Economic growth, debt and inequality

GDP per capita (PPP) (US$)

Source: http://www.indexmundi.com/g/g.aspx?c=xx&v=67

What causes economic growth?

Companies’ increased productivity Investment growth Increased international trade (new markets) Improved production techniques Population growth (more labour, more consumer demand) Increased consumer purchasing power Education and qualification of the labour force

Source: http://trueeconomics.blogspot.ca/2013/01/1312013-decoupling-us-v-euro-area-2011.html

Uneven growth• Not all countries experience

economic growth equally.

• After WWII, North America, Western Europe and Japan experienced strong growth.

• Since the 1990s, China, Russia, Brazil, India and Mexico have been gaining influence in the world. Source:

http://www.gac-china.com/China_Insight/China_Facts/China_Major_Industries/china_major_industries.html

DEBT Despite their best efforts, states do end up in debt.

Canada’s foreign debt: 758.6 billion US $ (2010)

State spending can lead to budget deficits which means the government is in debt.

DEBT• Infrastructure costs,

public services, military expenses, etc. = $$$$

• States can get loans from IMF, World Bank, other States, financial institutions, and citizens. Source:

http://media.salon.com/2012/06/money.jpg

The effects of debt on a State• Reconsideration of

social programs (ex: cutting spending on education)

• Privatization (ex: private healthcare clinics)

• Bigger gap between rich and poor

• Greater economic dependence on foreign aid

Source: http://www.worldpoliticaleconomy.com/site/wp-content/uploads/Debt-levels-copared-600x423.jpg

Which countries have the highest debts?

Inequality

• Even within countries, wealth isn’t distributed equally.

• Greater inequalities in developing countries than in industrialized countries.

• In emerging economies, people in cities generally earn more than people in rural areas.

Annual rural income by province in China (2011)

Where are the wealthier regions in China?

Gini index

• It is the indicator of income inequality in how income is distributed.

• Goes from 0 (perfect equality) to 100 (perfect inequality)

• In 2010,

• Denmark 24.8

• Sierra Leone 62.9

• Canada 0.32