Max's Economics Blog

South Africa GDP analisys

11mottma — Fri, 02 Apr 2010 00:55:21 +0000

GDP measure that, even being full of (…) flaws, can be used to measure development, as you can assume that the amount of mistakes remains fairly equal, therefore validating growth measurement through GDP by proportions.

Let me use South Africa as an example:

On the previous post you can see South Africa yearly for the last decade, through three different categories, GDP, GDP per Capita and the GDP growth.

GDP, as said, is the measurement of the total flow of money within an economy (South Africa) during the period of one year.

GDP growth represents the changes to GDP between the years, so if the economy is booming it grows at a fast pace (China goes at around 9 yearly), it also shows when the economy is sinking, through a negative value.

GDP per Capita measures the distribution of money per people, which indicates how well money is shared within the economy.

South Africa is a country that is doing rather well, as it has constant positive growth, with some exception, and which has been improving their wealth distribution. Considering South Africa`s potentials it is fair to hypothesize it becoming a major world player economically within 30 years, as they have a fairly stable economy, resources, and stands as the political leader and example to be followed within Africa.

South Africa GDP

11mottma — Fri, 02 Apr 2010 00:53:24 +0000

Year

GDP (billions)

GDP growth (%)

GDP per Capita 1998 134 0.157 2975 1999 133 2.36 2972 2000 133 4.15 3020 2001 118 2.74 3046 2002 111 3.67 3128 2003 167 3.12 3186 2004 216 4.86 3302 2005 243 4.97 3426 2006 258 5.32 3570 2007 284 5.1 3716 2008 277 3.06 3764

Down, down, down, and Japan goes down, down, down

11mottma — Fri, 02 Apr 2010 00:50:24 +0000

As the title may so subtly suggest, Japan finds itself in a gloomy economical situation, or it doesn’t find itself. Even though all other countries on the world have already recognized Japan in the world economy: as a moribund which holds on to their, already lost, position with a 20-year old inflated ego.

When, some may ask, did such a powerful, rich economy drown in their own debt, and most importantly, how?

Right after the 1992 Great Burble burst, economies throughout the world had their GDP`s chastised because of their methods that lead to such a disaster. After the initial shock the countries stood back up, attempted learning from their mistakes (questionable considering 2008), but they kept going. Unfortunately for Japan they were too high and too mighty to be shot down by the bursting of the bubble, so they decided to keep on going, through the fires of debt and flames of pride (Dante could really have written about this). Such a pleasant stroll didn’t seem to affect Japan anyhow, at least not on the short term, but on the long run… (and I know that Econ students have problems differentiating short and long term, but in this specific case the long term is when Japan noticed they were in DEEP S… DEBT, of course). That was how Japan managed to put itself in debt worth 180% of the GDP and stimulating deflation to a point that, once a number one consumer for luxury products became a world of saving and economical disintegration.

Little is there to be done in respect to Japan`s wrong decisions, its difficult, but I will say that it’s still in time to admit to their wrongly ways and attempt moving forward.

Reflection – The exam

11mottma — Thu, 01 Apr 2010 10:46:55 +0000

The results for the market failure exam, a grade which I refuse to reveal due to how humiliating it would be, 50%, correctly pictured how much I studied for the exam. The truth is I studied for the final 8 points question and forgot about the rest of the exam. This showed through the fact that I wasn’t to:

Define demerit goods: which are goods that create market failure when produced and consumed.

Draw a graph for an increase in supply, which should be an easy 4

Graph how tax free gives extra profits to a company

And several others barely retarded mistakes

I can’t really complain as it was my study methods that brought me to such a result, I should just keep in mind to do my activities and to study enough so I can at least define the economical terms.

MORE STUDYING NEXT TIME.

Discrimination

11mottma — Fri, 12 Feb 2010 01:27:36 +0000

Price discrimination is when a company changes its price considering any of a number of different variables. These variables can be age, ethnicity, nationality, time, location and many others. This is done in order to maximize the profits or sometimes in order to encourage some kind of an action.

A good example of how it is used sometimes is how Airlines use the variable of time to change the prices of their tickets drastically. Depending on how much time of antecedence you buy your ticket the lower the price you will get. This is a way the airlines have to profit upon the urgency and the willingness of the client to buy their tickets. So if the buyer has the absolute necessity to travel somewhere the next day they will have to pay a larger sum which will increase the company`s profit and therefore revenue. This also tests the client`s purchasing power, for it comes to a point which is almost like a first degree price discrimination (that is, a auction0 which explores of the buyers willingness and capacity to buy the ticket.

There are obviously some reasons why price discrimination would be acceptable, for example auctioning goods which values cannot be predicted by the market (rare and unique goods) or even the attempt to encourage a population to visit its own heritage centers. As can be seen in museums which will charge less for a citizen of the country then they would charge a tourist.

Obvious explorations can also be seen, for example goods bought in tourist centers will be several times more expensive than if bought in local areas.

End of the Ad age?

11mottma — Fri, 12 Feb 2010 01:27:04 +0000

In 2009, for the first time since the beginning of the ad age, the top 100 media firms had decreased revenues, and not only that but 11 of the 100 2008 top media firms had to file to bankruptcy due to the insufficient revenues of 2009. This clearly represents the nature of media, which it is a produced just wanted when there is disposable income on the market. The port crisis mentality made everyone save up and control expenses during 2009 and this obviously affected the media environment for it suffered a 4.9% loss

http://www.businessinsider.com/2009-revenues-dropped-43-for-nations-100-top-media-companies-2009-12

Diminishing Tennis balls transportation

11mottma — Fri, 12 Feb 2010 01:26:34 +0000

Today we were forced to recognize that more is not always better, this was achieved through the creation of a tennis ball transport line which was made of students lining up side by side in order to transfer tennis balls from one side of the room to the other. The number of students gradually increased, which represented the addition of factors of production to the short term, meaning labor number could change but machinery couldn’t. After a point for every new student the number of balls transported in a period of 1 minute decreased by a large factor demonstrating the law of diminishing returns which say that there is a point where a saturation of workers are reached and that a plethora of workers will cause production to decrease.

Chocolate shortage

11mottma — Mon, 07 Dec 2009 00:41:35 +0000

As result of combined natural disasters the harvest of Cocoa, main ingredient for chocolate, decreased in a catastrophic way, the biggest shortage in 40 years. The drop was such that the price of cocoa in London rose to 2,055 pounds a ton, the highest since 1985. The sudden increase to the price of cocoa result in the necessity of raising the price o chocolate, something the suppliers are not willing to do for it may affect the new 3% surge in demand in China and India, which represent a potential business opportunity. The theory of price mechanism explains the shortage that will result of these shifts.

JAL Confusion

11mottma — Thu, 03 Dec 2009 09:46:29 +0000

Japan Airlines, considered by international travelers one of the best airline, an airline which offers comforts beyond most other airlines, a giant of air travel.

Today, and for about the last 10 years, that hasn’t been the case exactly, the company has a debt of 15 billion dollars, and the only reason it keeps on going is the funding of a overly proud Japanese government which refuses to allow one of its symbols of wealth to be destroyed. Obviously that is not the only reason for JAL is a company which, through indirect jobs, employs hundreds of thousands, maybe millions, and its collapse would drag down the already stagnant economy of Japan.

But what is the reason for such a powerful and world renowned enterprise to reach this point?

The reason becomes obvious once JAL`s modus operandum is revealed. JAL is a government tool of political power and it was used to a point it dug its own grave, for one of the most common practices was the creation of routes to minor cities in order to please politicians and also the voting population. These unprofitable routes were one of the main reasons for JAL decadence.

The only way to crawl out of this dark pit it finds itself is a major reorganization of routes and expenses (especially within the current global situation), instead of sucking the money of the government and using it to pay for its vices and gangrenous routes.

Ryanair – Cheap goes rich

11mottma — Thu, 03 Dec 2009 09:45:36 +0000

Ryanair, a once minor air travel company, appears to have found the key for increasing profit, or at least not collecting debt, within the current situation (World Crisis ooooooh). The method used by Ryanair is minimizing the operation costs in order to offer tickets which are inexpensive. Such may be understood by some of the customers as the sacrifice of comfort in order to offer tickets that are cheaper, but in the current global economy it provides an incentive, maybe the only one, for air travel, since no one has barely enough money available for the luxuries of travelling, and the ones who actually could still afford the over-priced rates offered by most of the bigger companies don’t have reasons to travel, for the ones who pay for comfort were executives which travelled to sign deals and there is no deal, therefore no air travel necessities for them.

Ryanair recognized the elasticity of the demand for air travel within the boundaries of the low price and from that creating a strategy that cut down all expenses, attracted the most number of travelers possible, and made profit from quantity exclusively.