BU204_Unit3_Assignment

Unit 3 Assignment Template: Long-Run Economic Growth

Name: NyKeta Smith-Crenshaw

Course Number and Section Number: BU204 BU204 Section Number _01___

Date:______________

Using the same procedures described in the Unit 3 learning activity and listed in the World Bank Research Steps document, choose two different countries than the countries chosen during the learning activity, and perform the same analysis, answering the questions below. Collect the data requested below from the World Bank for the year of 2000 and for the year of 2015. The World Bank data is available from the Purdue Center for Economic Education.

Choose any two countries and for each country, download AND LIST the following data from the World Bank, in an Excel spreadsheet, for both the year ending 2000 and the year ending 2015:

Industry (including construction), value added

GDP

GDP per capita

Population, total

Employment in agriculture (% of total employment) (modeled ILO estimate)

Employment in industry (% of total employment) (modeled ILO estimate)

Employment in services (% of total employment) (modeled ILO estimate)

Employment to population ratio, over 15 years of age total percentage.

Land area (sq. km)

France 2000 2015

Industry (including construction), value added (% of GDP) 21.29393981 17.67969171

GDP per capita (current US$) 22364.02939 36638.18493

Population, total 60912500 66548272

Employment in agriculture (% of total employment) (modeled ILO estimate) 4.139999866 2.710000038

Employment in industry (% of total employment) (modeled ILO estimate) 26.27000046 20.31999969

Employment in services (% of total employment) (modeled ILO estimate) 69.58000183 76.97000122

Employment to population ratio, 15+, total (%) (modeled ILO estimate) 49.72999954 49.75999832

Land area (sq. km) 547567 547557

GDP (current US$) 1,362,248,940,482.77 2,438,207,896,251.84

Turkey 2000 2015

Industry (including construction), value added (% of GDP) 26.79741218 27.83434929

GDP per capita (current US$) 4337.478141 11006.24974

Population, total 63240194 78529409

Employment in agriculture (% of total employment) (modeled ILO estimate) 27.29999924 20.40999985

Employment in industry (% of total employment) (modeled ILO estimate) 27.62000084 27.22999954

Employment in services (% of total employment) (modeled ILO estimate) 45.08000183 52.36999893

Employment to population ratio, 15+, total (%) (modeled ILO estimate) 45.63000107 45.75

Land area (sq. km) 769630 769630

GDP (current US$) 274,302,959,127.24 864,314,287,105.73

Correctly calculate the percentage differences for each set of data, for each country between the year 2000 and the year 2015. Also, correctly calculate the percentage difference between your two countries for the year 2015 for each of the data elements.

France 2000 2015 % difference

Industry (including construction), value added (% of GDP) 21.29393981 17.67969171 -16.97%

GDP per capita (current US$) 22364.02939 36638.18493 63.83%

Population, total 60912500 66548272 9.25%

Employment in agriculture (% of total employment) (modeled ILO estimate) 4.139999866 2.710000038 -34.54%

Employment in industry (% of total employment) (modeled ILO estimate) 26.27000046 20.31999969 -22.65%

Employment in services (% of total employment) (modeled ILO estimate) 69.58000183 76.97000122 10.62%

Employment to population ratio, 15+, total (%) (modeled ILO estimate) 49.72999954 49.75999832 0.06%

Land area (sq. km) 547567 547557 0.00%

GDP (current US$) 1,362,248,940,482.77 2,438,207,896,251.84 78.98%

Turkey 2000 2015 % difference

Industry (including construction), value added (% of GDP) 26.79741218 27.83434929 3.87%

GDP per capita (current US$) 4337.478141 11006.24974 153.75%

Population, total 63240194 78529409 24.18%

Employment in agriculture (% of total employment) (modeled ILO estimate) 27.29999924 20.40999985 -25.24%

Employment in industry (% of total employment) (modeled ILO estimate) 27.62000084 27.22999954 -1.41%

Employment in services (% of total employment) (modeled ILO estimate) 45.08000183 52.36999893 16.17%

Employment to population ratio, 15+, total (%) (modeled ILO estimate) 45.63000107 45.75 0.26%

Land area (sq. km) 769630 769630 0.00%

GDP (current US$) 274,302,959,127.24 864,314,287,105.73 215.09%

Percentage difference between the two countries

France Turkey Industry (including construction), value added (% of GDP) 17.67969171 27.83434929 -10.15%

GDP per capita (current US$) 36638.18493 11006.24974 232.89%

Population, total 66548272 78529409 -15.26%

Employment in agriculture (% of total employment) (modeled ILO estimate) 2.710000038 20.40999985 -17.70%

Employment in industry (% of total employment) (modeled ILO estimate) 20.31999969 27.22999954 -6.91%

Employment in services (% of total employment) (modeled ILO estimate) 76.97000122 52.36999893 24.60%

Employment to population ratio, 15+, total (%) (modeled ILO estimate) 49.75999832 45.75 4.01%

Land area (sq. km) 547557 769630 -28.85%

GDP (current US$) 2,438,207,896,251.84 864,314,287,105.73 182%

In a 400 – 500-word essay, explain, in detail, WHY you think these values are different between the two countries and how long run economic growth operates differently between these two countries.

The percentage of people employed in the construction industry in France is 10.15% lower than Turkey. The reason for the difference is due to the fact that Turkey is a country that does not have so much infrastructural development. In the past 10 years the country has been undertaking several infrastructural projects to modernize the country. These infrastructural projects employ a significant number of people, which accounts for the high proportion of people employed in the construction industry.

France is also one of the largest economies in the world. This is the main reason as to why the country has a higher GDP than Turkey. The GDP of France is 232.89% higher than that of Turkey.

Most people in France are employed in the service sector. This is highlighted by the fact that slightly less than 77% of the total workforce in the country is employed in the sector. On the other hand, only 27.2% of Turkey’s workforce is employed in the service sector. France does not depend on agriculture as highlighted by the fact that only 2.7% of the workforce in the country is employed in the agricultural sector compared to Turkey where the agricultural sector accounts for 20.4% of total employment in the country.

As an emerging market, Turkey is still dependent on industries that would stimulate its economy. This is the main reason as to why industry and agriculture account for a higher proportion of employment in the country compared to France. The difference between the proportion of employment in industry and agriculture between Turkey and France is 6.91% and 17.70% respectively.

According to Buckley and Mujamdar (2018), the importance of the service sector in economic growth has increased significantly in since the turn of the century. Agriculture and industry are the major sectors in most low and middle-income countries. In most high-income countries such as France, services account for a higher proportion of the GDP. France is one of the leading exporters of services in the world. This is the main reason as to why services account for a higher proportion of employment in Turkey than in France. The availability of infrastructure to support the growth of the service sector is one of the main reasons as to why the service sector accounts for a higher proportion of employment in France than in Turkey. Focus on the service sector is one of the strategies that Turkey can use to facilitate the country’s future economic growth.

2) Assume there is a simple economy where people consume only two goods, food and clothing, as shown in the table below. Further assume that the market basket of goods used to compute the CPI consists of 100 units of food and 20 units of clothing.

Yearly Price per Unit Food Clothing

2004 price per unit $8 $20

2005 price per unit $12 $40

a. Compute the percentage changes in the price of food and the percentage change in the price of clothing between 2004 and 2005.

Food 2004 = 8$

Food 2005 = 12$

% change = (12$ – $8) / $8 = 0.5 = 50%

Clothing 2004 = $20

Clothing 2005 = $40

% change = ($40 – $20) / $20 = 1.0 = 100%

b. Calculate the percentage change in the CPI between 2004 and 2005.

Cost of market basket 2004 = (100 X $8) + (20 X $20) = $1200

Cost of market basket 2005 = (100 X $12) + (20 X $40) = $2000

% change in CPI = ($2000 – $1,200) / $1,200 = 0.6667 = 66.67%

c. Do you think the CPI price changes affect all consumers in the economy to the same extent? If not, how do you determine who “wins” and who “loses” in this particular situation? Explain why these differences would exist.

CPI price changes do not affect all consumers in the economy to the same extent. From the data shown, food increased from $8 to $12, which represented a 50% increase. On the other hand, clothing increased from $20 to $40, which represented a 100% increase. Therefore, consumers that purchase large quantities of clothing and less quantity of food would be worse off – losers – than individuals that purchase large quantities of food and less quantity of clothing – winners.

Reference

Buckley, P., & Majumdar, R. (2018, July 12). The services powerhouse: Increasingly vital to world economic growth. Deloitte. Retrieved from: https://www2.deloitte.com/us/en/insights/economy/issues-by-the-numbers/trade-in-services-economy-growth.html