The Economics of Happiness
• Happiness, well-being and economic growth -
  the paradox of happiness

19
Indicators of Comparative Economic Performance

• (2001) UK USA
  Germany Japan
• GDP/Head 24700 36,300 26,200
  27,200
• Growth 1.6 0.3 0.6 0.2
• (2003 2.6 2.5 1.3 0.7)
• Resource Allocation ( of GDP)
• Cons 64 68 57 60
• Invest 15 18 22 29
• Govt 21 14 21 11
• Income Distribution
• Lowest 10 2.6 1.8 3.6 4.8
• Highest 10 27.3 30.5 25.1 21.7
• Gini Index 37 41 30 25
• Unemployment 5.1 5.0 9.4
  4.9
• Inflation 1.9 2.8 2.4 0.6
• Trade Balance 1.0 1.6 0.8 1.5
• Industrial Prod 3.4 3.7 2.1 1.4

20
Outcomes of Economies

• How well is an economy performing in the face of
  the predicament of scarce resources?
• Here are seven commonly used outcomes which can
  provide indications of economic performance
• 
  
• Standard of living How many gds services/
  hd?
• Economic growth How quickly is output
  expanding? Allocation of resources What is
  produced?
• Distribution of income How is output shared
  out?
• Employment Is society using all its resources
  ?
• Change in price level What will money buy?
• Balance of Payments International
  competitiveness?

21
Other Significant Performance Criteria ?