The English words “economy” and “economics” can be derived from Greek words, emphasising “household management”, “manage; distribute; to deal out; dispense”.
Economics is a social science concerned with the production, distribution and consumption of goods and services.
PS: The series starts from the very basics, so Hey, Economics pundits, don’t hesitate to provide those tips. Happy reading ♦
There are basically three categories in Economics system:
- Capitalist system: The power lies in hands of Private Sector. Such system is found in democratic countries, where the liberty of choice is expressed and freedom is valued.
Few countries that follow this system are United States, Australia, New Zealand, Canada, Western Europe.
- Socialist system: The power lies in the hands of Public Sector. All factors are owned by Government, they control media, press and Paramilitary forces. Every statistics that are offered to their citizens can be altered as per the Government’s convenience.
Socialism and Communism are alike based on public ownership and centralised planning.Socialism grows directly out of capitalism; it is the first form of the new society.Communism is a further development or “higher stage” of socialism.
Social Economics system thrives in Communist countries, such as North Korea, China.
- Mixed Economy: An economic system combining private and state enterprise. Some government-owned businesses are ONGC, BSNL, BPCL, IOC.
Private owned business: Idea, Airtel.
Mixed Economy is further sub-categorised into 3 sectors:
- Primary: Agriculture, Forestry, Fishing, Animal Husbandry.
- Secondary: Mineral, Power, Mining, Manufacture.
- Tertiary: Service sector, Transport, Trade, Communication, Banking.
Countries measure their growth majorly by GDP and GNP.
- Gross Domestic Product (GDP):
GDP is the measure of calculating the value of all services, goods, products annually.
It’s the total products/services of the country.
GDP Purchasing Power Parity (GDP PPP): It is measured by finding the values of goods (in USD) that are present in each country.
In India, 1$ would buy much more than in America.PPP takes into account the relative cost of local goods, services and inflation rates of the country.
- Gross National Product (GNP):
GNP is the net income earned by domestic residents from overseas investments–net income earned by foreign residents from domestic investments.
GNP = GDP + Net factor Income from Abroad
If no foreigner in India who remits income out of country i.e, a lower remittance in India and higher outbound remittance then GNP is ↓ than GDP. The income of foreign entities and citizens within India is > than the income of Indian entities and citizens in other countries.
Read more about GNP here,
Coming to Statistics:
India has a population of merely 121 crores (1.21 billion) occupying 2.4% of world’s surface area, accounting for 17% of global population.
China, on the other hand, abodes 145 crores (1.45 billion) with the area thrice as India. 20% of the world’s population, abodes within the country’s borders.
Comparing, living standards and resource sharing. China has an upper edge in relation to the larger surface area ( 1.91% larger).
No wonder why Indians complaint about giving them space? LOL Pun intended.
- India ranks 6th with 2.4 trillion $, topped by US 19 trillion $. In 1977, India had was 300 billion$ economy. We reached 1 trillion in 2007 and 2 trillion in 2015. This is the nominal GDP (exact value of goods produced per year)
- GDP PPP- It is helpful in comparing the living standards in different countries, as it indicates the appropriate exchange rate to use when the prices in different countries are expressed in a common currency.
- India ranking in GDP-PPP is 3rd in the world, followed by US(2nd), China& European Union (1st).
That’s all from the very first chapter, I’ll be emphasising more on Indian Economy & History next, stay tuned! 🙂