Tuesday, June 30, 2009

Italy Economy

Italy Economic Profile, Italian Economy, Italy's Economy, Economy of Italy

The Roman Empire was once the dominant political, military and economic power in the world, but after the post war era of rapid industrialization, the Italian economy today is better known as the ‘Sick Man of Europe’. Italy in 2007 had a population of 58 million and GDP (PPP) of $1.8 trillion. It is the tenth largest economy by purchasing power parity, and the seventh largest by nominal GDP. Italy’s history stretches back several thousand years BC to its links with Greece, and the subsequent development of the Roman Republic and Roman Empire. For centuries, Rome was the effective center of the world, and its military and economy dominated Europe and Asia.
The Empire eventually split into component parts and was replaced by city states, which were major centers of trade, commerce and learning during the Middle Ages and the Renaissance. The Vatican City, center of the Catholic religion, gave the region both spiritual and temporal power. In 1861, the city states unified into modern day Italy. It prospered as a parliamentary democracy until the early 1920s, when the fascists under Benito Mussolini cemented their grip on power. Mussolini allied himself with Hitler during World War II, and the country was invaded repeatedly during its defeat. After World War II, Italy abolished the monarchy and was at the heart of western European institutions such as NATO, the Group of 8 (G8), the OECD, and the European Community, now the European Union. During that time it moved rapidly from an agricultural economy to an industrial power, and now a services-led industry. Services today make up 69 per cent of the economy, industry 29 per cent, and agriculture 2 per cent. Italy has an extremely robust small and medium enterprise sector, with family-owned businesses making up its backbone. It has not been as successful in establishing multinational corporations. Even its famous brand names, those associated with the fashion, wine and automotive industries, have usually been family businesses.
Many of these companies do not have a high level of technology sophistication, and so are facing increasing pressures from a globalized economy where manufactured goods can be produced at much cheaper prices elsewhere.
As a result, growth rates have been slowed to virtually zero. In 2007, GDP growth was 1.5 per cent, slightly above its average this decade. Italy has long been troubled with high levels of corruption and organized crime, high unemployment and debt levels, illegal immigration and a big divide between the advanced north and the poor south. These problems led Italy to be called the ‘Sick Man of Europe’. Indeed, the national debt reached a staggering 124 per cent of GDP by 1995. Repeated austerity measures have attempted to bring this figure down, but it is still officially over 100 per cent. Although unemployment has steadily been declining and now averages 6 per cent, it can reach over 20 per cent in the south. Inflation has traditionally been a major challenge for Italy, but it has been brought down to manageable levels – despite the belief that prices virtually doubled when the Euro was introduced, thanks to the corruption that is rife in the country. The worldwide economic slowdown is likely to hit Italy hard, since it will be compounded by the country’s own internal problems including the national debt level, high taxation, rigid labour laws and the economic cost of an expensive pension system that will be magnified by a graying population.

Ireland Economy

Ireland Economic Profile, Irish Economy, Ireland's Economy, Economy of Ireland
The economy of Ireland, driven by industry and exports is one of the leading economies in the European Union and an important economy in the world as well. The tertiary sector known as "Celtic Tiger" is the driving force in the Irish economy. The Secondary sector accounts for the highest exports while the primary sector plays an important role as well. The economy of Ireland is one of the more important economies of the European Union registering an average growth rate of 10% at the close of the last century. Dependant on trade and industry, Ireland's economy is driven by exports. Ireland ranks second among the European Union nations in terms of per capita income (Luxembourg being the first). The per capita GDP (Gross Domestic Product) of Ireland is the fourth highest in the world. According to the World Bank report of 2005, Ireland's per head Gross National Income of 41,140 US Dollars is the third highest among European Union nations and the seventh highest among all nations in the world. Traditionally an agriculture oriented economy, Ireland has now shifted course and is dominated by industry. The Industrial sector contributes a sizeable 46% of Irelands GDP. It also constitutes 80% of Ireland's exports and accounts for 29% of Irish employment.
Primary sector in the economy of Ireland The primary sector of the Irish economy is relatively smaller compared to the secondary and tertiary sectors. The primary sector has an average 5% contribution to the GDP of Ireland and employs an average 8% of Ireland's workforce. Agro based food and drink products contributed 8.4 % of Ireland's exports in 2004. Zinc is one of the major export items, while Ireland remains a major importer of wood due to gross deforestation. Fishery is another important segment in the primary sector of the Irish economy.
google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad);
Secondary sector in the economy of Ireland The secondary sector dominated by several top profile industries, contribute 46 % to the GDP of Ireland and accounts for 29% of employment. While textile industries have traditionally driven growth in the secondary sector of the Irish economy, high end technology based industries have now taken over. Ireland is one of the leading manufacturers of computers and computer parts in the European Union. As per estimates, 25% of total production of computers in Europe is from Ireland. Companies like IBM, Intel and Dell are the leading players in this sector. The software industry is another major industry in the Irish economy. Microsoft and Oracle have set up operations in Dublin. Ireland accounts for the largest software exports in the world. Other important industries of the Irish economy constitute drugs, confectionary, and machinery. In recent years real estate (construction) industry has assumed importance. However a recent slump has been observed in this sector.
Tertiary sector in the economy of Ireland The tertiary sector is the most important sector of the Irish economy, accounting for 49% of GDP. This sector employs 64% of Ireland's workforce. This sector is known as the "Celtic Tiger" for being the major driving force in the economic growth of Ireland. The major industries of the tertiary sector are call centers, legal services, financial services, catering and tourism. The Irish tourism industry alone recruits 100,000 people. The tertiary sector also has both Irish and international retail companies and café chains like Starbucks, McDonalds, etc.
Current economic trends The Irish economy was not too badly affected by the global economic crisis at the onset of the twenty first century. There was no closure of operations of multinational companies in Ireland. Unemployment remained under control. Unemployment is still low in the Irish economy but rising. Due to the slump in the real estate sector, 30000 jobs are predicted to be lost between 2007 and 2008. The ongoing inflation rate in Ireland in 2007 is 5.1%
Irish Budget 2008 The important highlights of the budget of Ireland for 2008 include -
9% stamp duty on the balance of house prices over €1m
Lesser duty on credit cards - now at €30 ( earlier €40)
Increase of 30 cents on excise of cigarettes.
16.2 billion Euros to be spent on healthcare in 2008.
Increase in spending for child benefits.
Rise in contributory and non-contributory pension.
Increase in Motor tax
9.3 billion Euros to be spent on education in 2008
One billion Euros allocated for public transport
Allocation on 600 million Euros for regional and local roads.
Allocation on 2.7 billion for ports and airports.
0.9% government deficit for 2008

Economic Structure France

The majority of product markets are now open to competition. However, despite significant reforms and privatization over the past 15 years, government continues to control a large share pf economic activity. This is true not only for the provision of services such as healthcare and education but also in economic activities such as banking and energy production and distribution (some gas and electricity providers are still 100% state owned). Besides, railway is a state monopoly and France telecom, the leading operator in France has maximum state equity. Government economic policy aims to promote investment and growth in a stable monetary and fiscal regime. The govt. of France successfully brought down unemployment rate from 12% to 9.7% in 2004. However, it still remains higher than other European countries' standard.
large industrial base and a highly skilled labour force. Service sector share in the GDP was close to 71% in 2003. Its economy is exceptionally diversified. Agriculture and the agro-food industries account for a large share of economic activity than in many other west European countries. France's greatest strength in manufacturing are in sectors such as motor vehicles, pharmaceuticals, transport equipment and aerospace (civil and military). The construction sector represents around 5% of GDP. ROLE OF MARKET vs GOVERNMENT Key reforms have been introduced into the regulatory governance system in France over the past 20 years. The role of the State in the economy has been reduced and State ownership of companies has declined significantly.

France Economy

French Economy, France/ French Economic Profile, Economy of France
France Economy-key Indicators France and Britain vie for the 4th rank in world's largest economy category. However, Gross National income of France Economy was $1523025 (2003) fell short of UK'S income and hence was placed at 5th position in 2003.
The GNI per capita was $ 24770 in 2003. In terms of purchasing power parity, Per capita GNI in 2003 was US $ 27460, placing France Economy at a lower rank among the other OECD countries. Average annual growth rate of GDP was 0.1% during 2003. GDP of French Economy as in the year 2006 has reached at 2.2 Trillions in current US $ with an annual percentage growth rate of 2.0. Growth rate of GDP has declined to 1.2 % in 2005 from 4 % in 2000.
population with 60.424 million people residing there in mid 2004. According to data obtained from World Bank Indicators, national growth rate in France during 1997-2003 was 0.4% slightly less than that of high-income countries' group as a whole. France is moderately populated with 111 persons living per sq km in 2004. Almost half of the population lives in Paris, Lyon, Marseille/ Aix-en-Provence, and Lille. 76% of the people live in urban areas and enjoy a longer life (life expectancy at birth in France is 79 years, third highest among all countries of the world,) according to (1997-2003) World Bank figures. The UNDP 2004 report shows that 8 % of France's population lives below income poverty line (50% of median household income). Gross primary enrollment, which denotes the percent of school-age population, is 105, with 106 for male and 104 for female population.Adult Literacy rate is the same as other high-income countries, 99 %. France is ranked 16th in 177 countries of the world in terms of human development index.

Economic Structure Germany

The social market economy concept contributed to harmonious labour relations. Additionally focus was laid on bank financing, which allowed companies to concentrate on long-term objectives and insulated them from short-term fluctuations in share prices, although it additionally insulated managers from effective control. However, there were certain drawbacks also, as extensive social protection and a high tax block on labour income reduced the incentive to work. High non-wage labour costs, rigid employment protection and persistently weak domestic demand depressed the demand for labour. These problems, which had already weakened Germany's growth performance during the 1980s, severely impaired the ability of the country to deal with the huge economic problems created by the process of reunification. As a result, Germany had the weakest GDP growth in the EU in 1994-2003. Widespread awareness of the poor performance intensified during the 2001-03 downturn, raising pressure on the government to react. In response to the poor performance, German
chancellor, Gerhard Schroder, announced in March 2003 his reform initiative, the Agenda 2010, to improve structural conditions for economic growth. It had measures to tighten conditions for entitlement to unemployment benefits and to reduce non-wage labour costs, reforms of the social welfare system, in particular public health insurance, and a liberalisation of the crafts sector. Because of the integration of European financial markets and the greater risk consciousness of banks, German companies have provoked a shift away from reliance on long-term bank financing towards direct financing on capital markets, which has also required companies placing more emphasis on shareholder value.
although the share of overall industrial output in GDP has declined from 34.5% in 1993 to 29.6% in 2002. The main manufacturing industries are the automotive and chemical industries, while telecommunications has also become a sector of great importance. The steel-making sector in the Ruhr region has declined sharply, and agriculture has become a sector of only marginal importance for the economy as a whole. Since 1988, however, the share of manufacturing in GDP has stabilised at around 30%, whereas that of agriculture, forestry and fishing has continued to fall, reaching a low of 1.2% in 2002, according to World Bank statistics.German economy is divided by its performance in the two regions East Germany and West Germany. The economy in the east remains particularly weak. Unemployment is double and economic output per head not much more than half of that in the west. Role Of Market Vs Government After losing in the WW-II, Germany started to rebuild its economy and indeed enjoyed remarkable economic success, and this "economic miracle" made it the third-largest economy in the world after the US and Japan. The government adopted prudent fiscal and monetary policy. Also external support in the form of Marshall Plan aid, good relations between social partners, and the focus on reconstruction contributed to its rejuvenation after the devastation of the Second World War. Germany followed an economic policy with the idea of making a social market economy. This concept demanded that market forces govern the economy, with the state retaining a role in improving the fate of the underprivileged and correcting market imperfections.

Germany Economy

German Economy, Germany Economic Profile, German Economy, Germany's Economy
The total number of people living in Germany in 2004 was 82.424 million. The July 2009 estimate is 82.329 million. According to data obtained from World Bank Indicators, national growth rate in Germany during 1997-2003 was 0.1%, showing very little population growth. Nevertheless, Germany is Europe's largest economy. Germany is moderately populated with 231 persons living per sq km in 2004. The population consists numbers of refugees from East European Union as well as immigrants from countries like Italy, Spain and Greece.
Most of the population live in cities, this is obvious from a high urban population of 88 %. Even the life span of people is higher as in most other developed countries (life expectancy at birth in Germany is 78 years, fourth highest among all countries of the world), according to the World Bank figures (1997-2003). The UNDP 2004 report shows that 8.3 % of Germany's population lives below income poverty line (50% of median household income). Gross primary enrollment, which denotes the percent of school-age population, is 103, with 104 for male and 103 for female population. Adult Literacy rate is the same as other high-income countries, 99 %. Germany is ranked 19th in 177 countries of the world in terms of human development index. Germany's labour force growth rate of 0.1% in last six years is far short of the other high-income countries' growth rate of rate of 0.7% during these years. Key Economic Indicators The GNI per capita of Germany Economy was $ 25250 in 2003. In terms of purchasing power parity, Per capita GNI in 2003 was US $ 27460, placing it at a lower rank among the other OECD countries.
The average annual growth rate of GDP in German Economy has been on a decline since early 1980s and no growth was observed in total output during 2003. With the effects of adverse external shocks diminishing, the German economy is currently recovering, ending a couple of years in stagnation on the back of its traditionally strong, competitive and innovative export-oriented manufacturing sector. However, there lies a vast potential and the economy is far from operating at full strength
due to the weakness of final domestic demand. Poor labour market performance continues to weigh on consumer sentiment and business confidence remains volatile. Although monetary conditions should remain supportive for GDP growth in the euro area, a persisting German inflation differential relative to the euro area average would mean that real short-term interest rates risk damping the recovery of demand in Germany to an extent, which may not be compensated by the corresponding gain in competitiveness. Cyclical weakness and the structural problems of the Germany economy impact strongly on public budgets, while uncertainty about how public finances will be put on a durably sustainable path is a further factor undermining confidence. Re establishing Germany's traditional economic strength requires a comprehensive policy response within a coherent framework.

UK Recent Economic History 2009

Could the UK economy get any worse? Data from Q1 2009 on the UK economy have delivered an unequivocal ‘yes’.The economy was declining at an even quicker rate than originally suspected.
The mood became increasingly grim, with headlines such as ‘The Lights Go Out as Recession Deepens’, as electricity usage dropped for the first time in years. Speculator Jim Rogers said the UK had nothing left to sell, and the LSE and FTSE100 fell to multi-year lows in tandem with other stock markets.
All sectors of the UK economy seem to be struggling, with historic lows across pretty much every measure – consumer confidence, house price drops, new home sales, retrenchments, manufacturing activity and demand.
Prime Minister Gordon Brown had been one of the first world leaders to move to capitalising and even nationalising ailing financial institutions, and his boldness of action in the autumn of 2008 had briefly revived his popularity. However his years presiding over the easy credit years as Chancellor (the equivalent of Finance Minister in other countries), and his glib statements that he ended ‘boom and bust’ came back to haunt him.
His economic stimulus package, announced in January, was one of the most ambitious worldwide. It will add to already high debt levels above 40 per cent of GDP, leading to speculation that Britain’s sovereign debt ratings would be downgraded. This would be a disaster of national proportions, leading to higher to higher debt servicing costs, a further loss of confidence and the possible decline of the City of London. Sterling has continued to decline as confidence in the British economic leadership slides.
Supporters of the Labour government argue that moves taken by Brown and Darling mean that the UK has acknowledged its malaise and taken the necessary bitter medicine quicker, and that this will lead to a quicker recovery on the other side of the recession.
That assumes, of course, that there is an ‘other side’, and with the gloom surrounding the country in 2009, that in itself is not a foregone conclusion.
By the end of 2009, the UK economy is expected to have contracted 3.2 per cent (although some economists are revising that figure downwards), with the UK budget deficit ballooning 11.3 per cent of GDP, from 5.3 per cent, and British national public debt expanding to 59 per cent of GDP.
Inflation is no longer a concern thanks to the collapse in energy and commodity prices. It is expected to be around 0.5 per cent this year. Indeed many argue that deflation is now a bigger concern. As such, the Bank of England is expected to cut Interest Rates to 0.5 per cent by the middle of 2009.

UK Economy 2008

Remember that period of unbroken UK GDP and economic growth from 1992 to 2007? In 2008 it started to feel like a distant dream.
In January 2008 the books of Northern Rock were added to the national debt, effectively nationalising the company, with a formal nationalisation following in Feb 2008. Bradford & Bingley was also nationalised later in the year.
As losses racked up in the financial sector, compounded by some rash mega-mergers and acquisitions, the British government had to bail out the banking sector as a whole in Oct 2008, much as was happening in the US and Europe. In total 400 billion GBP was committed. This included the injection of capital and underwriting of share issues, debt guarantees and short term loans. The biggest recipients of aid where RBS (Royal Bank of Scotland), HBOS (Halifax Bank of Scotland) and Lloyds TSB. The government later forced the merger of Lloyds TSB and HBOS into the Lloyds Group. Other more limited participants included Abbey, Barclays, HSBC, Standard Chartered and Nationwide.
GDP growth turned negative in Q2, with a technical recession starting in Q3. Chancellor Alastair Darling called it the worst economic scenario since the end of World War II.
As confidence in the British economy dropped, Sterling (or the British Pound, GBP) started to collapse, losing approximately 30 per cent against its main trading partners.
With consumer confidence shrivelling and unemployment rising, the retail sector was the next to be hit. Woolworths, a high street name since the 1890’s, before it could reach the redemption of the Christmas sales period, while disappointing sales figures in the crucial December month led a series of other retailers to file for bankruptcy during that period.
Pretty much every other sector of the economy was also in decline by this point.
The two (very small) silver linings in the (very large) dark clouds have been the collapse in commodity prices bringing down inflation, and the weakness of the pound helping position exports and tourism for a quicker rebound than Euro-denominated European countries. However these silver linings were more proof of economic weakness than seeds of economic recovery by December 2008.

UK Recent Economic History

UK Economy, 2001 - 2007
UK Economy, 2001 - 2006Like the US, Ireland, Spain and many other western countries, the UK experienced a double bubble in both housing and the stock market in the early part of the twentieth century.
This period is generally believed to have started after the Dot Com Crash came to an end in 2001.
It was characterized by easy credit. Towards the end of this period, it became common for mortgage lenders to offer anything up to 125 per cent loans, with a mortgage of 90 per cent to 95 per cent of the house, and an attached unsecured loan, at higher interest rates. Another high interest rate mortgage was the ‘Self-certification’ loan. In this structure, the borrower would certify their income levels, without needing to supply proof. They became known as ‘liar’ loans, for obvious reasons.
In hindsight both of these arrangements seem absurd, but with house prices as much as tripling between 2000 and 2006, and with little government appetite for oversight or regulation, it seemed like a good idea at the time.
The London Stock Exchange (LSE) and FTSE 100 Index (comprising the 100 largest companies on the LSE) continue to rise to record highs, driven by the financial services industry, which represented 25% of public company profits during the boom times.
Indeed, the City of London, or Square Mile, is still the financial capital of the world for many markets and asset classes, and works closely with global financial centres in New York, Frankfurt, Hong Kong, Tokyo and beyond.
Since the financial and residential sectors are a larger part of the economy in the UK than in the US, it is not surprising that the country has been impacted harder than its Anglo-Saxon partner across the pond.
UK Economy 2007It all started so well, but by the time it ended the wheels were coming off the British economy.
House prices peaked in September and started to drop, although still in a fairly orderly way.
However the US Sub-Prime crisis had made it harder for banks with high leverage ratios to access funds in the wholesale marke. The Sub-Prime crisis meant that some banks were having trouble paying back counter parties. Trust and confidence waned and wholesale markets started to freeze up.
British bank Northern Rock had built its business model around leverage and wholesale market funding. By September 2007 it was unable to rollover its short term debts and it was forced to turn to the Bank of England as lender of last resort.
Once this news became known publicly there was a run on the bank. Worried deposit holders withdrew 1 billion GBP on Friday 14 September 2007, and a further 1 billion GBP the following Monday. Shares dropped by 32 per cent and 40 per cent on those two days, forcing the UK government to guarantee all deposits. These events marked the start of credit crunch in the UK.
The British government insists it would have been fine if not for the US sub-prime crisis. In official documents it has said “the global economy was growing strongly when the sub-prime crisis hit. In the UK, the economy was close to trend, inflation was close to target, public sector debt was relatively low and unemployment remained low. The US economy was the first to slow, but the crisis quickly spread to other advanced economies.”
Most economists, however, believe that the UK was headed for trouble anyway, with its stock and property bubbles and low savings rate.

UK Economic History

From the British Empire to New Labour
The United Kingdom of Great Britain and Ireland was once the largest economy in the world. It was the birthplace of modern democracy, the Industrial Revolution, and many of the financial and capital markets that are the foundation of the capitalist economic system.
At its peak during the nineteenth century, the British Empire covered one quarter of the world’s surface. Using its dominant merchant navy, protected by the royal navy, it developed a global merchantile system that transported people, resources and capital, generating vast profits for the Empire and its key companies, such as the East India Company, who in effect ran much of India and South East Asia.
The development of the empire was driven both by competition between European powers and the development of science and technology. In the early part of the twentieth century, those two forces combined disastrously to lead to World War I and World War II. Although the UK was on the winning side in both conflicts, it exacted a heavy price. The economy was devastated, the British Empire came apart and the Republic of Ireland withdrew from the UK, leaving Great Britain (consisting of England, Scotland, Wales and Northern Ireland) to the union.
During this period, the United States of America firmly established itself and the leading economic power of the world. Although still a key global player, Britain has seen its influence decline steadily as other powers overtake it economically.
During this period, the United States of America firmly established itself and the leading economic power of the world. Although still a key global player, Britain has seen its influence decline steadily as other powers overtake it economically.
In recent times, there have been two periods of change that have delayed or (briefly) reversed that decline. The first resulted from the Prime Ministership of Margaret Thatcher, who famously broke the unions and ushered in free market reforms that helped the UK to shed its ‘Sick Man of Europe’ mantle.
The second came about when the ‘New Labour’ government came to power in 1997. Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown (who became Prime Minister in June 2007) presided over a period of unbroken GDP growth from 1992 to 2008, the longest period of uninterrupted expansion on record.. This period coincided with a resurgence of cultural and sporting gains that came to be known as ‘Cool Britannia’.
The UK economy has become one of the biggest losers in the Financial Crisis that started in 2007 however, leading some to believe that much of those gains were artificially inflated.

Monday, June 29, 2009

UK Economic Indicators

UK GDP, UK Inflation, UK Interest Rates, UK Unemployment, UK Treasury Rates, UK Economic Data
The key UK economic indicators are GDP growth, unemployment rate, Bank of England interest rate, inflation rate, 3 month Treasury rate, public debt, and imports and exports.
GDP growth was 1.1 per cent in 2008. In 2009 and 2010 the economy is expected to contract, with GDP growth forecasts of -3.2 per cent and -1.1 per cent.
The Bank of England had cut interest rates to 1.0 per cent by the end of 2008, and that is expected to drop to 0.5 per cent for most of 2009 and 2010.
UK budget deficit stood at 5.3 per cent of GDP in 2008. With economic stimulus packages and bank bailouts being worked on, that is expected to balloon to 11.3 per cent of GDP in 2009 and 13 per cent of GDP in 2010.
In 2008, the UK had the 43rd largest relative national public debt, at 47.2 per cent of GDP. This figure could rise to 58.5 per cent of GDP by 2009 and 70 per cent of GDP in 2010, thanks to the projected budget deficits of 2009-2010.
Inflation had ramped up to 3.6 per cent in 2008, but has dropped back with the economic collapse and is expected to be 0.4 per cent in 2009 and 0.8 per cent in 2010. It had the 58th lowest inflation rate in the world at end 2008.
The 3-month Treasury rate has similarly dropped, from 5.5 per cent in 2008 to an expected 1.3 per cent in 2009 and 2010.
The unemployment rate had reached 6.3 per cent in the UK by the end of 2008 according to the Office of National Statistics, reaching close to 2 million unemployed. This figure is likely to grow to the 2.5 million – 3 million figures, taking unemployment dangerously close to the 8-10 per cent range at end 2008.
google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad);
Other UK Economic DataThe UK has a population of 61 million and a labour force of 31 million as of 2009.
The UK has the third highest current account deficit in the world. It has a large trade deficit in manufactured goods. Its reserves of oil and gas in the North Sea and coal on the mainland are significant but have passed peak production and are in decline. The UK became a net importer of energy in 2005. It is the ninth largest exporter, with $468.7 billion of exports in 2008, and the sixth largest importer with $654.7 billion of imports. It is the second largest exporter and third largest importer of services, particularly financial services.
It was the second largest recipient of foreign direct investment (FDI) in 2007 according to UNCTAD, and one of the most competitive in Europe for business and personal taxation. London is cited by the European Cities Monitor as the best European business city.
UK GDP, GDP Growth and GDP Per CapitaThe UK economy is the fifth largest country economy in the world by real or nominal GDP, and the sixth largest by purchasing power parity (PPP). At the end of 2008, it was estimated to be US$2.279 trillion. The UK is the second largest economy in Europe. The next largest economy in the world, and the largest in Europe, is Germany, which is estimated at US$2.863 trillion.
The UK economy grew 1.1 per cent in 2008, putting it at 187th in the world GDP growth rate league, compared to overall world GDP growth of 3.8 per cent and European Union GDP growth of 1.5 per cent.
The UK’s GDP per capita is $37,400, which makes it the 30th richest country in the world. The European Union average is $33,800 and the world average is $10,500.
UK Industries, GDP Composition by SectorUK Services Sector – 76.2 per cent of GDP The services sector dominates the UK economy. In particular banking, insurance and business services dominate. Financial services companies dominated the UK stock market until 2007, accounting for one quarter of all corporate profits.
UK Industry & Manufacturing – 22.8 per cent of GDP Both manufacturing and energy (4.0 per cent of GDP) have been in long term decline, with Britain now a net importer of energy.
Current industries include machine tools, electric power & automation equipment, transport (trains, shipbuilding, aircraft, motor vehicles and parts), electronics and communications equipment, metals, chemicals, coal, petroleum, paper & paper products, food processing and textiles & clothing.
UK Agriculture – 0.9 per cent of GDP The UK has a highly efficient agricultural sector by European standards, producing 60 per cent of its food needs. Less than 2 per cent of the workforce is employed in the agricultural sector, or under 500,000 workers.

UK Economy

UK Economic Profile, British Economy, United Kingdom Economy
During the days of the British Empire the UK economy was the largest in the world and the first to industrialise (or industrialize, ushering in the Industrial Revolution). Although it has declined in significance since, the UK is still the sixth largest economy in the world by purchasing power parity.
It is a member of the G7 (now expanding to the G8 and G20), the European Union (although not the European Economic and Monetary Union -EMU - or Euro) and the OECD (Organisation for Economic Cooperation and Development). It is also the founding member of the Commonwealth, the association formed by former British Empire states.
The British Economy is one of the most globalised (or globalized) economies in the world, thanks in no small part to the City of London, considered to be the largest financial center in the world.
The economy of the United Kingdom of Great Britain includes the economies of England, Scotland, Wales and Northern Ireland. The Isle of Man and the Channel Isles are part of the British Isles and have offshore banking status.
google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad);
The Bank of England had cut interest rates to 1.0 per cent by the end of 2008, and that is expected to drop to 0.5 per cent for most of 2009 and 2010.
UK budget deficit stood at 5.3 per cent of GDP in 2008. With economic stimulus packages and bank bailouts being worked on, that is expected to balloon to 11.3 per cent of GDP in 2009 and 13 per cent of GDP in 2010.
In 2008, the UK had the 43rd largest relative national public debt, at 47.2 per cent of GDP. This figure could rise to 58.5 per cent of GDP by 2009 and 70 per cent of GDP in 2010, thanks to the projected budget deficits of 2009-2010.
Inflation had ramped up to 3.6 per cent in 2008, but has dropped back with the economic collapse and is expected to be 0.4 per cent in 2009 and 0.8 per cent in 2010. It had the 58th lowest inflation rate in the world at end 2008.
The 3-month Treasury rate has similarly dropped, from 5.5 per cent in 2008 to an expected 1.3 per cent in 2009 and 2010.
The unemployment rate had reached 6.3 per cent in the UK by the end of 2008 according to the Office of National Statistics, reaching close to 2 million unemployed. This figure is likely to grow to the 2.5 million – 3 million figures, or 8-10 per cent.
The UK has the third highest current account deficit in the world of US$186 billion. It has a large trade deficit in manufacturing and has become a net importer of energy and North Sea extraction declines. It runs $468.7 billion of exports (9th in the world export rankings) and $654.7 billion of imports (6th in the world).
It was the 2nd largest recipient of foreign direct investment (FDI) in 2007 (although the figure has dropped since), and one of the most competitive in Europe for business and tax.
UK GDP DataThe UK economy is the 5th largest in the world and 2nd largest in Europe with GDP of US$2.279 trillion (6th largest by PPP GDP).
GDP growth was 1.1 per cent in 2008 but it is expected to contract in coming years, with GDP growth forecasts of -3.2 per cent in 2009 and -1.1 per cent in 2010.
The UK has a population of 61m and a GDP per capita is US$37.4k, which makes it the 30th richest country in the world, above the European Union average of US$33.8k.
UK GDP by industrial sector:
Services Sector - 76.2 per cent of UK GDP
Industry & Manufacturing - 22.8 per cent of UK GDP
Agriculture - 0.9 per cent of UK GDP
UK Economic History
The UK was once the largest economy in the world. At its peak during the nineteenth century it ran the British Empire – and one quarter of the world. Its global mercantile system transported people, resources and capital, generating vast profits for the Empire.
Since the end of World War II the UK has been weakened by the costs of war, the end of the Empire and the Republic of Ireland leaving the United Kingdom.
In recent times, there have been two periods of strong economic performance. The first resulted from the Prime Ministership of Margaret Thatcher, who famously broke the unions and ushered in free market reforms that helped the UK to shed its ‘Sick Man of Europe’ mantle.
The second came about when the ‘New Labour’ government came to power in 1997, with Gordon Brown serving as both Chancellor of the Exchequer Gordon Brown and later Prime Minister, inheriting and expanding a period of continuous economic growth from 1992 to 2007.
UK Economy 2001-2007The UK experienced a double bubble in both housing and the stock markets from 2001 - 2007.
Credit was cheap and easy, regulation lax and rules broken. Fuelled by mortgages of up to 125 per cent, house prices tripled in some areas during that period and the London Stock Exchange (LSE) reached record highs.
Home prices peaked in the third quarter of 2007 and the long decline set in. Unable to get wholesale funding UK bank Northern Rock was forced to turn to the Bank of England as lender of last resort in September 2007. This led to the first run on a British bank in generations, and forced the government eventually to nationalise the bank.
UK Economy 2008Northern Rock did not mark the end of the British government’s involvement in the financial sector.
It was forced to nationalise Bradford & Bingley, help Alliance & Leicester and HBOS get bought, and provide capital, funding and underwriting worth more than 400 billion GBP to both over-leveraged giants like RBS and Lloyds TSB, and relatively stronger groups like Barclays, HSBC and Standard Chartered.
By Q2 2008 the UK was officially in recession and Sterling had dropped more than 30 per cent against the other main currencies.
With consumer confidence dropping and unemployment rising, the auto and retail sector were the next victims of recession. Household names in the High St including Woolworths, Zavvi (the former Virgin Megastores), MFI, Adams and Waterfords Wedgewood went into receivership by Christmas 2008.
UK Economy 2009The British economy in 2009 was declining at an even quicker rate than originally suspected.
All sectors of the UK economy seem to be struggling, with consumer confidence, the housing market, employment and manufacturing either at the lowest point, or dropping faster than ever previously recorded.
Seeking to overcome blame for the recession and the fall out from his previous statements that he had tamed the ‘Boom and Bust’ cycle, Prime Minster Gordon Brown announced a major economic stimulus package. It will add to already high debt levels above 40 per cent of GDP, leading to speculation that Britain’s sovereign debt ratings would be downgraded and to further slides int eh value of sterling.
By the end of 2009, the UK economy is expected to have contracted 3.2 per cent (although some economists are revising that figure further downwards), with UK public debt rising to a staggering 70 per cent.
UK Economy 2010 ForecastForecasting in the midst of such economic uncertainty and financial upheaval is, to put it mildly, a challenge.
The consensus for 2010 has now shifted to flat to negative growth. Forecasts range from 0 per cent to – 5 per cent growth, with the median in the -1 to -2 per cent range, although most economists state that major downside risks remain.
The Bank of England Interest Rate, Inflation and the three month Treasury rate are expected to stay low at under 1 per cent, under 1 per cent and 1.3 per cent respectively.
The budget balance is forecast to grow dangerously to -13 per cent of GDP, which would take UK national public debt above 70 per cent of GDP.
google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad);
UK Monetary and Fiscal PolicyAs of Q1 2009, the Bank of England has already cut Interest Rates to a historic low of 1.0 per cent, with a drop to 0.5 per cent or even 0 likely.
Further measures are probably needed, and this will include quantative easing, in other words printing more money.
During Gordon Brown’s stint as Chancellor, the Labour Party officially adopted the Golden Rule and the Sustainable Investment Rule in fiscal policy, which state that deficit over an economic cycle should only be used for future investment, and only up to a national debt of 40 per cent of GDP.
By the end of 2008 estimated public debt had already risen to 42 per cent, and could rise to 70 per cent of GDP by 2010, meaning that the rules have gone out of the window as fighting the recession takes priority. Keynesian economics says this is the right thing to do, but it leaves the British government finances dangerously over leveraged – and over leverage was, after all, what got us into this mess in the first place.
UK Real Estate, UK Property MarketThe UK real estate or property market has been growing for most of the years since 1992. Between 2000 and 2007 alone, some areas saw median prices trebling in value. Since the third quarter of 2007, prices have fallen every month, reaching record levels of price drops and record lows in terms of new sales.
Speculators were a big part of the growth of that market, with Buy-To-Let buyers making up as much as 50 per cent of house purchases in London before the crash. This effectively priced new home buyers out of the market.
Although prices have now dropped back to affordable levels, fears of further falls, rising unemployment and reluctance among beleaguered banks to lend continue to restrict the market.
UK TaxThe UK taxation system involves taxes applied by both the central government and local government. Central government collects tax through Her Majesties Revenue and Customs (HM Revenue & Customs) department, in the form of income tax, national insurance, VAT (value added tax), corporation tax and fuel duty.
Local government receives grants from central government, and additionally collects revenue from business rates, council tax and fees such as on-street parking.
Tax as a percentage of GDP reached a percentage of GDP reached 46 per cent as of 2005-2006, according to HM Treasury.

Sunday, June 21, 2009

Philippines Economic Development

Philippines economic development has been very fast in recent years. However, in last three decades, growth rate has been fastest. Real gross domestic product for this time was estimated to be 7 percent, but growth has slowed down a bit in 2008, which came to about 4.5% because of world financial crisis.
Economic development in Philippines economy has been because of high government spending. A hard working service sector and large allowance from millions of Filipinos working abroad played an important role in Philippines economic development. Since, Macapagal-Arroyo came into power in 2001 there has been an economic growth of 5 percent. Still, Philippines needs a further increase in growth rate in order to sustain growth in economy. More economic development of Philippines is required to alleviate poverty from that country and address imbalances in distribution of income. It also stresses on high population growth. Macapagal-Arroyo also has taken great care introduce new revenue measures to constrict expenditures of country. New developments in economy of Philippines can be expected because of positive efforts in lowering fiscal deficits, narrowing debt and debt service ratios. There has been an increase in expenditure in infrastructure of country. Economic prospects of Philippines have grown, which in turn would augur well for economic development at Philippines. Though there has not been any negative impact on macroeconomic outlook of Philippines economy, yet this nation has faced some setbacks because of various external reasons. It has also faced challenges from regional competitors. Main focus of Philippines has been to develop employment opportunities and lessen poverty. Long term Philippines economic development can only be possible if these areas are properly taken care of. Purchasing power parity of GDP for fiscal year 2008 was $327.2 billion, while official exchange rate of GDP was $172.3 billion. Per capita GDP as was recorded in 2008 was $3,400 and 4.5% is real growth rate in gross domestic product. Agricultural sector contributes about 13.8% to GDP, 2008 of Philippines economy and 31.9% is received from industry. From service sector of Philippines economy contribution towards Philippines GDP is about 54.3%. Philippines economic development is also result of agricultural products, which includes corn, sugarcane, pineapples, coconuts, bananas, rice, cassavas, mangoes and pork, eggs, beef and fish. Major industries that contribute to economic development of Philippines are wood products, electronics assembly, food processing, footwear, garments, pharmaceuticals, chemicals, petroleum refining and fishing.

Philippines Economic Conditions

As per latest reports on Philippines economic conditions it is expected that there would be slowdown as far as national economy is concerned. However, what is encouraging for Philippines’ economic conditions is that depreciation would be still within expectations of national government.
A number of moves have been made by national government in order to improve economic conditions of Philippines. It has increased amount of expenditures to a significant extent and has been outsourcing its business activities. Amount of mining and construction for residential purposes has gone up in Philippines as well. 2009 fiscal is expected to bring not much of turbulence as far as economic conditions in Philippines are concerned. It is expected that there would be an increase of 4.1 percent in gross domestic product for 2009 fiscal. However, in first quarter of 2009 rate of growth of Philippines GDP would be 3.5 percent. Philippines government had previously estimated this rate to be within 3.7 to 4.4 percent. Economic conditions at Philippines in fiscal 2008 were far from ideal. Growth rate of GDP had gone down to 4.6 percent from 7.2 percent in 2007 fiscal. It is being expected that rate of inflation would go down to 6.4 percent in February 2009. It would further depreciate to reach less than 4 percent as of April 2009. Economists have noted that Bangko Sentral ng Pilipinas can still deduct its rates of interest for policies by as much as 50 basis points in first quarter of 2009 fiscal. It is expected that this interest rate deduction would be assisting weakened financial sector and overall Philippines economic conditions. Reports on Philippines economic conditions have confirmed that rates of interest would stay flat for first quarter 2009 even if there are deductions on policy rates by Bangko Sentral ng Pilipinas. Much of this would be owing to irregularities in issuance of major corporate bonds. It is also expected that in first quarter of 2009 fiscal exchange rate between United States dollar and Philippines Peso would continue on its downward slope. In first quarter of 2009 fiscal 1 US dollar would be worth 48.50 Philippines Peso.

Philippines Economic Growth

About Philippines economic growth Philippine economy is regarded as being one of fastest economically developing countries in South East Asian region. In financial year 2007, its gross domestic product grew at a rate of 7.3 percent. This was quickest for Philippine economy in last thirty years. Economic growth Philippines can stand toe to toe with some other rapidly developing South East Asian economies like India for example.
Philippine economy under Ferdinand Marcos and Fidel Ramos Reign of Ferdinand Marcos, who presided over Philippines from 1965 to 1986, saw a stoppage of productivity as well as Philippine economy growth, as a result of high levels of corruption gripping this country at that point in time. It was in such a bad state that its economic growth rate plummeted below that of a number of South East Asian economies that had not been doing well till then. Fidel Ramos tried to rectify that situation and was able to help Philippine economy register one of its highest gross domestic product growth rate in many years. Philippine economy in 1998 In fiscal 1998, Philippines economy faced a critical situation as a result of after effects of financial crisis that had gripped Asian countries at that time. There were a number of natural disasters that contrived to bring down Philippine economy. Growth rate was negative – it was -0.6 percent in 1998 compared to 5.2 percent in 1997. However, situation improved in financial year 1999, when this rate became 3.4 percent. There was a major bank failure in fiscal 2000 and in next financial year, President Joseph Estrada vacated his office. These factors contributed to a lower rate of growth. Present condition of Philippine economy In fiscal 2004, Philippine economy grew at a rate of 6.1 percent. Current President Gloria Macapagal-Arroyo has been adopting economic measures and steps that are geared towards taking Philippine economy towards greater growth. However, these steps are fraught with risks.

Philippines Economic Profile

Philippines Economy, Economy of Philippines

It was once expected that the Philippines would be the economic powerhouse of Asia, but instead it became one of its poorest countries. After years of corruption and neglect, there are, however, some tentative signs of improvement in the Philippine economy.
For many years, the Philippines has been one of the world’s up-and-coming emerging markets. Unfortunately for the Philippine economy and its people, it has been a case of ‘up-and-coming’ but never quite ‘there’. After the Second World War, many experts believed that the Philippines would become the economic powerhouse of Asia, not Japan. It was an American ally, it was a stable Philippino-speaking country with a capable workforce, and it had natural resources. By the 1960s it had a per capita income that was double that of Thailand and it seemed destined for greatness – however today the opposite has happened, and Thailand now has almost twice the per capita income of the Philippines. Some experts believe that the Philippines has more in common with Latin America than Asia, having inherited strong Spanish traditions from its years as a Spanish colony, including a tradition of ‘caudillismo’, a form of leadership that often leads to dictatorships and leads to widespread corruption and nepotism. The Marcos regime in particular was responsible for misappropriating vast amounts of national wealth and left the country as one of the poorest in Asia. Several hundred years of Spanish rule followed by almost 50 years of US occupation created enormous landed estates that are today controlled by a small group of families. Agriculture employs 40% of the populace, often on these estates, and produces 20% of GDP, a good indicator that expected development has not occurred. Reform and economic liberalization are vital for the long term economy, but with the landed families wielding so much economic and political power major change is unlikely. The Philippines also suffered an economic recession in 1984 and 1985, reducing economic conditions by as much as 10%. Turbulence in the political area during this time also had a negative impact on the economy of the Philippines. Lacking opportunities at home, Filipinos have sought work elsewhere. Remittances from overseas Filipino workers (OFWs) are estimated to contribute close to 10% of GDP. Filipinos are to be found across North
America, the Middle East, Europe and Asia-Pacific. In the US alone there are over four million Filipinos, with a further two million in Saudi Arabia. In all, there are 11 million Filipinos abroad, close to 11% of the population, of whom eight million are OFWs. One million Filipinos are sent out each year through the overseas employment program. They are employed as doctors and nurses, accountants, IT professionals, construction workers, domestic help, technicians, engineers, architects and as military servicemen. Over one third are unskilled workers, typically domestic maids or employed in the retail, hospitality, and food & beverage industries. There are some signs of progress, however. In 2007 the International Monetary Fund recognized the Philippines as being the 37th largest economy in the world. Its growth rate in 2007 was 7.3%, the best the country has had thirty years. Comparisons are starting to be made with India, in particular because of the growth of the Philippine outsourcing business, in IT and particularly in call centers and business process outsourcing (BPO). Low wages, an Philippino-speaking populace and one of the highest literacy rates in Asia should drive this boom, with planners aiming to capture 10% of the $130 billion outsourcing industry by 2010. In addition to services, growth was also boosted by higher government spending and larger remittances from OFWs. Economic growth has averaged 5% since 2001, and recent years have been marked by a reduction in national debt and debt service ratios and increased investment in infrastructure and social services. Higher sustained growth rates are still needed, however, if the Philippines is to reduce endemic poverty levels and start to live up to its potential.
The Philippine economy has some strength in its manufacturing sector, in particular in automotive parts, food processing, electronics, garments, and textiles. Mining is potentially one of the biggest industries in the Philippines as the country is rich in chromite, copper and nickel. In addition to its coal reserves, natural gas has recently been discovered in the Palawan islands. Interestingly, the Philippines is a world leader in renewable energy sources. It has considerable hydroelectric generation facilities, and has created the world’s first commercial scale geothermal energy installation. Around a quarter of the Philippine energy is generated from underground heat sources.

Vietnam Economy

Vietnam Economic Profile, Economy of Vietnam, Vietnam's Economy

Vietnam Economy - Vietnam is a Lower income country comes under the East Asia and Pacific region, according
to the classification made by the World Bank on the basis of Region and Income for the year 2005. The country has a total surface area of 331.7 thousand square kilometer as of the year 2004 with a forest area of 117.3 thousand square kilometer in 2000.
Demography And Social Indicators of Vietnam EconomyThe total population of the country as of the year 2004 has reached at 82.2 millions with an annual percentage growth rate of 1.0. The following graph gives a clear picture upon the annual percentage growth rate of the population of the country.
The life expectancy at birth years in the country as of 2004 is calculated at 70.3. Infant mortality rate per one thousand life births is 17.4 in the same year. Under the age of 5, the mortality rate per one thousand is 23.2. The literacy rate, adult total (% of people ages 15 and above) have reached at 90.3.
Vietnam Economy - Key Economic Indicators The Gross National Income, Atlas method of the country as in 2004 has reached at 44.6 billions in current US $ with a per capita GNI of 540.0 in current US $. The Gross Domestic product of the country as in 2004 is 45.2 billions in current US $ with an annual percentage growth rate of 7.7. The following table gives a clear picture upon the growth rate of GDP in the country.

Singapore Economic Conditions

As per latest reports on Singapore economic conditions, Lee Hsien Loong, Prime Minister of Singapore, has called for economic integration among ASEAN nations so that they may be able to recover from tremors of global financial downturn.
Lee Hsien Loong also reiterated that Singaporean economic conditions could get far worse as he predicted that levels of unemployment would rise to 5 percent in fiscal 2009. He has also said that maximum rate at which economy of Singapore would depreciate is 8 percent. However, this depreciation would depend a lot on how worse global economic slump turns out to be. Manufacturing sector is an important area of Singapore’s economy as it occupies almost 25 percent of it. It is going to be affected in 2009 fiscal, which is an ominous signal for economic conditions of Singapore. Exports are a major source of revenue for Singapore and Lee Hsien Loong expects there would be a reduction of more than 33 percent in this sector in 2009. If this happens it would make economic conditions in Singapore far worse as its manufacturing sector would be down by 33 percent as well. Major reason behind such an opinion is fact that Singapore exports almost every product made over there. In an encouraging news on economic conditions at Singapore Lee Hsien Loong has said that national government is ready to introduce as many economic stimuli packages as needed to prop up national economy. Lee Hsien Loong has also reiterated that he understands that it would take a significant time before Singapore economic conditions get back to normal. Much of this is due to decreasing levels of consumer spending. He said that it would be illogical to expect common people in Singapore to spend more in these times of economic distress as they also require to save for various purposes like retirement and old age. He says that national government would need to function by taking these factors into consideration. He has also asked for help from neighboring countries like Malaysia and Thailand regarding increasing commercial transactions among themselves so that Singapore economic conditions get back to normal.

Singapore Economic Policy

Singapore is one of world's rapidly developing economies. Singapore economic policies have been greatly responsible for this nation's rapid economic progress. National government of Singapore expect an economic contraction in 2009. This has led Singapore's policy makers to introduce measures directed at reducing impact of a slowdown.
Economic growth predictions Singapore's economic growth in 2008 was estimated to be around 2.5 percent in November, This was much lower than an earlier assessment of 3 percent and also lower than one-third of growth rate in 2007. Singapore economy growth is predicted to decline by another 1 percent in 2009. SG economic policy Singapore economic policies work towards reducing interest rates. Stimulus packages to ward off adverse effects of global financial crisis are also part of Singapore economic policy. Nation is slated to announce its new budget on January 22, 2008. Date of announcement of new budget has been brought forward owing to warning that Singapore economy may have to experience many years of slow growth. Expansionary policies Singapore's weakening economy has created an urgent requirement for its policy makers to introduce expansionary policies. Since external demand is one factor that Singapore's government cannot do much about, policy makers focus would be on boosting economy through domestic resources. Focus area for Singapore's economy Several areas of Singapore's economy need to be addressed by policy makers in future. This nation's economy is heavily dependent on export sector. But demand for electronic goods and pharmaceuticals has been going down, creating pressure on Singapore's export industry and hence, on its economy. Singapore economic policy, to be introduced in near future, will help local companies to get loans in a more secure manner. Government spending is also unlikely to be reduced, as stated by Finance Minister of Singapore, Tharman Shanmugaratnam. Singapore's central bank said that it's unlikely to change its policies in wake of global financial crisis. Singapore's economic policies include a spending of about $390 million in training laid off workers.

Singapore Economic Growth


On Singapore economic growth Singapore economic growth has been maintaining a steady rate. On February 14, 2007 national government of Singapore had announced an economic growth rate of 7.9 percent for fiscal 2006.

Economic growth Singapore and governmental strategy Singapore's national government had been following economic strategies and tactics that have borne fruit in form of economic development for this South East Asian country. From financial year 1960 till fiscal 1999, Singapore had been able to achieve an average real annual economic rate of growth of 8 percent. SG economic growth post 1999 Singapore's economy developed well after financial year 1999, even though it had been affected by regional monetary problems. In financial year 1999, rate of growth was 5.4 percent and in fiscal 2000 this rate went up to 9.9 percent. Singapore's economy suffered in 2001 as a result of financial crisis. In financial year 2002, Singapore's economy increased at a rate of 2.2 percent but this rate came down in fiscal 2003. In 2003, rate of growth achieved by Singapore was 1.1 percent. Much of this problem resulted from breakout of Severe Acute Respiratory Syndrome, commonly known as SARS. However, in financial year 2004 there was a major reversal of economic fortunes of Singapore. It recorded a stupendous rate of growth of 8.3 percent. It was followed up in financial year 2005 with a growth rate of 6.4 percent and 7.9 percent in 2006. Causes for economic development of Singapore There are a number of factors responsible for economic development in Singapore. A principal reason is increasing demand for electronic products all around world. Singapore, being a major producer of electronic goods, has been able to use this demand for their country's benefit and overall economic progress. Other industries in Singapore have also contributed to Singapore's economic well-being through their impressive business in sectors like pharmaceuticals, financial services and manufacturing. Foreign relations of Singapore with United States of America Singapore has always maintained a cordial relationship with United States of America and this has helped their economy by virtue of USA being among major export partners of this southeast Asian country.


Singapore Economic Development

About economic development Singapore Singapore economic development focuses highly on manufacturing industry. Singapore's national government is anxious to preserve it from possible threats like hollowing out as has happened in Hong Kong. In last twenty years, Singapore has increased scope of tertiary education for accentuating economic progress.
Singapore has also fostered construction and maintenance of science themed parks. There are several stages of development in economic history of Singapore, where certain strategies have been adopted in order to look after peculiar economic issues as well as to maximize those opportunities that have presented themselves at that point in time. Importance of governmental authorities in economic development of Singapore As per noted economists, Singapore's governmental authorities have an important role to play in economic development of this country. They feel that politicians should be working hard for economic uplifting of Singapore. Important areas of Singapore's economic development There are certain areas that are extremely important as far as economic development of Singapore is concerned. As far as leading economists are concerned, offshore financial market and domestic financial system of Singapore are areas for national government to focus on. Singapore's economic development in 2007 According to official proclamation of Ministry of Trade and Industry Singapore, this country has recorded impressive growth statistics in last couple of fiscals. For example, gross national income of Singapore was SG $51,100, which is an impressive figure. Singapore Economic Development Board Singapore Economic Development Board is a leading name in context of economic development of this South East Asian country. It is responsible for promoting investments that have high value and are likely to boost Singapore's economy. Its areas of focus include a few industries like manufacturing, exportable services and manufacturing services. Singapore Economic Development Board works in close conjunction with corporate investors in order to bring about groundbreaking solutions that are in accordance with requirements of corporate clients. This body also works hard to update plans that have been formulated for ensuring economic benefit of Singapore over longer periods of time. These plans are also created to keep Singapore abreast with latest developments in world of industry and business.

Saturday, June 20, 2009

Green Singapore

Government Plans to Become Sustainability Leader
Singapore, 20 May 2009. Having asked ‘Is Red China Going Green?’ last week, in the second of green economy articles we look at Singapore. Although this tiny Asian city state doesn’t boast much in the way of resources, it will do what it knows best - plan, invest and create research-led ‘hubs’ - to become a sustainable development leader.
At first blush, Singapore doesn’t hold much promise as a renewable energy or clean tech leader. Although Singapore gets plenty of sun, being near the equator, it doesn’t have large tracts of land for solar farms or to grow biofuel crops. Neither does it have enough regular wind or any geothermal resources, and its waters are too busy for tidal power projects. However, as with so much else in its brief history, Singapore is looking to turn its disadvantage into opportunity. As a small and concentrated urban country, Singapore is ideally placed to be become a live test bed for new technologies. It has already developed a series of research & development centers, called ‘hubs’, at OneNorth, where academia and industry meet. Biopolis at OneNorth has already become a leader in biotechnology, and the authorities hope to replicate that success with specific sustainable technologies. It can go further by implementing those technologies live into both government, business and civil settings, in a rapid prototyping and commercialization process. The obvious example is hybrid and electric cars. A network of recharging stations could cover the island in weeks. In fact entrepreneurs have already tried a number of times to introduce electric cars in Singapore but without government support those schemes floundered. There is a limited Compressed Natural Gas (CNG) scheme currently running for taxis, but critics believe the authorities need to go a lot further.
The Government of Singapore recently released a Sustainable Development Blueprint and committed to invest $1 billion into it. It expects to generate 18,000 jobs and add $3.4b to national GDP from the clean technology sector by 2015. Some of the key planks of the plan include:
$680 million for research and development in clean energy (particularly solar power and batteries), water and environmental technologies
Singapore plans to increase its proportion of ‘Greenmark’ environmentally friendly buildings from 1 per cent today to 80 per cent by 2030
It plans to become a leader in urban solar energy projects, and is converting the roofs of all government buildings to be solar-panel enabled
It will create the infrastructure needed to support electric or hybrid cars, and to cover the island with 200km of park connectors and cycle lanes. It is already the greenest major city in Asia
Greater focus will be placed on maintaining the biodiversity of the islands and marine surrounds
Training centres to be created either by local universities, or in association with foreign partners such as the Singapore-Delft Water Alliance, which has helped Singapore already to join the Netherlands as a leader in water treatment and membrane technology
The country will host global events and think tanks, such as the Centre for Liveable Cities, the International Water Week and the World Cities Summit While generally applauding the thought and planning that has gone into the program, critics were disappointed that no carbon limits have been set, either in a cap-and-trade’ carbon emission permits system, or using a carbon tax. Heavy industry including large petrochemical plants, IT infrastructure and residents’ love of air conditioning all contribute to heavy per-capita pollution levels, and unless there is a real penalty for use, there are fears that pollution levels could grow even as these schemes are put into place.

Singapore Trade

Singapore Trade (Singaporean Trade): Singapore Export, Singapore Import

FOREIGN TRADE International trade in Singapore as a proportion of total local output is considered without parallel in modern history. Merchandise exports have averaged over 130% of GDP since the mid-1980s. At the same time, services exports play a very significant role. One important feature of Singapore's trade performance has been the changing composition of exports to progressively higher capital and skill intensive products.
The total value of exports and imports were at 144,134 and 127,898 million dollars respectively in the year 2003 reflecting a current account balance of 18,704 million dollars in the same year.The trade in goods as a percentage share of total GDP was at 297.8 in the year 2003.The foreign reserve has reached at $ 114.9 billion in November 2005. Macro-Economic Policies In Singapore Economy A sound macroeconomic policy is being undertaken in the recent years, which aims at maintaining a conducive environment for long-term investment in the economy. Fiscal policy in Singapore is a means to promote long-term economic growth, rather than cyclical adjustment or the distribution of income. The government has taken necessary steps for job creation and free market competition. Singapore's fiscal policy has contributed to its high savings rate. Gross national savings rose from a 11% of GNP in 1965 to over 50% since 1995. Singapore's high domestic savings rate has allowed it to achieve one of the highest investment rates in the world without having to incur foreign debt. Because of Singapore's healthy overall fiscal position,
it has ensured price stability and preserving confidence in the domestic currency. "Singapore", The Financial Hub In The World In the late 1960s Singapore's developed as an international financial center. In recent years, its sound economic and financial fundamentals, conducive regulatory and business environment, strategic location, skilled and educated workforce, excellent telecommunications and infrastructure and high living standards have attracted many reputable international financial institutions to set up operations in Singapore There is a large and diversified group of local and foreign financial institutions, numbering more than 500, located in Singapore and offering a wide range of financial products and services. These include trade financing, foreign exchange, derivatives products, capital market activities, loan syndication, underwriting, mergers and acquisitions, asset management, securities trading; financial advisory services, and specialized insurance services. For which in 2004, the World Economic Forum Global Competitiveness Report ranked Singapore among the top ten most sophisticated financial markets in the world.
CONCLUSION
Attaining the highest competitiveness is a fundamental tenet of Singapore's economic philosophy. Singapore is ranked the third most competitive economy by the World Competitiveness Yearbook 2005 and the sixth most competitive economy by the Global Competitiveness Report 2005-2006. The global competitiveness report 2005-06 by the world economic forum ranks Singapore sixth in its widely quoted Growth Competitiveness Index (GCI) and fifth in the Business Competitiveness Index (BCI).

Economic Structure Of Singapore

Singapore Economic Profile, Economy of Singapore
Singapore’s far-sighted economic policies have helped to transform the Singapore economy into an Asian powerhouse. Exciting developments such as the integrated resorts will continue to change the face of the Republic.
The Singapore economy is an example of a vibrant free-market economy that is developing at a rapid pace. The per-capita income of the country is very high and it has been supported and strengthened by a corruption-free environment, an educated and motivated workforce, and well-established legal and financial business framework. Singapore's economy is heavily dependent on export activities. The main goods that exported from the country are high-tech products such as semiconductors and consumer electronics. In recent years, the Singapore government has invested heavily in diversifying the economy. This has led to growth in the tourism industry, the pharmaceutical industry with a particular focus on biotechnology, financial services, education, multimedia, retail and leisure, and the medical technology industry. With strong economic tailwinds behind it, in 2007 Singapore added thousands of millionaires to its already rich populace. Property prices rose faster than in any other country in the world, with over 29% increases in transacted property sale prices. In a further bid to boost Singapore's economic prospects, the government approved the creation of two integrated resorts with casino licenses, the first to be granted in the republic. The first license was awarded to Marina Bay Sands, a more business-focused integrated resort (IR) with extensive convention facilities. The second license was awarded to Resorts World at Sentosa, a family-oriented IR. The Marina Bay Sands IR will draw over $5 billion in investment and will open in 2009, while Resorts World at Sentosa will open in 2011. The IRs are expected to generate 35,000 jobs. The awarding of casino licenses is a direct response to the growth of the gambling industry in Asia. In 2007, Macau overtook Las Vegas as the biggest casino center in the world, and casino revenues will continue to soar as ever more wealth is created in Asia, a continent with a long history of gambling. A number of other events will boost the Singapore economy. In September 2007, Singapore will host the first Formula 1 night race, and in 2010 it will host the world's first Youth Olympic Games.
A number of major redevelopment initiatives are also boosting the construction, property, tourism, leisure and retail industries, including projects to refurbish Orchard Road and the Singapore River regions, the extension of the Biopolis, and the development of the Sports Hub. A snapshot of the Singapore economy in 2007:
The government of Singapore follows a particular policy to promote savings and investment in the country. Its large reserves are invested in the development of the education and technology sectors. More and more investments have also been made outside the country, through its two sovereign wealth funds, the Government Investment Corporation of Singapore (GIC) and Temasek Holdings. The country's geographical location is also a major contributor to its steady financial growth. It has one of the busiest seaports in the world and is used for both import and export activities. Since Singapore has an export-dependent economic policy, the port is crucial to development. The economic strategy that is followed by the country is successful enough to provide it with steady real growth rates. During the period between 2000 and 2003, the economy of the country was hit by a global economic slump, recession in economies of the US and other European Union countries, and SARS. After absorbing these major shocks, Singapore's economy recovered well, and in 2007, it recorded 7.5% in real growth of its GDP. This recovery was mainly due to a sound economic strategy, a highly skilled workforce, excellent infrastructure, and a number of foreign investments. Government-linked corporations have also contributed to the development of the economy, and a major part of the services industry is regulated by these corporations.

Malaysia Economic Growth

It was estimated that there will be a Malaysia economic growth by a minimum of 6 percent in 2008. This was said by government minister, who was sure of fact that this economic growth of Malaysia will be able to tame inflation rate and can trace conditions of US recession. Swelling in prices of food and oil was a threat to economic growth of Malaysia but this threat was calmed down by Malaysia finance minister.
In an interview, Nor Mohamed Yakcop told Reuters that if condition is not as was expected, then also Malaysia economic growth will reach closer to 6 percent and if things get better, then growth can be about 6.5 percent in financial year 2008. It has been estimated that in last three years, Malaysia economic growth has been fastest despite of fact there has been fall in key tech exports and hike in domestic consumption. Malaysia is world's second-largest producer of crude palm oil and is net crude oil exporter. This has played a major part in helping economic growth in Malaysia. Growing economy of Malaysia increases demand for U.S. exports as it is vital for economic growth at Malaysia. Electronic equipment, petroleum and liquefied natural gas, wood and wood products, palm oil, rubber, textiles, chemicals are major export items of Malaysia. 2007 economic reports show that major export partners were US (15.6 percent), Singapore (14.6 percent), Japan (9.1 percent), China 8.8 (percent), Thailand (5 percent), and Hong Kong (4.6 percent). For Malaysia economic growth, exports of goods play an integral part. Malaysia has been seeking investment from America, which is arranged by a program of incentives. Tax incentives for foreign investors and several free trade zones are offered by Malaysian government. Several American business establishments also privatized government-held companies of Malaysia. Economy of Malaysia is moderately open and aggregate exports and imports of goods and services are equivalent to approximately 130 percent of GNP. Though manufacturing industry contributes more than 25 percent to Malaysia economic growth, yet agriculture remains major part of economy of Malaysia. As was estimated in year 2008, contribution to agricultural sector to Malaysia GDP was 9.7 percent, 44.6 percent from industrial sector and 45.7 percent came from service sector. Malaysia economic growth has been largely because of investment in real estate sector, non tradable sectors and capital intensive infrastructure. In financial year, 2008, $15,700 has been estimated as Malaysia GDP per capita.

Malaysia Economic Conditions

Latest reports on Malaysia economic conditions have confirmed that national economy has depreciated at its worst rate in a space of eight years in final quarter of 2008 fiscal. Much of these sorry Malaysian economic conditions could be blamed on rapid decline in its exports
Information on Malaysian economic conditions has revealed that it would not be possible for Malaysian government to make excess expenditures. In final quarter of 2008 fiscal gross domestic product of Malaysia appreciated at a rate of 0.1 percent compared to final quarter of fiscal 2007. This implies tough economic conditions of Malaysia in fiscal 2009. Economic conditions in Malaysia in fourth quarter of 2008 fiscal are totally different from what was case in third quarter of 2008 fiscal. In third quarter of 2008 gross domestic product of Malaysia had grown at a rate of 7.3 percent compared to third quarter 2007 fiscal. Critical nature of economic conditions at Malaysia could be gauged from economic statistics for financial years 2008 and 2007. In 2008 economy of Malaysia grew at a rate of 4.6 percent but in fiscal 2007 it had grown at a rate of 6.3 percent. Najib Razak, deputy Prime Minister of Malaysia has said that government of Malaysia would be making every effort to make sure that Malaysia economic conditions stay feasible for everyone. He said that national government would be making fresh expenditures in order to preserve jobs and also increase levels of consumer demand in Malaysia. However, he has not committed to a major amount being spent in this instance. He said that national government would be working within its limitations in order to restore parity to Malaysia economic conditions. He said that they were thinking in terms of spending in 2009 as well as 2010 fiscal, when as per predictions financial world would be making its recovery from global financial crisis. National government’s inability regarding spending sufficient funds in order to restore Malaysia economic conditions back to normal have been hindered by fact that they have been experiencing budget deficits for last couple of fiscals. In 2008 this deficit was supposed to have been equivalent to 4.8 percent of gross domestic product of Malaysia.

Malaysia Economic Policy

As per latest information on Malaysia economic policy Prime Minister, Abdullah Badawi has decided to disperse economic inheritance and extravagant projects, taken up by Mahathir Mohamad, his predecessor. He declared this economic policy in Malaysia during 57th UMNO General Assembly. He decided to make his own economic policies and stated that he will not follow economic strategies that were taken up by Mahathir.
Among other Malaysia economic policies, Abdullah Badawi has decided to generate wealth not by government contracts, foreign investment and privatization but by innovation and creativity. Some of major highlights of Malaysia economic policy have been a sustained focus on agriculture and biotechnology field. It is believed that these sectors and economic policy at Malaysia regarding them would be able to bring large amount of wealth to this Asian nation. Free trade agreements were introduced by Badawi to Japan. These contracts will help these two countries minimize tariffs on trade of all industrial goods and large number of forestry, agricultural, and fishery products. Economic policies of Malaysia also state that it has to develop and focus more on its strengths, which is agriculture. It would also look in to fact that manufacturing base is not affected. By restructuring government financial assistance, it has increased price of petrol and electricity. Abdullah Badawi has been criticized as this policy was damaging Malaysia's place as an established exporter. Economic policies of Malaysia focus on revision of agrarian economy towards manufacturing industry. Economy of Malaysia receives contribution from various sectors of economy. Agricultural sector contributed 9.7 percent to Malaysia GDP as was estimated in 2008. Industrial sector contributed 44.6 percent and 45.7 percent came from service sector in financial year 2008. State economic policy of Malaysia puts stress on investment in export industries, which mainly comprises of electronics goods. Major export goods from Malaysia include electronic equipment, petroleum and liquefied natural gas, wood and wood products, palm oil, rubber, textiles and chemicals. Export partners include US (15.6 percent), Singapore (14.6 percent), Japan (9.1 percent), China (8.8 percent), Thailand (5 percent), and Hong Kong (4.6 percent), as per data of 2007. Malaysia economic policy includes that for financial stability, macroeconomic policies have to be put into practice. Economic policies of Malaysia look forward for development of nation at large.

Malaysia Economy

Malaysia Economic Profile, Malaysian Economy, Economy of Malaysia
Malaysia Economy comes under East Asia and the pacific region, according to the classification of economies by region and income for the year 2005 by World Bank.
In the World Bank parlance, it is an upper middle-income country with GNI per capita reaching 3,780. Malaysia Economy is modestly populated and endowed with abundant natural resources. This country is the largest producer of rubber, palm oil and tin, and have began recently to exploit plentiful reserves of oil and timber.
Malaysia Economy: Demography And Social Indicators
According to the department of Statistics Malaysia, the total population has reached at 26.38 million in the fourth quarter of 2005.The annual growth rate of population in Malaysia is falling. The annual growth rate was at 2.4 percent in 2000, 1.9 percent in 2003 and further fell to 1.7 percent in 2004. The life expectancy (years) in the year 2003 was at 73. The infant mortality rate (per one thousand life births) was 7 in the year 2003.
google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad);
The density of population per square kilometer was at 75 in 2003. The annual average growth (1998-2004) rate of labor force was at 2.4 percent.
Malaysia Economy: Economic Indicators
The Malaysia Economy had expanded strongly in the year 2004. A moderate growth was being marked in the year 2005 and 2006. The real growth was increased by 7.1% in 2004 from a relatively lower rate of 5.3% in 2003.Following a robust growth in first of 2004 averaging 8 percent, the pace of economic activity slowed in the third quarter to 6.7 percent.
google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad);
In the year 2004 GNI (atlas method) was at $ 117.1 billion (In current US). GNI percapita was at $ 4650.0 (Current US). The following diagram shows the absolute value of Gross domestic product in different years

Indo-South Korea Economic Relations


A remarkable feature of South Korea is its transformation from a developing country in 1950s to a high-income country of the world with a substantial per capita income. The economic reforms of 1990s in India have been influenced with East-Asian success and South Korea was among the chief countries to have an impact on Indian policy makers' thinking process. Though Consular relations between India and South Koreawere set up in 1962, it was in 1973 with the establishment of formal diplomatic ties that a new chapter was opened in the history of Indo-Korean cooperation. Both India and Korea contribute significantly in the world GDP. Korea is among the few Asian countries that are counted among the developed countries of the world; India too has a growing stature and increasing role in international affairs. In a bid to boost bilateral ties, India and South Korea on Jun 1, 2005 decided to step up efforts to take their economic partnership to higher levels by utilising synergies in trade, investment and hi-tech areas. The two sides held ministerial discussions and hoped that negotiations for the $ 12 billion integrated steel plant to be set up by Korean company Posco at Paradip in Orissa would be concluded at an early date. Negotiations for the mega project are at an advanced stage and when completed it would be the largest single foreign investment by any country in India.
BACKGROUND -->TRADE India's exports to Korea were Rs 4325.84 crores in (April-March 2004-05) and it was of 1.21% of the total Indian Exports. While India's imports from Korea were higher at Rs 14351.54 crores in (April-March 2004-05) and it was 2.98 % of the total Indian Imports. The trade balance has been in favour of Korea. Traditionally India's exports were limited to a few primary commodities such as cotton, oil cakes, iron ore, iron & steel, organic and inorganic chemicals, and electrical machinery & equipments. During the last few years, however, the commodity composition of our exports, though still dependent on low value-added items has expanded to cover a wider range of industrial products. For the last 2-3 years, India has been exporting wheat to Korea. Indian industry is of the view that our exports to Korea, valued at US$ 650 million, are not commensurate with the vast opportunities for trade that still remain untapped. Iron ore, chemicals & allied products, marine products, processed food; cotton yarn fabrics, gems & jewellery, and leather are some of the sectors that offer tremendous potential. India imports Korean machinery and equipment and these are set to grow rapidly in face of likely investments by South Korea in transportation, construction and infrastructure sectors in India. Already, several Korean construction companies are engaged in highways, power plants, chemicals, petrochemicals and metro rail projects in India. Other sectors where Korean and Indian companies can mutually benefit are the shipbuilding, telecommunications, aviation and energy sectors. INVESTMENT
Korean investments in IndiaSouth Korea is one of the top ten leading investing countries in India. In 2003, it invested US $ 24 million in India. South Korean business groups such as LG, Samsung and Hyundai have not only established their presence in the Indian business scene but are also looking at diversifying their businesses into different sectors. Korea accounts for about 2.64% of total FDI inflows, amounting to US$ 2.601 billion (excluding amount approved for ADRs/ GDRs). The main sectors attracting foreign direct investment from South Korea are transportation industry accounting for over 1/3rd of the share, fuels (power & oil refinery), electrical equipment (computer software & electronics), chemicals (other than fertilizer) and commercial, office & household equipments. There have also been technical collaborations with South Korea- areas include transportation industry, electrical equipment including computer software & electronics, chemicals other than fertilizers, metallurgical industries and industrial machinery.
In addition to the above sectors, studies have also revealed that the two countries could set up joint collaborations in the sectors of infrastructure - power, ports, telecommunications, ship building & ship repair, petrochemicals, automobile ancillary, electrical & electronics, office equipment, banking & financial services, software as well as iron & steel. Out of 44 contracts awarded for National Highway Development Project, 9 have been won by Korean companies in collaboration with Indian companies or independently. Recently, Hyundai Heavy Industries have won two mega projects including one pipeline project worth US$ 600 million. Indian investment in Korea With the growing amount of globalization and liberalization, not only Korean companies are making their presence felt in India, Indian firms too are establishing themselves in Korea. Last year in February, Tata Motors, Mumbai signed an agreement for acquiring Daewoo Commercial Vehicles, Kunsan (South Korea) at a cost of US$ 102 million.

South Korea Mortgage


In the Korean mortgage system consumers have to pay approximately 80% of the home price up front, and pay the remaining loan in 5-20 years. So majority of consumers cannot afford to purchase expensive finishes when they initially buy their apartment. The US manufacturers report that consumers are beginning to replace domestically produced interior goods with US-made goods because they are not satisfied with the quality of domestically produced goods. Housing Market In Korea The housing market in Korea is very special in nature and is called chonsei; its literal meaning is the 'total rent.' In case of the chonsei system, the tenant pays an upfront lump-sum amount of deposit to the owner for the use of the property with no additional requirement for periodic rent payments.Interest earnings on the lump sum deposit income to the owner during the contract period. The deposit is then returned to the tenant when the contract expires, otherwise the owner is in breached of contract and the Korean legal system grants the tenant a right of full control over the property until the owner returns the deposit. That is, the deposit money of tenant is legally protected as an asset that can be claimed against the collateral value of the property. Housing Process In Korea In the periods of the Korean conflict, many of the national housing stock and economic infrastructure are being destroyed and caused the Korean government to make restrictions to the housing finance market so as to channellize credit into the industrial sector for several decades. Still the mid-1990s, homeownership opportunities financed via mortgage loans was possible to most households in Korea.
The housing finance system chonsei has been widely spreaded in Korea, with the rapid urbanization for the last few decades. The Population and Housing Census Report (2000) has stated that the total number of households in Korea is 14.31 millions, out of which 7.75 million (54%) are homeowners and 4.04 million (28%) are under chonsei contracts (the remaining households are under monthly rents). The housing system chonsei works in a way that effectively allows owners to leverage their investments by pulling out significant deposits that are used to purchase additional properties. It also allows owners to skirt government rental price controls and ownership restrictions.The chonsei contract wipes out the likelihood of tenant's default on the rental payment as the deposit is maximized till periodic rents are zero. Chonsei System in South Korea.This system is more beneficial for the landlords and the tenants as well. For the landlords
The chonsei is regarded as a financial instrument, which satisfies many household's credit demands.
Able to use the chonsei deposits to fund other investments e.g. real estate purchases or capital for businesses. In the view of the tenants
As long-term mortgage loans are not widely available in the country rather chonsei becomes the tool of building equity for buying a house.

Korea Trade

Korea Trade (Korean Trade, South Korea Trade): Korea Import, Korea Export
A striking feature of South Korea's economic structure is its heavy dependence on international trade. In 2003, the value of merchandise trade was equivalent to 35.7% of GDP, compared with 10% of GDP in the early 1970s, following the export-oriented industrialization drive initiated by the then president, Park Chung-hee. Korean exports mainly consist of elctronic products, machinery and transport equipment, Semiconductors, wireless telecommunications equipment, computers, steel, ships and petrochemicals. The main exports partners of Korean republic are China (18.2%), US (17.8%), Japan (9%), and Hong Kong (7.6%).( figures in the bracket indicate these countries' share in 2003) Imports commodities are machinery, electronics and electronic equipment, oil, steel, transport equipment, organic chemicals, plastics. In 2003, the share of different countries from which Korea imported these products was -Japan 20.3%, US 13.9%, China 12.3%, Saudi Arabia 5.2%. ROLE OF GOVERNMENT vs MARKET During late 1950s, South Korea GDP per capita was comparable with levels in the poorer countries of Africa and Asia. Today its GDP per capita is 18 times North Korea's and equal to the lesser economies of the European Union. This success through the late 1980s was achieved by a system of close government/business ties, including directed credit, import restrictions, sponsorship of specific industries, and a strong labor effort. The government promoted the import of raw materials and technology at the expense of consumer goods and encouraged savings and investment over consumption. In 1961 General Park Chung Hee overthrew the popularly elected regime of Prime Minister Chang Myon. A nationalist, Park wanted to transform South Korea from a backward agricultural nation into a modern industrial nation that would provide a decent way of life for its citizens.The Park administration decided that the central government must play the key role in
economic development because no other South Korean institution had the capacity or resources to direct such drastic change in a short time. Park extended government control over business by nationalizing the banks and merging the agricultural cooperative movement with the agricultural bank. Economic programs were based on a series of five-year plans that began in 1962. The Economic Planning Board was created in 1961 and became the nerve center of Park's plan to promote economic development. The early economic plans emphasized agriculture and infrastructure; the latter were closely tied to construction. Later, the emphasis shifted consecutively to light industry, electronics, and heavy and chemical industries. Using these strategies, an export-driven economy developed. The economic system incorporated elements of both state capitalism and free enterprise. The economy was dominated by a group of chaebol (large private conglomerates) and also was supported by a significant number of public corporations in such areas as iron and steel, utilities, communications, fertilizers, chemicals, and other heavy industries. In 1995, for example, the top 30 chaebol produced 16% of South Korea's GDP and accounted for 41% of manufacturing value added and 50% of exports. Among the top 30 chaebol, the top four groups at the time Hyundai, Samsung, Daewoo and LG clearly dominated, producing 9% of GDP in 1995. Although the corporate landscape has changed considerably since 1997, partly as a result of government reforms only 18 of the largest chaebol in 1997, remained on the list in 2001, they continue to dominate economic activity. The government guided private industry through a series of export and production targets utilizing the control of credit, informal means of pressure and persuasion, and traditional monetary and fiscal policies. Significant economic policies included strengthening key industries, increasing employment, and developing more effective management systems. Because South Korea was dependent on imports of raw materials, such as oil, a major government objective was to significantly increase the level of exports, which meant stressing greater international competitiveness and higher productivity. The government combined a policy of import substitution with the export-led approach. Policy planners selected a group of strategic industries to back, including electronics, shipbuilding, and automobiles. New industries were nurtured by making the importation of such goods difficult. When the new industry was on its feet, the government worked to create good conditions for its export. Incentives for exports included a reduction of corporate and private income taxes for exporters, tariff exemptions for raw materials imported for export production, business tax exemptions, and accelerated depreciation allowances. In 1990 the Economic Planning Board primarily was charged with economic planning; it also coordinated and often directed the economic functions of other government ministries, including the Ministry of Finance.