The Economics Journal

Bringing economics and finance closer to common people

India – a poor man’s America?

leave a comment »

Apart from the fact that India is pretty poor, it has a lot of similarities with USA. Here are 12 of them.

1. Both economies are run by their domestic consumers. In contrast, the economies of China, Japan, Germany and East Asia are powered by overseas customers (through exports).

2. Both economies are heavily dependent on services, particularly information, entertainment, education & knowledge related. In contrast, China, Germany and Japan are dependent on manufacturing.

3. Both countries import far more than export. In contrast, Japan, Germany and China have reverse.

Read the rest of this entry »

Written by econjournal

February 3, 2010 at 2:30 pm

Posted in Uncategorized

When will India and China overtake US in GDP (nominal terms)?

leave a comment »

Here are some charts from Goldman Sachs research. China is expected to overtake US around 2035 and India is expected to overtake US in 2040 and then it will be the race between the two Asian giants.

India-growth

Read the rest of this entry »

Written by econjournal

February 2, 2010 at 2:49 pm

Posted in Uncategorized

iPad: Apple’s Tablet has finally arrived

leave a comment »

 

image

People in tech were anticipating this device for a long time. In Microsoft we had plenty of informal watercooler discussions  on this gadget, and the past year the media has been running plenty of rumours. Finally here is the much awaited device, announced by Steve Jobs yesterday. For most of the jouranlists it was underwhelming and while it is a great device it is not yet a complete replacement for you laptop.

Read the rest of this entry »

Written by econjournal

January 28, 2010 at 5:29 am

Posted in Uncategorized

Gross Domestic Product per unit area

leave a comment »

image

Gross Domestic Product (GDP) is a very important measure in macroeconomics that measures the total value a nation (or a region) produces. It is the fundamental unit through which most measurements of wealthiness, growth and economic importance are measured. Higher the value of GDP, richer the country is.

However, in computing the GDP the area of the region is never taken into account. Though a 1999 paper by John Gallup and Jeffrey Sachs introduce the concept of GDP density (Per-capita income * population density), they didn’t elaborate it and use it to understand the economies. Area Intensive measure could show some insight into an economy – whether the value produced by an economy is people centric or whether it is resource centric. For a country like  Saudi Arabia (sitting on world’s largest oil reserves) almost all value is produced from the land, while for a country like Singapore almost all value is the people. GDP’s area intensity can be a useful measure for policymakers and analysts to understand the nature of an economy. There are some interesting insights that this measure can show.

Here is the GDP per sq.mile. The extremes are Russia and Singapore, with Singapore producing 2500 times more value per sq. mile. Russia and Brazil as the chart shows are primarily land centric in GDP value additon, while Germany, UK and Japan are highly people centric. This means the fortunes of Russia and Brazil would swing hard with commodity and agricultural prices and these economies will be highly impacted. Western Europe and Japan on the other hand will remain stable with commodity prices, but will see their fortunes impacted by labor demographics and productivity. As labor force ages and diminishes, economies with more people centricness would face major upheavals.

The three major economies of tomorrow – US, China and India are very close to each other and in the middle of pack. They will partly be impacted by commodity price change and partly from demographic changes, but would be on far better footing due to the balance.

  Area (sq. mi) GDP_PPP ($ million) GDP in $million per sq.mi
Russia 6,601,668 2,260,907 0.342475114
Brazil 3,287,612 1,981,207 0.602627987
China 3,705,407 7,916,429 2.136453296
India 1,269,219 3,288,345 2.590841297
USA 3,717,813 14,264,600 3.836825575
Germany 137,882 2,910,490 21.10855659
UK 93,800 2,230,549 23.77984009
Japan 145,920 4,354,368 29.84078947
Singapore 272 238,755 877.7757353

 

Interestingly this measure also indicates India is not as poor as other statistics show. Unlike US or China, it doesn’t have enough area to increase food production, the land to build dams, industries and infrastructure, and the mineral and energy resources to spur the industrial revolution. Given the lesser area, it means India has to emulate Western Europe and Japan in building more of a people centric economy rather than emulating just China and USA.

Written by econjournal

January 22, 2010 at 6:54 am

Posted in Uncategorized

Business models and Entrepreneurs

leave a comment »

 

Wonder 1:

What is the difference between startup entrepreneurs and non-entrepreneurs? Is it that one of them has a great notion about business strategy while the other doesn’t? No. In fact, both of them don’t have a friggin clue about business models. The difference is one of them takes the forward step with a mix of guts, greed, passion and appetite for risk. The other doesn’t.

Wonder 2:

Why do all those strategy and business professors, with apparently lots of business ideas, don’t make a dime making something, while Steve Jobs or Larry Page who don’t write about strategy still make billions? The difference is the profs are waiting for a perfect business idea that satisfies all their models, while an entrepreneur lifts up his finger and just does it. The people who talk about strategy more often than not have little clue of actually building a business. They can talk & analyze post-facto, but cannot predict the success/failure before it actually happens.

Read the rest of this entry »

Written by econjournal

January 19, 2010 at 7:04 am

Posted in Uncategorized

Most salient economic trends of the decade

leave a comment »

 

What are the most important trends in the last decade? Which ones will continue and which ones will turn? I have taken 7 major trends –  gold, US stocks, emerging markets, debt, interest rates, housing and tech.

1. Spectacular rise of Gold.

imageFrom early 80s till the end of 90s, gold was a laggard. As inflation fears receded (thanks to China’s low cost exports) and growth fears subdued (due to “unreal” 90s – when growth skyrocketed due to open markets worldwide), gold’s role was really questioned. Most mainstream commentators thought gold bulls were dinosaurs and gold investing was anachronistic.

 

However, gold would prove its detractors wrong.

Read the rest of this entry »

Written by econjournal

January 1, 2010 at 12:16 pm

50 trillion dollars gone poof

leave a comment »

According to an Asian Development Bank report, the total loss from this crisis will reach 50 trillion dollars, almost equal to the annual GDP of the world. With 50 trillion you can give everybody in earth $8000 or buy enough burgers to cover 10 times the distance of earth and sun, or give a  BMW 3 series car to every household on earth. You could also buy enough rice or wheat or corn to feed for the lifetime of every human on earth (assuming an average consumption of 350kg/year).

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ1kcJ7y3LDM&refer=worldwide

The value of global financial assets including stocks, bonds and currencies probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product, according to an Asian Development Bank report.

Asia excluding Japan probably lost about $9.6 trillion, while the Latin American region saw the value of financial assets drop by about $2.1 trillion, said Claudio Loser, a former International Monetary Fund director and the author of the report that was commissioned by the ADB. The report didn’t give a breakdown of asset declines in other regions.

 

Here is the full study.

Written by econjournal

March 10, 2009 at 4:36 pm