Key Economic Indicators and Public Sector Roles

Economic Indicators and Variables

Economic indicators are key magnitudes used to report on the status of different variables, changes in general economic activity over a period of time, and the degree of development achieved.

Short-Term Economic Indicators

Short-term indicators serve to track the evolution that a series of economic variables have had in a recent time period, typically about a month or a quarter. These include:

• Economic activity: Industrial and agricultural production.
• Consumption: Car registrations and electricity consumption.
• The labor market: Population and unemployment rates.
• Price and wage: Higher wages and consumer price rates.

Specifically, the Consumer Price Index (CPI/IPC) can be calculated monthly and reflects economic activity in terms of consumption, while the GNP deflator is measured quarterly.

Measuring Economic Growth and GDP

To calculate economic growth, we compare the Real GDP of the current year with the previous year. Increased production is best measured using Real GDP rather than Nominal GDP. GDP Per Capita indicates the average share that corresponds to each inhabitant of the country. Furthermore, GDP per capita in Purchasing Power Parity (PPP) is used to compare the situation between countries while considering the different price levels in each one of them.

Aspects Not Included in GDP

The following aspects are excluded from GDP calculations:

• Work in the informal economy.
• Uncontrolled production and environmental impact.
• The value of domestic chores.
• Activities that do not go through the market, such as religious services.

Human Development and Future Readiness

Beyond GDP, Human Development Indicators (HDI) take into account other factors such as life expectancy, literacy rates, and school enrollment. Another metric, the Index of Preparation for the Future, evaluates economic growth and per capita income alongside spending on health, technological development, and education.

The Public Sector and Economic Schools

The Public Sector integrates the economic activities of a nation that remain within the governmental sphere. A key distinction exists between public companies (which are not government agencies) and state agencies (which may not be affordable). Historically, three main schools of thought define the sector's role:

• Classical economists: They advocate for economic liberalism and are supporters of non-state intervention in the economy.
• Socialist economists: Followers of Karl Marx who believe that the state is fundamental to the economy.
• Keynesian economists: Supporters of the state becoming an active trader and regulator.