Question

Choose China or South Korea, it’s my first news assignment so it doesn’t matter what you pick.

Choose a country from the Big Emerging Markets list below. The list is obtained from the Market Potential Index (MPI) for Emerging Markets in the globalEDGE website (globaledge.msu.edu). China India Russia Brazil Indonesia Mexico South Korea Turkey South Africa Nigeria You will be doing the IB News Assignment on the same country throughout the semester. Your assignment is to follow the International Business news about the country you chose. You are to find and briefly summarize and analyze an article that is related to the topic of each chapter we are covering in the unit. Your analysis should reflect a good understanding of the concepts in the chapters up to this point. You are required to use reliable sources (ex: The Economist, Business Week, scholarly articles, etc.; Wikipedia is NOT acceptable) and cite them in the APA style. You may also post the article in addition to providing its reference. You cannot post the same news about the same country that a classmate posted earlier in the week. Several students may choose the same country, just make sure you do not post the same article. You are welcome to comment on each others postings and enhance your learning experience. How to reach reliable sources? Through the International Business Research Guide. ABI/INFORM, globalEDGE, Factiva are some of the databases that will be useful. How to cite sources in the APA style?

Answer 1

By definition, GDP or Gross Domestic Product measures the market value of total output of an economy in a given year. We need to emphasize here that GDP is a quantities measure of the market value of goods and services produced. Now, is total production an indicator of the health of an economy? The answer is the production level definitely indicates what is happening in an economy; however, this is not a complete measure of economic health as it does not address the following points?

• How efficient are the producers:
• What are the opportunity costs in terms of environmental degradation or poor health due to pollution
• How well is the income distributed?
• If two countries have the same GDP, people of which country ate happier and more satisfied?
• What about crime rate? Education level? Creativity? Artistic expressions?
• Is the economy too leveraged?

Therefore, even though GDP is a good measure of outputs, it is a partial measure of real economic health.

Rather than an alternate method, I think GDP should be supplemented with two or three other measures to provide a holistic picture. These measures can include measures of natural sustainability, the measure of health, the measure of psychological wellbeing, etc.

I think GDP should be supplemented with two or three other measures to provide a holistic picture. These measures can include measures of natural sustainability, measure of health, measure of psychological wellbeing, economic efficiency, etc. We need to measure how our economic activities are affecting the ecology and environment and what are their costs. We can measure how efficient our producing agents, such as factories, are in terms of resource utilization. Also, we should measure the health and psychological aspects of welfare to provide a more accurate picture of an economy.

GDP should measure as it is. GDP should not be overwhelmed with a number of other variables. It should only measure the level of output in an economy. However, we need a set of other measures for environmental sustainability, health, psychological welfare and economic efficiency. For example, we do not measure the academic performance of a student just by his/her marks in one subject. Rather, we find out the weighted total score of the student for a set of subjects. Similarly, we can introduce a number of other measures and provide weights to these individual measures to come with weighted values of all the measures, as shown below:

Variable to Measure	Index	Weight
Total Production	GDP	40%
Environmental Sustainability	Environment Index (EI)	20%
Health	Health Index (HI)	20%
Economic Efficiency	Economic Efficiency Index (EEI)	10%
Psychological Welfare	Psychological Welfare Index (PWI)	10%
Weighted Index	(GDP × 0.4 + EI × 0.2 +HI×0.2 +EEI×0.1 +PWI×0.1)	100%

Increasing global trade and global integration will make this comparison more real. EU is a good example. When the global economy starts behaving like one single unified market with a single currency, we can make this comparison more realistically. Also, we can make the comparison on the basis of purchasing power parity and the other weighted indicators explained above.

Generally, the real GDPs of different countries are compared by converting these GDPs into a common currency using the prevailing exchange rates. However, this comparison does not reflect the full picture as exchange rate does not fully reflect the price of goods or services which are not traded internationally. Purchasing Power Parity or PPP facilitates international comparison of GDP. PPPs provide currency conversion rates which adjusts the price differences of goods and services across countries. This makes the international comparison of GDP much easier. For example, the Eurostat-OECD PPP program takes into account a basket of 3000 goods and services across a wide range of categories. When this PPP is applied to real GDP data, our comparison of GDP of different nations become more realistic.