FLUCTUATIONS IN GDP

Fluctuations in GDP in Developing Countries



Fluctuations in GDP in Developing Countries

Introduction

The paper focuses on the fluctuations in gross domestic product in the developing countries. GDP is the monetary value of goods and services produced by an economy in a given period. Gross domestic product refers to value-added refers to domestic production is within the boundaries of an economy, and gross refers to the variation not accounted for inventory and depreciation or appreciation of capital. This study particularly focuses on the consumer spending of developing countries. In addition, this paper is based on the secondary data which is obtained from the Office for National Statistics and HM Treasury.

Hypothesis

H o: There is a relationship between gross domestic product of developing countries and consumer spending.

H A: There is no relationship between gross domestic product of developing countries and consumer spending.

Variables

In the study, following variables are used to determine the fluctuations in GDP in the developing countries;

Dependent variable = GDP

Independent variable = Consumer spending

Discussion

GDP is the monetary value of goods and services produced by an economy in a given period. GDP is a proxy indicator that helps to measure the growth or decline of production of goods and services companies in each country, only within its territory. This indicator is a reflection of the competitiveness of enterprises.

GDP indicates the competitiveness of enterprises. If the production of companies do not grow at a faster rate, means no is investing in creating new businesses, and therefore job creation does not grow at the desired pace. If GDP grows at the bottom of inflation means that wage increases tend to be smaller than it (Cobb, Halstead & Rowe, 1995).

The GDP of a country will increase if the government or companies within the same borrow abroad, obviously, this will decrease the GDP in future periods. It does not take into account the depreciation of capital (This includes machinery, factories, etc., as well as natural resources, and may also include the "human capital"). For example, a country can increase its GDP intensively exploiting its natural resources, but the capital will decrease, leaving less capital available for future generations. It ignores negative externalities generate some productive activities, such as environmental pollution. It ignores income distribution. The inhabitants of a country with per capita GDP as another but with a more equitable distribution of that enjoy higher welfare than the latter. The measure of GDP does not account for productive activities that affect the welfare but do not generate transactions, such as volunteer work or housewives (Cobb, Halstead & Rowe, 1995). The GDP is supposed to measure the total output produced in one year in the country. For that, one hand, as we saw in the previous paragraph, selling prices. This seems obvious and simple. But when there is no sale price or when the sale price is far from representing the cost of production, how do you? For example, how does one measure the production of teachers? Users pay directly for any price they receive education (Nordhaus & ...