According to the data from the World Bank website, one of the countries with the advanced economy is the U.S and a developing country is Namibia (World Bank, n.d). The following are the data for the five major economic indicators for both U.S and Namibia.
Data for GDP growth (annual %). (World Bank, n.d)
Data for inflation, consumer price (annual %). (World Bank, n.d)
Data for export of goods and services (% of GDP). (World Bank, n.d)
Data for imports of goods and services (% of GDP). (World Bank, n.d)
Data for agriculture, value added (% of GDP). (World Bank, n.d)
The following are the data for three social indicators for both USA and Namibia.
Data for population growth (annual %). (World Bank, n.d)
Data for health expenditure total (% of GDP). (World Bank, n.d)
Data for infrastructure: improved water source, rural (% of population with access). (World Bank, n.d)
The GDP growth rate and long-term economic growth between U.S and Namibia differ due to the following reasons. First, the value of the exchange rate is stronger. The currency of the United States is stronger than the Namibian currency hence this stabilizes the economy. Second, the U.S has advanced technology and in the long-run, it is the key to improved productivity and economic growth. Third. The investment and the level of infrastructure are high in U.S than Namibia. The country has investment more in transport and communication, and this makes firms that operate in the country more competitive in the international trade. Lastly, the U.S has more productive human capital than Namibia. High levels of education and training influence the increased labor productivity in the U.S.
The policy makers impose policies because of the influence of the economic conditions. Some of the improvements that can occur in economic conditions include supply and demand, the standard of living, purchasing power and distribution of income. The above factors determine the size of the market. Moreover, the business cycle also reflects the economic condition of a country. Besides, it entails various stages that include prosperity, boom, decline, depression and recovery (Ottaviano, & Peri, 2006). To understand the economic condition of a country, an individual must have an insight into the country’s demand and supply trend, inflation rate, national income, interest rate, per capita income and industrial growth rate.
Countries all around the world have varied economic systems, and their respective goals define them. Namibia is a developing country meaning its infrastructural development, education level, social amenities are low. Similarly, there are no major companies compared to U.S. Therefore, Namibia should break down its multiculturalism and accept cultures from other countries. By doing so, the country will boost its long-term economic growth. On the other hand, the U.S is already successful because the country embraced free religious beliefs, preached respect for ethnicity and promoted education to almost everyone.
In response to the decrease in government borrowing to zero, the amount of loanable funds will reduce by the same amount as the deficit. Therefore, the interest rate will decrease, and the private investment will increase, and also private savings will decrease.
When the consumer decides to save more money at a given rate of interest, the following are the impacts. The supply of the loanable funds will increase hence shifting the supply curve rightwards. This will result in a reduction in equilibrium interest rate and an increase in private spending. Similarly, the private savings will reduce.
Ottaviano, G. I., & Peri, G. (2006). The economic value of cultural diversity: evidence from US cities. Journal of Economic Geography, 6(1), 9-44.
World Bank (n.d). Retrieved from http://data.worldbank.org/products/wdi.
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