PowerPoint E: International Comparisons

Deficit A deficit occurs when you have a negative budget balance or when expenditures exceed revenues. The deficit per person is calculated by dividing the total deficit amount by a country’s population. Governments will sometimes chose to have a deficit in order to try to boost the economy during slower economic times. Typically this spending or investment includes infrastructure, which creates jobs, which in turn helps the government collect money through taxes. In theory, these deficits would be paid for by an expanded economy during the boom that might follow.

Employment rate The Organization for Economic Co-operation and Development (OECD) defines the employment rate as the employment-to-population ratio. This is a statistical ratio that measures the proportion of the country's working-age population (ages 15 to 64) that is employed. A person is considered employed if they have worked at least 1 hour in gainful employment in the most recent week.

Youth unemployment rate The unemployment-to-population ratio for those between 15-24 years of age. An unemployed person is defined as someone who does not have a job but is actively seeking work. Youth unemployment rates are historically double the adult rate of unemployment.

International Comparisons – Deficit and Employment Country Deficit Deficit per person Unemployment Youth Unemployment Canada $25.1 billion (CAD) $694.44 7.0% 13.0% US $616 billion (USD) $1,937.10 4.9% 10.3% China 334 billion (USD) $298.48 4.04% 11.1% India $90.5 billion (USD) $78.49 5.0% 12.9% Greece $13 billion (USD) $547.60 23.4% 42.7% Spain $74.8 billion (USD) $1,582.40 25.6% 56.3% UK $85.9 billion (USD) $1,309.12 13.5%

National debt When you have a deficit, you need to borrow money to cover the difference between your expenditures and revenue. The money that a government borrows and does not repay becomes its debt. The debt per person is calculated by dividing the debt by a country’s population. Governments borrow money from citizens, domestic institutions holding federal bonds, treasury bills, and have other forms of debt.

Debt-to-GDP ratio Gross domestic product (GDP) is the total value of goods produced and services provided in a country during one year. The debt-to-GDP ratio is a measure of a national government’s debt in relation to its GDP. By comparing what a government owes to what it produces, the debt-to-GDP ratio indicates the government's ability to pay back its debt. The Organization for Economic Cooperation and Development (OECD) encourages countries to aim for a debt-to-GDP ratio below 50.

International Comparisons – Debt and GDP Country National debt Debt per person Debt-to-GDP ratio Canada $642.0 billion (CAD) $17,833 91.5 % US $19.0 trillion (USD) $58,000 105.2% China $4.3 trillion (USD) $4,054 41.0% India $485 billion (USD) $341 23.8% Greece $345 billion (USD) $33,866 176.9% Spain $1.24 trillion (USD) $25,931 99.6% UK $2.0 trillion (USD) $30,741 89.2%

Discussion Questions How do Canada’s finances compare to other countries around the world? Are there other countries with stronger economies and job prospects than Canada? What is the most attractive country to live or work in long-term?