The countries of the European Union are very similar. They are all More Economically Developed Countries (MEDC) and have a good Gross Domestic Product per capita in comparison to their populations. As the Gross Domestic Product or Purchasing Power Parity of the member countries the population generally decreases. This shows that the more highly populated a country is then the more Gross Domestic Product it has. For example Luxembourg only has 400,000 people so therefore its Gross Domestic Product is only £4billion. Germany has 63,100,000 people and therefore has a Gross Domestic Product of £636 billion. The population of these countries generally depends upon the size of these countries. Germany is the largest in size and therefore it has the largest population. The Gross Domestic Product per capita does not comply with the population. This is shown by Luxembourg having the greatest Gross Domestic Product per capita out of all the countries in the European Union. They have a Gross Domestic Product per capita of £11500, compared to the Germany’s £10100. From European Union countries, we can see that the countries with the higher Gross Domestic Product have a much highly populated country in comparison to countries with a lower Gross Domestic Product. This is because countries with a higher population have a higher workforce and therefore they can produce many goods and services. The Gross Domestic Product per capita shows the total amount of goods and services produced divided by the population of the country. This can show that Luxembourg has a good workforce or maybe very efficient or benefit from economies of scale.
The European Union is one of the biggest single economies in the world today. The main rivals are Japan and the USA. The Gross National Product growth of Japan is the highest of the three today. It used to be very high, at about 10.6% in the 1960s and 1970s. However, today it is just 4.6%, but this is because it has already grown a lot so does not need to do so much rapidly. The USA is just ahead of the European Union at about 2.7%, 0.2% higher than that of the European Union in the 1990s. Japan is growing very fast but this is because of a very large population and extremely high population density. Japans population may only be ½ of the USA, and 1/3 of the European Union , but the size of the country can show that Japan is very overcrowded. Despite this, unemployment in Japan has been constantly kept very low and is only just above 2% at the moment. This is impressive for a very densely populated country. In comparison, the USA has unemployment at about 5.5%, but the European Union has a very unemployment rate of about 8.4%, but it was as high as 11%. Even though the European Union has the highest unemployment, it is the largest area and therefore it should be approximately equal to the USA, and maybe less than Japan. Of the three economies, Japan has the lowest Gross Domestic Product, but still a very high Gross Domestic Product per capita. The USA has the highest for both the Gross Domestic Product and the Gross Domestic Product per capita. The EU has the lowest Gross Domestic Product per capita, maybe because it has the largest population. Japan and the USA import more than they export so the have a trade deficit. Other developing countries export more as they are exploited because of cheap labour, land and prices of goods and services.
Overall, out of the three economies, I think that Japan is doing the best as it has to cope with overpopulation and manages to keep unemployment down and Gross National Product growth up. America would be second because it is better than the European Union is many aspects of the economy.
Thank you for your letter, I took a great interest in reading it, understanding your concerns about the current state of the economy. However, I write to you showing you the positive effects these points are causing.
Trade unions are in existence to provide their members with a fair wage and desirable environment to work in. Without these trade unions, workers would be exploited by being paid low wages and working in poor environments. Before trade unions workers individually would not be able to stand up to employers for their rights. They were sacked by the employer to hire someone else instead and they were forced to work long hours. Trade unions organise their members to take action against the employer together. With a higher cost of living, the workers need a higher wage. You are right in saying that higher wages mean fewer workers because the firm may not be able to afford to pay for everyone on high wages. However, the increase in employment especially in the public sector means that unemployment in general is steady and will decrease by even more in the future. British produced goods are higher priced than foreign goods. This is due to higher wages and higher cost of producing the goods, but higher wages mean people can afford to buy British. You will find however, that British goods will become cheaper as imported good rise in price, you are right in saying that there are an increasing number of imports but this too is being reduced Tariffs are placed on many foreign goods anyway so that people buy British products. Also there are quotas on some imports limiting the number of imported goods. British workers are less productive than foreign works, because the foreigners are given tax incentives. Who pays for these incentives? The tax-payers. Taxes are higher in these countries such as France and Germany because they need to pay for tax incentives to keep workers more productive.
Economic growth can still be achieved by higher-priced British goods. Resources and labour as well as capital need to be fully employed and used efficiently. This will lead to firms producing more goods that are generally of better quality. Resources are scarce so the resources of land labour and capital need to increase. Nationalized industries such as water and gas industries are natural monopolies and need to spend a lot of money on pipes, etc. to provide a lower average cost to their customers. Monopolies benefit from economies of scale and therefore the average cost of production decreases, lowering prices. Monopolies can be a good thing for any economy.
Inflation is higher because of rising costs to produce goods. Wages are higher and therefore prices of commodities have increased due to this. The demand of higher wages would also mean that the productivity of workers would have to increase. This cost-push inflation can only be prevented by decreasing wages, however this is uneconomical as the cost of living is high. The increased cost of living is high because of higher prices on goods and services. So there is a circular flow of money which is good for the economy and encourages economic growth. The high value of the pound shows that the economy is in a great state for us. However, it is correct when you say that foreign will not buy our goods or come to this country but making the pound weaker is not such a good idea as we would be worse of.
