Developed and less Developed Economies Countries
Macro economic variables are the chief determinants of progress in developing and developed countries (Turabian, pg 23). Economic growth refers to the expansion of production of goods within a country. It is generally, estimated in terms of gross domestic product (GDP). To compare growth of countries, overall sales are expressed in terms of a common currency (Turabian, pg 23). However, several factor such as inflation can distort the economy. In any country, the most observed and considered macroeconomic variable in evaluating the progress and growth of a country are gross domestic product, state of employment as well as inflation (Turabian, pg 23). The major reason gross domestic product is considered is because it accounts for the entire production-taking place within a country irrespective of whether the production is domestic or by foreign companies and individuals (Turabian, pg 23).
Countries referred to as the G-8 are countries with some of the largest economies. They are also termed as world super powers. These countries are the likes of France, Germany, United States, Canada, Italy, Russia, UK and Japan. The G-8 nations all register gross nominal returns of close to fifty three percent. The countries’ ministers meet annually to discuss the way forward. However, the G-8 countries have been having crisis since lack a stable administrative structure. G-8 has accomplished so much and hope to go miles in supporting each other. Their main objective now is to fight terrorism to foster stable economic environments.
Inflation affects the economic activities of a country in a number of ways. For instance, when prices escalate, the respective unit of currency of a particular country now purchases fewer goods as compared to before. We could therefore, conclude that inflation affects purchasing power of money. Inflation is measured in terms of inflationary rates (Turabian, pg 23). However, despite inflation affecting prices, the effects could be either positive or negative. The undesired effects of inflation include a decline in money’s real worth. This is dangerous to economic expansion as it decreases the motivation to invest and even save in the end. In addition, high inflationary rates cause’s shortages of goods as producers and suppliers hoard good for speculation of a hike in prices (Turabian, pg 23).
We could also view the positive desirable effects of inflation. To start with, the monetary policies by banks are adjusted to the benefit of commercial banks. The central bank of Federal Reserve Bank may decide to adjust interest rates in order to moderate recessions (Turabian, pg 23). Economists have argued that price increases and more so hyperinflation are as results of uncontrolled expansions in money supply (Turabian, pg 23). On the other hand, no inflation at all slows down economic progress in a way. This is because low prices increments tend to moderate and reduce the effects of economic recessions (Turabian, pg 23). Inflation does this by preventing a case of liquidity trap since it stops the monetary policy from calming down the economy. The central bank also uses the monetary tool of open market operation to control money supply in the economy (Turabian, pg 23).
Macroeconomic variables in developed countries
Developed and developing countries vary greatly in levels of economic progress. As a result, they have varying macroeconomic indicators. However, in a few cases they may be evaluated using similar variables for purposes of uniformity. Economic indicators are the watched modern age the most viewed news items. Macroeconomic indicators are chosen as compared to microeconomic indicators since they reflect the general situation in a country (Turabian, pg 23). Microeconomic variable on the other extreme are mainly concerned with individual small units. Examples of the most developed countries are USA, Japan, China among many other western countries.
The first macroeconomic indicator in developed nations is GDP, gross domestic product (Turabian, pg 23). The trend has been upward rising within the last five years. As said earlier, it represents the aggregated monetary worth of all goods produced within a given region. In the US for instance, their GDP growth rate per annum is roughly two point five percent to three percent (Turabian, pg 23). Any growth rated below this range signifies negative growth and could characterize rapid unemployment and less spending. Statistics conducted by the World Bank revealed that the GDP in US as per last year amounted to thirteen point eight trillion dollars (Turabian, pg 23). Other big economies following the US closely are Japan with a GDP of four point four trillion dollars, Germany with a gross domestic product of three point two trillion dollars among others (Turabian, pg 23).
Another commonly used measure of growth is the consumer price index (Turabian, pg 23). It estimates the change in cost of a package of consumer produce and services. Prices of these goods are estimated suing costs of sample similar goods in stores (Hirschey, pg 54). Besides obtaining the core rate, another rate observed is the core rate (Turabian, pg 23). The only distinction of this rate from the consumer price index is that, it excludes prices of volatile goods such as foods to give closer in range measure of real inflation (Turabian, pg 23).
Employment is viewed in terms of number of jobs created per hour, average hourly earnings among other variables (Turabian, pg 23). The rate of unemployment in developed countries is not rampant and it is over ridded by the superior percentage of the employed. When a greater percentage of the population is employment regardless of whether formal or informal, the per capita incomes are higher (Turabian, pg 23). Another closely related macroeconomic variable closely tied to employment is productivity index. A productivity report frequently generated is essential in helping to determine the units of output produced by each unit of labor (Turabian, pg 23). Economists argue that this index is of great significance in if especially high since it fuels the economy to grow at steadily high rates without necessarily having to experience inflation. It is therefore, concluded that, if productivity is on the rise, employment costs can in return increase.
The state of health of a country’s populace is key development indicator (Turabian, pg 23). If people are healthy, it is a key indicator of availability of labor factor of production. In developed countries, governments have adopted numerous policies to guarantee its citizens good health. For instance, health insurance schemes are a major requirement most if not all employers (Turabian, pg 23). If employees are in good health, they are bound to be more productive since they are in good stature. They are mentally, emotionally as well as physically healthy.
Developed countries are characterized by steady availability of credit through the financial institutions. This is a good motivation to potential investors. They invest and repatriate earning to the country through tax. Other minor but still crucial macroeconomic determinants entail tax rates to countries and level of technology. Their technology is up to date and they therefore can produce more at subsidized costs of production since inputs are cheap (Turabian, pg 23).
Macroeconomic indicators in developing countries
Developing countries on the other extreme have lagging figures in all of the macroeconomic indicators (Turabian, pg 23). One developing country is Qatar. The main source of revenue in the country is oil as contributed to seventy percent of the country’s revenue. It may be not so developed but it is the richest country in the Muslim world (Hirschey, pg 54). Its economy is however not stable and has reduced by fifty percent. The country is still far from coming up with ways of diversifying its economic activities to ensure the economy is stable.
Year Gross Domestic Product US Dollar Exchange Inflation Index
(2000=100) Per Capita Income
(as % of USA)
1980 28,631 3.65 Qatari Rials 53 266.18
1985 22,829 3.63 Qatari Rials 64 104.82
1990 26,792 3.64 Qatari Rials 77 67.85
1995 29,622 3.63 Qatari Rials 85 55.75
2000 64,646 3.63 Qatari Rials 100 86.03
2005 137,783 3.64 Qatari Rials 115 127.05
The Qatar government is doing its best to see its economy grow. In fact, it has done so much to establish diversify economic growth. The country’s main export comes from the industrial sector. Citizens of the country make up the labor sector and are estimated to be one point two million people. However, of this percentage, ninety percent is made up of non-citizens. Its per capita income amounts to US$ 88.232.51 and is expected to rise if the economy improves (Hirschey, pg 54).
The main variables used to characterize development in these countries include high unemployment levels (Turabian, pg 23). The working percentage in these countries is the minority percentage. A larger percentage of the population lives below the poverty line and survives on a less than dollar a day (Turabian, pg 23). Due to the poor state of Qatar, the rate of job creation is low and even the informal job sectors are poorly developed (Turabian, pg 23).
Another indicator of development in developing countries is rampant corruption and political instability (Hirschey, pg 54). This has greatly contributed to the poor investments in these countries. Investors are scared in regions they are not assured of returns (Turabian, pg 23). In addition, the private sector is not stable enough and its share to the national income is still insignificant. Another indicator is that of gross domestic product. It remains relentlessly depressed in the region and specifically in central Africa. Over the years, it has registered a downward trend of less than ten percent in each subsequent year (Turabian, pg 23). To improve the situation, the political leaders faced with pragmatism continually appreciated the fact that the private sector could play a major role to improve the situation (Turabian, pg 23).
Production in developing countries like Qatar is suppressed by inadequate technology and high cost of inputs (Hirschey, pg 54). This further contributes to production of low quality of goods and hence less income is realized. As a result, balance of payment is in deficit. The developing countries are also yet to be fully exploit their full potential in raising revenues in the capital market (Turabian, pg 23). Their investments in trading of foreign currencies have a long way to go for the countries to realize their full potential (Turabian, pg 23).
Health economics is another area of concern in developing countries. Countries such Qatar are yet to embrace policies that will improve the labor productivity (Turabian, pg 23). A majority of its population lack insurance policies that would provide assurance in case they feel sick (Turabian, pg 23).
The per capita income of developing countries is very small (Turabian, pg 23). This is because; the population is large and coupled with uncontrolled population growths and less gross domestic product. Developing countries are characterized by low life expectancy (Turabian, pg 23). Expenditures allocated to the health sector are minimal and as a result, many infant deaths occur before age five. The education sector is also poorly developed (Turabian, pg 23). As result, the level of illiteracy is high.
To improve the situation in developing countries, they can seek for aid in developed countries and increase on their investment ventures (Hirschey, pg 54). In addition, the situation can be made better with improvements in key fields as labor productivity and creating a stable political atmosphere attract foreigninvestors(Turabian, pg 23).
Work cited
“Economic Structure and Context: Development and Strategy.” Qatar Country Monitor (2011): 16-17. Business Source Complete. Web. 19 Apr. 2012.
“Macroeconomic Outlook.” Qatar Oil & Gas Report (2010): 57-60. Business Source Complete. Web. 19 Apr. 2012.
Fuhrmann, W. “The Economic Development of the FRG and USA: A Principal-Components- Analysis.” Empirical Economics 4.3 (1979): 187-198. Business Source Complete. Web. 19 Apr. 2012.
Hirschey, Mark. Managerial Economics. Mason, OH: Southwestern Cengage Learning, 2009. Pages 45-234
Ruževičius, Juozas. “Ecological Footprint as an Indicator of Sustainable Development.” Economics & Management (2010): 711-718. Business Source Complete. Web. 19 Apr. 2012.
Turabian, Kate L. A Manual for Writers of Research Papers, Theses, and Dissertations: Chicago Style for Students and Researchers. Chicago: University of Chicago Press, 2007. Page 23-34.
