Economic Indicators and Global Development Trends

Economic Expectations

Economic expectations are assumptions people make about the future. They guide individuals, businesses, and governments in their decision-making processes. Companies analyze their own situation, their competitors, and the economic climate to adapt their strategies. This includes investment and production decisions, which can shift the supply curve.

Industrial Structure

In developed countries, most people work in the tertiary sector (services), while manufacturing and agriculture are less prominent. This pattern differs in emerging and non-developed countries.

GDP and Economic Well-being

Gross Domestic Product (GDP)

GDP measures the total value of goods and services produced in an economy annually, indicating its size and evolution.

GDP Per Capita

GDP per capita is calculated by dividing a country's GDP by its population. While GDP reflects the size of an economy, GDP per capita provides a better understanding of a country's wealth. Most developed countries have a high GDP per capita, while some with a large GDP have a low GDP per capita (e.g., China, India, Brazil).

Real GDP

Real GDP accounts for inflation. If a country experiences 20% inflation, its nominal GDP might increase by the same percentage, but this growth is misleading. Real GDP adjusts for inflation to provide a more accurate picture.

Problems with GDP

• Underground Activities: GDP doesn't capture the black market.
• Inequality: GDP per capita doesn't reflect income distribution.
• Environmental Impact: GDP ignores negative externalities like pollution.
• Currency Fluctuations: GDP is measured in local currency, susceptible to exchange rate volatility.

Formula

C + I + G + (X - L)

Recession

A recession is a period of economic decline characterized by two consecutive quarters of negative economic growth.

Types of Poverty

Population Dynamics

Population Growth

Population growth is calculated as the percentage change in population over a period. It's influenced by factors such as:

Population Growth in Developed and Developing Countries

Consequences of Population Change

Development and Economic Classifications

Development

Development refers to the continuous improvement of living standards and a country's capacity to produce goods and services.

Developed Country

A developed country possesses a sophisticated economy and advanced infrastructure compared to less industrialized nations, reflected in its GDP, income per capita, and standard of living.

Frontier Market

A frontier market is a developing country more advanced than the least developed countries but too small, risky, or illiquid to be considered an emerging market.

Emerging Markets

Emerging markets show potential to become developed but still face challenges. Their characteristics include:

• Rapid economic growth
• Concentrated economic development in a few sectors
• High capital requirements
• Significant current account deficits
• Underdeveloped financial systems
• Regulatory and supervisory challenges due to rapid growth