1. Welcome to class of Economic Forces Dr
Welcome to class of Economic Forces Dr. Satyendra Singh Professor, Marketing and International Business University of Winnipeg Canada

2. Dimensions of the Economy…
Important Economic Indicators
Gross National Income (GNI)
GNI/capita
Purchasing Power Parity
Income Distribution
Private consumption
Unit labor costs
Exchange rates
Inflation rates
Interest rates
Balance of payment (BOP)

3. Dimensions of the Economy
Gross National Income (GNI)
The measure of the income generated by a nation’s residents from international and domestic activity
Preferred over GDP
GNI/Capita
Used to compare countries with respect to the well-being of their citizens and to assess market or investment potential

4. Kinds of Economy… Formal economy Visible, Recorded, Audited
What % of GDP is owned by government
UK: 10%  4%
China: 80%  50%
Chie: 75%  25%
Mexico: 66%  33%

5. Informal Economy (Street, undocumented…)

6. Underground Economy
Illegal!, USA (10%)

7. Why Privatize? To get $ from firms Increase firm profitability
Ideological reasons
Preserve jobs …
Unfair because government firms
↓ price unfairly
↓ financing rate
↑Get government contract
Expert assistance
↓ wages
↑ Has more resources

8. Characteristics of Economy
Developed countries spend twice on
Food
Clothing …
Developing countries spend twice on
Transportation
White goods
Healthcare
Wine/ cigarette

9. Effects of Economy Sales  willingness to purchase low Wage rate
Labor supply
Union contract

10. Wal*Mart Economy $+450b sales 4000 stores 30 countries
Only 40 countries (out of 227) above Wal*Mart
Ghana $40b (ppp 80b)
Manitoba $50b

11. Economic development Measurement (GNI/Capita), World Bank
Low Income (<$1000)
Mower middle income ($1000-$3000
Upper middle income ($3000-$9000)
Higher income (>$10000)
Canada  $40,000
India  $4,000
China $9,000
Ghana $3,000

12. Levels of Economic Development
Developed
Nations that are the most technically developed
Newly industrialized economies (NIEs)
The fast-growing upper MIG and HIG economies such as Taiwan, Hong Kong, and Singapore
Newly industrializing countries (NICs)
Brazil, Mexico, Malaysia, Chile and Thailand
Developing
Nations that are less technically developed
Emerging Markets
Transformation from controlled to market economy

13. Purchasing Power Parity (PPP)…
The number of units of a currency required to buy the same amount of goods and services in a domestic market that $1.00 would buy in the U.S.
Helps to make comparisons possible across economies
CIA Fact Book

14. Purchasing Power Parity (PPP)
If,
1 Lt. Milk US $1.00
1 Lt. Milk India Rs
Then, PPP: US $1 = Rs. 20
Reality: US $1 = Rs. 40
ie Rs. is 50% undervalued – artificially?!
However, PPP is based on consumer expenditure on basket of essential goods