Merchandise trade has become an increasingly important contributor to a country’s gross domestic product (GDP), particularly for developing countries. Before the global financial crisis hit in 2008, merchandise trade as a percent of GDP for low- and middle-income economies was 57 percent, about 5% higher than for high-income economies. This is very evident in Europe and Central Asia (ECA) where merchandise trade accounts for 73 percent of the developing region’s GDP. Many ECA countries including Hungary, Belarus, and Bulgaria have merchandise trade to GDP ratios above 100 percent (155, 136, and 114 percent respectively in 2011), meaning merchandise exports are a large contributor to their overall economy.
Is China, after a hiatus of 150 years, again the largest economy in the world? Not all sources of GDP data agree, but there is little doubt that China is either already now the largest economy, or it will, within a year, become so by overtaking that of the United States. Whichever the case may be, a long era when the American economy was the largest in the world and which began around 1860, is now reaching its end.
Data on gross domestic product (called now Gross Domestic Income) are available from three sources: the Maddison project, which is the only source for the long-run series of national GDPs, going back to 1820s; the World Bank or IMF annual data, going back to 1960; and Penn World Tables, produced periodically at the University of Pennsylvania, going back from their just-released version 8.0 to 1950 . All three sources produce GDP data in PPP (purchasing power parity) terms, which means that they adjust for differences in price levels between the countries. The easiest way to explain it is to say that PPPs try to account for each good and service using the same price for it around the world, so that a mobile phone, a kilo of rice and a haircut would each be valued the same in China as in the United States. Only thus can the real sizes of the economies, and the welfare of people, be truly comparable. These PPP data, in turn, are obtained through a massive worldwide project called the International Comparison Program, which is run every five to 10 years and collects more than 1,000 prices in all countries.
- The Center for Financial Inclusion blog discusses new global data on corruption - Sierra Leone recorded the highest rate with 81 percent of polled individuals reporting that they had paid a bribe during the past year, followed by Liberia, Yemen, and Kenya, with 75, 74, and 70 percent, respectively.
Yesterday I idly tweeted a request for the Monty Python sketches most relevant to development. Great response, uncovering some forgotten gems – turns out Python fans are everywhere, (and they’re not even all men, well not 100% anyway). Too many for one post, so today we’ll do politics. Here are my favourites (with credits where due):
Good governance and accountability (aka anarcho sindicalist v monarchist discourses) [via Emily Barker and others]
Colonial legacy and institutions [aka what have the Romans ever done for us?, via Matt Collin]
A cup of coffee in Caracas costs almost 200 times a liter of gasoline. Households in Turkey paid 74 times more than their Egyptian counterparts for bottled cooking gas in early 2013. The price differences across countries for gasoline and diesel are even larger, as much as 250-fold for diesel.
Conflict is a major cause of poverty in the developing world today. In addition to endangering lives, conflict disrupts the functioning of an economy in many ways. It destroys infrastructure, prevents children from going to school, and closes factories. A little-studied economic impact is conflict’s tendency to restrict the mobility of goods and labor within and across borders. These restrictions are caused both by insecurity associated with the conflict and by explicit barriers that constrain the mobility of people and goods. Our recent World Bank study measures the harm such barriers have caused the economy of the West Bank by limiting mobility in the Israeli-Palestinian conflict.
The following post is a part of a series that discusses 'managing risk for development,' the theme of the World Bank’s upcoming World Development Report 2014.
Crude oil is arguably one of the single most important driving forces of the global economy, and changes in the price of oil have significant effects on economic growth and welfare around the world. Indeed, the level of oil dependency of industrialized economies became particularly clear in the 1970s and 1980s, when a series of political incidents in the Middle East disrupted the security of supply and had severe effects on the global price of oil. Since then, oil price shocks due to such exogenous events have continuously increased in size and frequency (cf. Figure 1). While oil demand tends to be slow moving, mainly driven by economic growth and to some extent climate policies, the prospects of future oil supply are highly uncertain – not least considering persistent political instability in exporting countries and the uncertainty regarding the discovery of new reserves. As a result of such uncertainties, oil prices could undergo further (increasingly) drastic fluctuations in the future.
- external validity