Wealth GDP Analysis: World Geographic Economic Differences Keith L. White/RSK HS TC, Arizona Geographic Alliance

Macroeconomics  The part of economics that looks and deals with the economy as a whole  Population and labor force, education and training  Economic systems and politics  Resources and trade  Economic Indicators

Economic Indicators  Used to “check the health” of an economy  Comparative to other countries and economic systems  Over 50 economic indicators: most popular and common: CPI (Inflation), Unemployment claims, Housing starts, Inventory, DJIA, S&P, and GDP.

Why does the USA have great wealth?  Most of the worlds population suffers with limited education opportunities, poor health care, unclean drinking water, limited conveniences, few employment options, no home ownership.  How can we compare the USA to other world countries?

GDP: Gross Domestic Product  Value of all FINAL goods and services produced within a country’s borders in a given year  C+I+G=Nx=GDP  Consumer spending + Business Investment (and Inventory) + Government Purchases = Net Exports (Exports – Imports or x – m) = GDP  In USA GDP is calculated by US Dept. of Commerce.

Get Real! Real vs. Nominal GDP  Real GDP is adjusted for inflation if you are comparing growth to previous years.  Nominal GDP is current GDP that is not adjusted for inflation and would not be accurate compared to previous years.

GDP or GNP?  GDP measure all final goods within a countries borders regardless of ownership. With globalization, it is much more accurate on a comparative basis  Gross National Product calculates by countries ownership inside and outside of borders which dilutes in production accuracy and analysis and is rarely used today my most economic sources.

GDP: What is NOT included?  Intermediate Goods  Illegal Activities (Stolen Goods, illegal drug trade, prostitution, etc.)  Unpaid “non market” activities (Chores, household, charity, unpaid labor, etc.)  Used goods  Gifts, loans, welfare, taxes (nothing produced)  Financial Transactions (Stock Market/Deposits/Paper Transactions)

Who Cares?  GDP is a major leading economic indicator of the health in an economy.  A growing GDP is reflective of “good health” and prospering economy  A declining GDP is reflective of a “sick” economy usually accompanied by high unemployment, low wages, poverty, homelessness, hunger and suffering

Comparative GDP  Per capita = population / nominal GDP  Compare per capita (per person)  China and India both have a healthy, fast growing GDP and estimates should they will pass us the USA within 20-years. HOWEVER:  China and India have huge populations and when divided into their nominal GDP the per capita comparisons are much more accurate

World Population

World GDP

USA / World GDP by State

Per Capita GDP

USA  2006 Nominal GDP = 13 trillion plus  Population = 300 million (Approx.)  Per Capita GDP = $43,444  Real GDP (adjusted for inflation has enjoyed steady growth of 3-5% year  Growing US trade deficit (x- m=exports-imports) is biggest inhibitor to growth

Locate and Label:

Top 10 Per Capita GDP (2007) CIA World Fact Book ( 1- Luxembourg 80, Qatar 75, Bermuda69,900 (UK) 4- Jersey 57,000 (UK) 5- Norway 55, Kuwait 55, UAE 55, Singapore48, USA 46, Ireland 45,600

Bottom 10 Per Capita GDP (2006) CIA ( Central African R Niger Ethiopia Solomon Islands Comoros Somalia Guinea-Bissau Liberia Zimbabwe Dem Rep Congo 300

Other Per Capita GDP of Interest (2007) CIA (  184- Haiti1,900 (Lowest in NA)  165- India2,700  130 China5,300  85- Mexico12,500  75 Russia14,600  34- Japan33,800  21- Canada38,200

World Map Activity  Using a blank world map and Atlas for reference: find and label the 10 ten and bottom 10 per capita GDP countries.  Shade each group using a color key  Identify and label on the world map 5-more per capita GDP countries you are interested in.

Interrelationships & Meaning  What are possible geographic, economic, resource, or political reasons for a high per capita GDP?  What are possible geographic, economic, resource, or political reasons for a low per capita GDP?  What steps could be taken to assist a country with a low per capita GDP?

Geographic Connections to low GDP  Natural disasters and destruction  Politics and disputes, wars, turmoil  Poor health care options (mortality rate)  Poor education opportunities, employment training  Private property rights/land ownership  Economic Freedom/profit motive  Location and natural resources  Low production rates  Climate changes/weather issues

World Bank  One of the primary functions of The World Bank is to lend money for capital improvements to low per capita GDP producing nations.  Loans are used to educate the labor force, train in food production and distribution, utilize and develop available resources, invest in transportation and utility infrastructures.

Overnight Research Assessment  Select a country in the bottom 50 of per capital GDP.  Research the nominal GDP, current population, labor force, mortality rate, and resources available. ( go to the fact book)  Write a 1 page letter to The Word Bank requesting consideration for a 10-billion dollar loan.  Begin the letter with a overview of your country, its location, and current problems.  Conclude the letter with an explanation why the loan would help develop your country and improve the standard of living for your population.

Assessment Rubric 1-Poor (4) 2-Fair (6) 3-Good (9) 4-Excellent (12) Limited or no research Some research attempted by key areas were missed Most facts & details were researched Outstanding research, resource facts, and details No clear purpose of The World Bank loan request Few facts listed in letter requesting loan Most facts & details were listed in the letter Excellent overview of facts and details which clearly defined purpose of letter No clear outline of why loan would specifically help Few benefits of loan were outlined Good overview with a few specifics as to why loan would benefit Excellent review and detail of why loan would benefit and improve conditions

Arizona Extensions & US GDP How does Arizona contribute to the US GDP growth?  Tourism  Farming (Cotton, Vegetables, Citrus)  Ranching (Cattle, Sheep)  Mining (Copper, Silver, Gold)  Housing construction/growth  Electronics manufacturing

GDP Closure  Per Capita GDP shows relative comparisons  Poverty, unemployment, hunger, homelessness, and standard of living  Continent of Africa suffers with many countries very poor  China and India nominal GDP vs. per capita GDP