January 19, 2007
Two Huge Middle Eastern Stories: One Good, One Bad
Continuing the economics discussions, an interesting editiorial from Al Hayat (English site) on economics changes in region, and the tensions between a nasty political enviro and improving economics.
Posted by The Lounsbury at January 19, 2007 06:45 PM
Filed Under: Biz - Policy & Development
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mm hm. Not Being An Economist, I sit and wankishly wonder about the connection between pop growth and BNP growth. I suppose, if income levels remain the same, they should follow each other completely? So if BNP does not rise while pop does, like in 90s, people are poorer generally, yes? So does that mean Egypt is maintaining its BNP per capita now, instead of getting poorer?
Klaus, basic maths (assuming you meant GNP):
Population increase --> GNP increase (most probably, or the country is really in a messy shape).
(GNP increase GNP/capita decrease, i.e. individuals are poorer.
Oops - part of my post was eaten.
last sentence should be:
(GNP increase < Population increase) --> GNP/capita decrease, i.e. individuals are poorer
yeah, BNP is Danish for GNP. Thanks for clearing that up, Shaheen, I thought of this in relation to the discussion about Egyptians eating each other in 40 years from now.
Posted by: Klaus at January 20, 2007 12:22 PM
There are several ways you can look at the question.
First, of course, yes any population increase will engender an increase in Gross Domestic Production (Product).
The question at hand is the magnitude of the increase relative to the magnitude of the increase in population (one can get fancier and look at productive population versus non-productive or better, dependent).
That really gets down to the question of value added, or more clearly, economic efficiency of each worker and ability to create value [things/service people will pay for] of greater or lesser magnitude.
Low value-add, effectively low efficiency, and high population growth (which generally means a large percentage of dependents who are not producing value) can mean easily GDP growth that is below the rate needed to increase or even maintain wealth. Look at Saudi gross versus per capita figures from the early 80s to present, per capita it collapses.
Of course, there are also distributional issues, even high levels of economic growth if poorly distributed can mean a significant portion of the population can experience declining real living standards (not just relative).
Generally this also implies lower levels of efficiency and value add, so the problems often go hand in hand.
Posted by: The Lounsbury at January 20, 2007 12:48 PM