2009

INTERNATIONAL SCHOOL OF BUSINESS & MEDIA; KOLKATA

ABHIJIT SAMANTA

[VARIOUS ECONOMIC SYSTEMS

AROUND THE WORLD]
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Objective of the report: -

In this project our basic objective is to understand the various economic systems across
the world. In the starting the fundamental concept of three major economic systems is
discussed. Then showing the data from various countries of the world the theories are
proved.

Methodology: -
There are three major economic systems which are discussed in this topic. The data is
collected from the World Bank website.

We are well aware about the comparison of growth and development. However the
parameters which are important in considering the ‘growth and development’ are

1. GDP
2. Per Capita Income
3. Equal distribution of wealth
4. Better standards of living
5. Education attainment
6. Life Expectance at birth
7. Mortality rate
8. Infrastructure development

The last six parameters are basically associated with development.

Here form the World Bank website we have collected some of the above factors and
tried to analysis the effect of these factors on the county’s economic system.

Source of Information: -

http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS

MS Excel is used for the data analysis portion.

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Basic Concepts: -
Economic System: -
It defines the functioning of an economy in doing so it defines the ways in which the
economic agents interact among themselves.

Types of Economic System: -

There are three main types of economic systems.

1. Market Economy / Free Economy: -

Here the functioning of the economy is fully controlled by the market itself. In
other worlds the demand and supply are the main parameter to determine the
functioning of this economy.
Example: - Economy of United States.

2. The command Economy: -

It is operated by centralized body or government regulators.
Example: - Economy of Soviet Union.

3. Mixed Economy: -
It is characterized by the existence of both the economies i.e. The market
economy and the command economy.
Example: - Economy of India after 1991.

The Analysis of GDP & GDP Growth Rate: -

If we look toward the following chars then we can see that the GDP growth rate in US is
not very high in a comparison to India and China. Whereas India & China is maintaining
a very high growth rate in the GDP.

But looking toward the contribution to the World GDP, US is very high than India &
China. In the year 2008 where US is having 23.44 % contribution to world GDP, China
is only 7.14 % and India 2.01 %. So in this picture also we can see that US is being a
major country in this sense of contribution.

Here we can also say that the market economic system is having a greater impact on
the overall development of the country. Because US is having the market economic
system whereas India & China is having a Mixed Economic System.
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Year 2000 2005 2007 2008

World view
GDP (current US$) 32,001.93 45,232.14 54,891.06 60,587.02
(billions)
GDP growth (annual %) ) 4.1 3.5 3.8 2.0
China
GDP (current US$) 1,198.48 2,235.91 3,382.27 4,326.19
(billions)
GDP growth (annual %) ) 8.4 10.4 13.0 9.0
India
GDP (current US$) 460.18 810.15 1,176.89 1,217.49
(billions)
GDP growth (annual %) ) 4.0 9.4 9.1 7.1
US
GDP (current US$) 9,764.80 12,376.10 13,751.40 14,204.32
(billions)
GDP growth (annual %) ) 3.7 3.1 2.0 1.1
Source of information: - http://web.worldbank.org

GDP & GDP Growth

16,000.00
14,000.00
12,000.00 GDP (Current US$) (Billion)
10,000.00 (China)
8,000.00 GDP (Current US$) (Billion)
6,000.00 (India)
4,000.00
2,000.00 GDP (Current US$) (Billion)
0.00 (US)
2000 2005 2007 2008

Contribution to world GDP

2000 2005 2007 2008
China 3.75% 4.94% 6.16% 7.14%
India 1.44% 1.79% 2.14% 2.01%
US 30.51% 27.36% 25.05% 23.44%
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The Population Statistics: -

World view 2000 2005 2007 2008
Population, total (millions) 6,078.27 6,462.05 6,614.40 6,692.03
Population growth (annual %) 1.3 1.2 1.2 1.2
)
Surface area (sq. km) 133,945.2 133,945.8 133,945. 134,095.
(thousands) 8 4
China
Population, total (millions) 1,262.65 1,303.72 1,318.31 1,325.64
Population growth (annual %) 0.7 0.6 0.6 0.6
)
Surface area (sq. km) 9,598.1 9,598.1 9,598.1 9,598.1
(thousands)
India
Population, total (millions) 1,015.92 1,094.58 1,124.79 1,139.96
Population growth (annual %) 1.7 1.4 1.3 1.3
)
Surface area (sq. km) 3,287.3 3,287.3 3,287.3 3,287.3
(thousands)
US
Population, total (millions) 282.17 295.56 301.29 304.06
Population growth (annual %) 1.1 0.9 1.0 0.9
)
Surface area (sq. km) 9,632.0 9,632.0 9,632.0 9,632.0
(thousands)
Source of information: - http://web.worldbank.org

The above chart shows us the population statistics. Here we can see that the average
population growth in the world is 1.2 % - 1.3 %. Whereas it is 1.7 % - 1.3 & over India
but this figure is significantly less for the country like US. This will be having a greater
impact on the per capita income of the county. Because it is directly dependent over the
population.

Looking toward the Surface Area and the population also gives us a significantly
different picture for the above three countries. For china the population is the highest
but their surface is more also. In case of India the picture is noticeable. According to the
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Surface Area the population is very high over here. It is having a smallest value in case
of US.

Per Capita Income (Purchasing power of parity method):-

Here we can see that the per capita income for US is very high but in case of India and
China also it is not so high. One major reason for this is the population is this three
counties.

At particular one place there is a better picture we can see that the average growth rate
for per capita income very high in a comparison with the world, it is 32.44 %. In case of
China it is extremely good 52.79 % whereas the whole world sees an average growth of

World view 2000 2005 2007 2008 Avarage Growth

GNI per capita, PPP (current 6,885 8,730 9,950 10,357 16.81%
international $) )
China
GNI per capita, PPP (current 2,330 4,100 5,430 6,020 52.79%
international $) )
India
GNI per capita, PPP (current 1,500 2,220 2,740 2,960 32.44%
international $) )
US
GNI per capita, PPP (current 35,190 42,090 45,890 46,970 11.16%
international $) )
16.81 %.

Source of information: - http://web.worldbank.org

Life Expectancy at birth: -

World view 2000 2005 2007 2008

Life expectancy at birth, total (years) ) 67 68 69 ..
China
Life expectancy at birth, total (years) ) 71 73 73 ..
India
Life expectancy at birth, total (years) ) 62 64 65 ..
US
Life expectancy at birth, total (years) ) 77 78 78 ..
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The life expectancy rate for US and China is much higher than India. But as the average
of the world is shows it is 67-69 years. Normally it is good for India. The life expectancy
at birth is case of India is also very optimum in a comparison to the global data.

Various Other Factors: -

States and markets

World view 2000 2005 2007 2008
Time required to start a business (days) ) .. 50 43 38
Market capitalization of listed companies (% of GDP) ) 102.3 97.5 120.7 59.4
Mobile cellular subscriptions (per 100 people) ) 12 34 51 60
Internet users (per 100 people) ) 6.7 16.2 21.3 ..
High-technology exports (% of manufactured exports) ) 23 21 18 ..
China
Time required to start a business (days) ) .. 48 35 40
Market capitalization of listed companies (% of GDP) ) 48.5 34.9 184.1 64.6
Mobile cellular subscriptions (per 100 people) ) 7 30 42 48
Internet users (per 100 people) ) 1.8 8.6 16.1 22.5
High-technology exports (% of manufactured exports) ) 19 31 30 ..
India
Time required to start a business (days) ) .. 71 33 30
Market capitalization of listed companies (% of GDP) ) 32.2 68.3 154.6 53.0
Mobile cellular subscriptions (per 100 people) ) 0 8 21 30
Internet users (per 100 people) ) 0.5 3.8 7.2 ..
High-technology exports (% of manufactured exports) ) 5 5 5 ..
US
Time required to start a business (days) ) .. 6 6 6
Market capitalization of listed companies (% of GDP) ) 154.7 137.1 145.1 82.6
Mobile cellular subscriptions (per 100 people) ) 39 72 87 89
Internet users (per 100 people) ) 43.9 69.6 73.6 72.4
High-technology exports (% of manufactured exports) ) 33 30 28 ..
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Source of information: - http://web.worldbank.org

The above chart gives us a very clear cut picture about various other market factors of
these three countries in a comparison to the world.

Looking towards to the time required to start a new business the requirement of days
is 6 for US which is very minimum. But in case of India it is 71 – 30 days. But the bright
picture for India is that the days requirement is actually reducing day by day. Because
the government restrictions to start a new business is also reducing day by day. People
here are feeling more comfortable starting new business which is a very good sign for
the country. In case of China also the figure is just like India.

The market capitalization of listed companies is also having a greater value for US. In
this context we must tell that in a comparison to the whole world view the capitalization
rate for India and China is not also very bad especially in the year of 2008.

Looking toward mobile subscription and internet use the picture is very different. The
fact that using mobile for communication and internet for information are important for a
country because these thing actually shows the countries position in the era of
globalization.

Now for US the figures are really very high even in a comparison with the world average
use. For China and India the picture is bad and it is not up to the mark. Even for China
there is good sigh that they started using mobile earlier than India.

In 2000 there was no mobile in India and the use of internet was also very minimum. In
a comparison to that the present picture is much better. Because there is significant
growth in the use of internet as well as in the use of mobile also. This shows the
country’s overall development.

Conclusion: -
After all these analysis we can find out some conclusion depending on the economic
system of the country.

As we know US is having a market economic system. In their case we can see that
there is a suitable growth in every sector. In other world we can say that the market
economic system is having a greater impact over the country’s overall economic
development.
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Whereas in India & China we follow a mixed economic system in which there is both,
the Govt. control as well as the demand and supply law in the market.

But one advantage of Indian economic system is that the governing body of our
economy i.e. RBI is very strong over here. So our economic base is very strong. Strong
in the sense that it is not that much of volatile. That is why we face a lower harm in case
of recession.