World Economic Systems Analysis

2009

INTERNATIONAL SCHOOL OF BUSINESS & MEDIA; KOLKATA

ABHIJIT SAMANTA

[VARIOUS ECONOMIC SYSTEMS AROUND THE WORLD]

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Objective of the report: -

In this project our basic objective is to understand the various economic systems across

the world. In the starting the fundamental concept of three major economic systems is

discussed. Then showing the data from various countries of the world the theories are

proved.

Methodology: -

There are three major economic systems which are discussed in this topic. The data is

collected from the World Bank website.

We are well aware about the comparison of growth and development. However the

parameters which are important in considering the ‘growth and development’ are

1. GDP

2. Per Capita Income

3. Equal distribution of wealth

4. Better standards of living

5. Education attainment

6. Life Expectance at birth

7. Mortality rate

8. Infrastructure development

The last six parameters are basically associated with development.

Here form the World Bank website we have collected some of the above factors and

tried to analysis the effect of these factors on the county’s economic system.

Source of Information: -

http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS

MS Excel is used for the data analysis portion.

http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS

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Basic Concepts: -

Economic System: - It defines the functioning of an economy in doing so it defines the ways in which the economic agents interact among themselves. Types of Economic System: - There are three main types of economic systems.

1. Market Economy / Free Economy: -

Here the functioning of the economy is fully controlled by the market itself. In

other worlds the demand and supply are the main parameter to determine the

functioning of this economy.

Example: - Economy of United States.

2. The command Economy: -

It is operated by centralized body or government regulators.

Example: - Economy of Soviet Union.

3. Mixed Economy: -

It is characterized by the existence of both the economies i.e. The market

economy and the command economy.

Example: - Economy of India after 1991.

The Analysis of GDP & GDP Growth Rate: -

If we look toward the following chars then we can see that the GDP growth rate in US is

not very high in a comparison to India and China. Whereas India & China is maintaining

a very high growth rate in the GDP.

But looking toward the contribution to the World GDP, US is very high than India &

China. In the year 2008 where US is having 23.44 % contribution to world GDP, China

is only 7.14 % and India 2.01 %. So in this picture also we can see that US is being a

major country in this sense of contribution.

Here we can also say that the market economic system is having a greater impact on

the overall development of the country. Because US is having the market economic

system whereas India & China is having a Mixed Economic System.

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Source of information: - http://web.worldbank.org

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

16,000.00

2000 2005 2007 2008

GDP & GDP Growth

GDP (Current US$) (Billion) (China)

GDP (Current US$) (Billion) (India)

GDP (Current US$) (Billion) (US)

Year 2000 2005 2007 2008

World view

GDP (current US$)

(billions)

32,001.93 45,232.14 54,891.06 60,587.02

GDP growth (annual %) ) 4.1 3.5 3.8 2.0

China

GDP (current US$)

(billions)

1,198.48 2,235.91 3,382.27 4,326.19


India

GDP (current US$)

(billions)

460.18 810.15 1,176.89 1,217.49


US

GDP (current US$)

(billions)

9,764.80 12,376.10 13,751.40 14,204.32


Contribution to world GDP

2000 2005 2007 2008

China 3.75% 4.94% 6.16% 7.14%

India 1.44% 1.79% 2.14% 2.01%

US 30.51% 27.36% 25.05% 23.44%

http://web.worldbank.org/

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The Population Statistics: -

World view 2000 2005 2007 2008

Population, total (millions) 6,078.27 6,462.05 6,614.40 6,692.03

Population growth (annual %)

)

1.3 1.2 1.2 1.2

Surface area (sq. km)

(thousands)

133,945.2 133,945.8 133,945.

8

134,095.

4

China



)

0.7 0.6 0.6 0.6


(thousands)

9,598.1 9,598.1 9,598.1 9,598.1

India



)

1.7 1.4 1.3 1.3


(thousands)

3,287.3 3,287.3 3,287.3 3,287.3

US

Population, total (millions) 282.17 295.56 301.29 304.06


)

1.1 0.9 1.0 0.9


(thousands)

9,632.0 9,632.0 9,632.0 9,632.0


The above chart shows us the population statistics. Here we can see that the average

population growth in the world is 1.2 % - 1.3 %. Whereas it is 1.7 % - 1.3 & over India

but this figure is significantly less for the country like US. This will be having a greater

impact on the per capita income of the county. Because it is directly dependent over the

population.

Looking toward the Surface Area and the population also gives us a significantly

different picture for the above three countries. For china the population is the highest

but their surface is more also. In case of India the picture is noticeable. According to the


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Surface Area the population is very high over here. It is having a smallest value in case

of US.

Per Capita Income (Purchasing power of parity method):-

Here we can see that the per capita income for US is very high but in case of India and

China also it is not so high. One major reason for this is the population is this three

counties.

At particular one place there is a better picture we can see that the average growth rate

for per capita income very high in a comparison with the world, it is 32.44 %. In case of

China it is extremely good 52.79 % whereas the whole world sees an average growth of

16.81 %.


Life Expectancy at birth: -

World view 2000 2005 2007 2008

Life expectancy at birth, total (years) ) 67 68 69 ..

China


India


US


World view 2000 2005 2007 2008 Avarage Growth

GNI per capita, PPP (current

international $) )

6,885 8,730 9,950 10,357 16.81%

China


international $) )

2,330 4,100 5,430 6,020 52.79%

India


international $) )

1,500 2,220 2,740 2,960 32.44%

US


international $) )

35,190 42,090 45,890 46,970 11.16%


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The life expectancy rate for US and China is much higher than India. But as the average

of the world is shows it is 67-69 years. Normally it is good for India. The life expectancy

at birth is case of India is also very optimum in a comparison to the global data.

Various Other Factors: -

States and markets

World view 2000 2005 2007 2008

Time required to start a business (days) ) .. 50 43 38

Market capitalization of listed companies (% of GDP) ) 102.3 97.5 120.7 59.4

Mobile cellular subscriptions (per 100 people) ) 12 34 51 60

Internet users (per 100 people) ) 6.7 16.2 21.3 ..

High-technology exports (% of manufactured exports) ) 23 21 18 ..

China




Internet users (per 100 people) ) 1.8 8.6 16.1 22.5


India




Internet users (per 100 people) ) 0.5 3.8 7.2 ..


US




Internet users (per 100 people) ) 43.9 69.6 73.6 72.4


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The above chart gives us a very clear cut picture about various other market factors of

these three countries in a comparison to the world.

Looking towards to the time required to start a new business the requirement of days

is 6 for US which is very minimum. But in case of India it is 71 – 30 days. But the bright

picture for India is that the days requirement is actually reducing day by day. Because

the government restrictions to start a new business is also reducing day by day. People

here are feeling more comfortable starting new business which is a very good sign for

the country. In case of China also the figure is just like India.

The market capitalization of listed companies is also having a greater value for US. In

this context we must tell that in a comparison to the whole world view the capitalization

rate for India and China is not also very bad especially in the year of 2008.

Looking toward mobile subscription and internet use the picture is very different. The

fact that using mobile for communication and internet for information are important for a

country because these thing actually shows the countries position in the era of

globalization.

Now for US the figures are really very high even in a comparison with the world average

use. For China and India the picture is bad and it is not up to the mark. Even for China

there is good sigh that they started using mobile earlier than India.

In 2000 there was no mobile in India and the use of internet was also very minimum. In

a comparison to that the present picture is much better. Because there is significant

growth in the use of internet as well as in the use of mobile also. This shows the

country’s overall development.

Conclusion: -

After all these analysis we can find out some conclusion depending on the economic

system of the country.

As we know US is having a market economic system. In their case we can see that

there is a suitable growth in every sector. In other world we can say that the market

economic system is having a greater impact over the country’s overall economic

development.


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Whereas in India & China we follow a mixed economic system in which there is both,

the Govt. control as well as the demand and supply law in the market.

But one advantage of Indian economic system is that the governing body of our

economy i.e. RBI is very strong over here. So our economic base is very strong. Strong

in the sense that it is not that much of volatile. That is why we face a lower harm in case

of recession.

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World Economic Systems Analysis

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