Economie anglo-saxonne

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Economie anglo-saxonne

What do you mean by Anglo-Saxon ?

Connection of countries and economies deeply influenced by English customs:
- Same language
- Share a common legal system which distinguish these countries from France, Germany, Japan
✓ Position of case law
✓ Notion of equity
- Religion played key part in developing the economies
✓Protestantism: “make their own way of life”
- Political liberalism
✓ Democracies for hundred years
- Economic liberalism
✓ Free market
✓ Adam Smith : Capitalism’s origins

Which countries?

- UK
- US
- Canada
- Australia
- New Zealand
- Ireland

4 factors to identify what they have in common:

1 Measuring acountry’s economic activity:

Principal measure of a country’s overall economic activity is called Gross Domestic Product (GDP) and can be defined as:
- “a measure of the total flow of goods and services produced by an economy over a particular time period, normally a year. Calculated by valuing and adding together all that is produced within a country in a year”
- The value of allintermediate goods is excluded
- Gross refers to the fact that no deduction is made to reflect expenditure on replacement of capital goods
- Domestic refers to the fact that income arising from investments outside the country is not counted.

2 Making international economic comparisons:

- Population
- World biggest oil company by turnover/revenues
To be able to make comparisonsinternationally, a common currency is necessary
✓ The US $ is the standard basis for making international financial and economic comparisons
✓ But exchange rates change everyday and can vary by a lot over time so such movements distort comparisons

3 International comparisons continued:

If I want to compare individual people’s welfare even with GDP in $ and adjusted for purchasingpower parity don’t have valid basis of comparison.
- Need to adjust for size of population (per head or per capita) otherwise can be misled.
- Example: in India, there are about 51 million colour TV and in Australia only about 7 million but
✓ In India there is 1 colour TV for 20 people
✓ In Australia there is 1 colour TV for 2.5 people
- GDP per capita, the mostcommon economic measure of economic wealth

4 Making comparisons over time:

Many physical entities and units often used to describe them don’t change over time:
- A person-age, gender, life expectancy, numbers unemployed
- The size of a country, population density, number of hospital beds
- Number of cars or computers per capita

Many economic and financial concepts andmeasures are often expressed in monetary terms
- GDP, consumer expenditure, exports
- Turnover, profit, investment
- Salaries, rent, dividends

But the value of money changes over time with inflation and deflation. To make direct comparisons over time, we need to use “constant prices” (“a big Mac is a big Mac”, want a measure volume/quantity not monetary value)

Waysof computing GDP:

What is earned = what is spent = what is produced

The income approach:
Income from employment
+ Profits of companies
+ Surplus of public utilities
+ Rent

The expenditure approach:
Consumer’s expenditure
+ Public expenditure
+ GD capital formation
+ Exports
- imports= GDP

The output approach:
Agriculture and extractive industries output
+ manufacturing industries output
+ services and construction output

Limitations of GDP as an indicator of economic welfare:

For example, Germany’s economy GDP per man-hour is 1% higher than the US
it is per capita GDP adjusted for PPP is about 26% lower
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