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Financial Innovation, Did it really help!

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Bob Litan of Brookings Institution has come out with a very provocative paper   “ In Defence of Much, But Not all Financial Innovation.” Therein he discusses “good vs bad” that has happened with financial innovations.

Kevin Drum at Motherjones has summarized the paper beautifully for all of us who don’t want to give time to understand the details of paper, and intricacies of the argument.

Financial Innovation, Source Motherjones.com

Written by SK

March 8, 2010 at 4:00 pm

Does Economics Violate the Laws of Physics?

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They say , now at this age I have realized it also, that exercise is necessary to keep body fit. Thinking along the last line, if it applies to the body, it must apply to the brain and mind.

So here is an article that says that, “Neoclassical economics is inconsistent with the laws of thermodynamics” — two areas I never thought of in same breath.

http://www.scientificamerican.com/article.cfm?id=does-economics-violate-th

Written by SK

October 24, 2009 at 7:52 pm

The Importance of remittance

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The remittance account about thirty five percent of NSDP (Net state domestic product) of Kerela for year 08-09.  The figure 35% of NSDP was really a surprise for me, so I did my research to understand this.  Before I write about my findings about remittance on Indian and global perspective, have a look at few more figures on importance of remittance for Kerela.

  • Kerela has more than 27 emigrants per 100 household.
  • Remittance are sufficient to wipe out more than 60% debt of state.
  • Remittance were 1.74 times revenue receipt of state, 7 times of the transfer to the state from central government and 1.8 times of annual expenditure of Kerela.

Statistics are based on 2005 remittance, taken from a research paper.

While for few countries remittance as percent of GDP goes upto 45%, for India and few other countires remittance as percentage of GDP for year 2007 looks like this.

remit as percentage of gdp

Remittance inflow in million $.

Remittance $

Top countries from where emigrants are sourcing money to their native country.

Remittance outflow

Now have a look at the remittance trend for India. Notice how the rate of increase of remittance is increasing. The remittance amount is in million US $. The detail can be found at World Bank published data.

Remittance trend

I couldn’t lay my hands on remittance received by all the states within India, and how much remittance contribute to their NSDP. Will publish it when I get them.

Written by SK

August 18, 2009 at 7:20 pm

Doing Business In India

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World Bank has come out with ‘ease of doing business’ ranking for countries. Unfortunately India ranks 122 out of 181 countries. Major competitors of India as outsourcing hub, Malaysia, Srilanka or  China rank higher than it.

Country Rank

The full ranking can be seen here

They have come up with ranking of cities within India also. Good to know that Ranchi ranks higher than even Mumbai, Bangalore.

City Ranking

The matrix cities have been compared  on are: starting a business, dealing with construction permit, registering property, enforcing contracts, trading across borders, paying taxes, closing a business. 

To have better insight into ranking, you can go through the full report here. But it’s heartning to know that despite of naxalite problem, government unwillingness, local work culture Ranchi ranks higher than Mumbai and Bangalore, India’s business capital.

Written by SK

August 16, 2009 at 7:58 am

Posted in Economic Indicator

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Export – Import

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Please have a look at the graph of US GDP components. Please keep in mind that

GDP  =  Personal Consumtion Expenditure (PCE) + Gross Private Domestic Investment (GPI) + Government Consumtion Expenditure and gross investment (GCI) + Exports – Imports (Net exp)

 gdp comp

We observe that for entire period 1984 to 2009 net export for US has been negative. In fact this has been the case for last fifty years. Till last year people had started arguing that the best way to run an economy is to import and consume, and do nothing.  USA the most economically strong country was doing so. Though from the data, till last year also, this shouldn’t have been concluded. From the graph we see that for last 25 years personal consumtion expenditure has hovered from 63% to above 70% of GDP, that is, it has been the major chunk of GDP.

This 7% rise in PCE is accomodated by decrease in Gross private investment and  net exports. This is what economist mean when they say that fundamental of USA economy is flawed.

Will try to get similar chart for India, and would be interesting to see how do they compare against each other. For India, net export would be positive, and would be increasing. PCE won’t be this high, but it would certainly show upward trend. Gross private investment would have upward movement, and government consumtion and expenditure downward. All sign of a healthy economy 🙂 .

Written by SK

August 3, 2009 at 7:39 pm

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