What makes a country wealthy?

Authors Avatar

UNIVERSITY OF ABERDEEN

BUSINESS SCHOOL

BU5302 (MACROECONOMICS FOR BUSINESS)

What.makes.a.country.wealthy?

Name: Varun Varun

        Student ID no. 05940113

M.B.A

Macroeconomics for Business

Course coordinator and lecturer:

Dr Harminder Battu


INTRODUCTION

In the essay, I will be taking example of India to show what makes India a wealthy country. This will facilitates me to express myself more clearly and reader to understand easily. For this I will use GDP, Factors of production, saving and investment of the nation. Standard of living of the people of the country and education standard. With the help of all these I will explain the question give. I think GDP is not only the wealth of the nation but it is one of the components of the wealth of the country. Natural resources, labour force, capital of country, entrepenure, and people living in the country are the real wealth of the country.

WEALTH OF COUNTRY

Country wealth is not only the produced assets or physical capital (GDP) but it is one of the main components of the countries wealth. Country’s wealth is its effective and efficient factor of production, saving (investment), living standard of people and education standard.

India has a mixed economy combining features of both capitalist market economies and socialist command economies. The private sector is regulated and the government elected by the people of India controls the public sector. According to Purchasing power parity, Indian economy is at fourth number in the world with GDP of $3.36 trillion. In the end of first quarter of 2005-2006 India stood second fastest growing economy nation with GDP growth rate of 8.1.

Indian economy mainly consists of agriculture, industries, handicraft and services. At this time, service sector of India is playing a major role in the growth of Indian economy.

GROSS DOMESTIC PRODUCT

GDP is used to show the actual condition of the country’s economy.GDP is used to express the total value of the goods and services produced with in the domestic territory of a country during a specific period of time.GDP considers only the final value of goods and services consumed by the final users not the input of other goods in the final goods and services. As it will result into double counting.

GDP = Consumer Expenditure + Government expenditure + Investment + Net Export

Consumer Expenditure refers to the household expenditure like food, clothes, rent, bills etc. Government expenditure refers to the expenditure on the final goods and services. It also includes the expenditure on development works like building infrastructure, paying salaries of public servants and buying weapons for arm forces.                                            Investment is also known as non-financial product. It includes thighs like construction of building for business, buying land and machinery for a factory etc.                                       Net Export (Gross Export-Gross Import) it is the total amount of goods and services produced for overseas consumption by a country subtracted by the import of the country, as they are already included in the consumer expenditure, govt. expenditure and investment. GDP of India is         $3.36 trillion. At the end of first quarter of 2005–2006 GDP growth rate is 8.1.                                                              

Contribution of sectors in the GDP of the India.                                                 Service Sector: 52.2%                                                                                  Industrial sector: 26.1%                                                                              And the Agriculture sector contributed 21.8% in the total GDP of India.        

Join now!

(Fig.no.1)

Growth of the service sector, industrial sector and agricultural sector will help the country to be wealthy. Analyses of GDP show higher the GDP wealthy and healthier economy of the country and lower the GDP poor economy of the country. India’s wealth is $3.36 trillion. Further increase in the GDP will make India wealthier and decrease in it will make poor.

FACTORS OF PRODUCTION                                                               Four factors of production, which are used to produce goods and services in the economy, are as follow: Land, Labour, Capital and enterpenurship.They are also known as resources or scarce resources. The ...

This is a preview of the whole essay