Measuring economic growth stage, marketing implementation.
#types of economy: 1. According to economic stratification: a) traditional economy (mkt economy, command economy), b) centrally planned economy.
2. Fundamental types of economy: a) mkt economy, b) command economy.
Combination of mkt & command economy is termed as Mixed economy. Our economy is still aspiring to be mkt economy being a mixed economy.
#centrally planned economy Vs command economy:
Major rules and regulations are provided by govt. but personal assets liabilities are managed by respective persons (in command economy)
On contrast centrally planned economy is thoroughly maintained and monitored by govt. rules & policies. No personal asset, liability mgt is possible from business perspective. All entities are only govt. employees in such econmy.
#measuring factors to rate/ judge an economy externally: 4 facts
1. Through National production: GDP, economic value. Domestic production scale is the first impression, GDP is inclusive of national income, govt. spending etc. Drawbacks of GDP calculation- average amount of value measured regardless of social gap. Only volume is considered, how the volume came it is not considered or justified. Income is taken to consideration regardless source of the income. If the income amount is resulted from loaned money or from personal income that is not taken to account.
2. PPP (Purchase Power Parity): comparison of purchase price for a particular set of product in respective countries is parity. Inferior or superior economy is judged by parity comparison that is which country spends how much money to buy a particular line of product. Which country needs less money in buying one particular line of product is an inferior economy, on the other hand, which country needs more money is a superior economy.
3. Human development index: increase in 3 aspects:
a) Basic human needs: basic 5 human needs are food, cloths, shelter, education, medical care. This means not only shelter it includes personal safety, not only food- nutritious food pure food & water. And these basic must be insured to root level village people also. Moreover all of the people of the country should have access to these basic human needs.
b) Foundation of wellbeing:
i) knowledge-access to basic knowledge,
ii) Access to information- access to all kind of information must be insured within 2020
iii) Health and wellness- prompt access ability to any kind of medicare and enough medicare availability.
iv) Ecosystem sustainability- this is our responsibility to maintain a sustainable eco-system.
I, ii, iii will be provided by govt. iv is our responsibility.
c) Opportunity insurance:
i) Personal rights(consumer rights, land act. Etc.)
ii) Personal freedom and choice( freedom to talk, freedom of doing legal business)
iii) Tolerance and inclusion: inclusion to root level people. Communication with root level people.
iv) Access to advance education- higher education is insured or not.
This index has to be increased to increase socioeconomic condition of a country. At present we have many scopes to improve our condition. To develop our position in index we are to integrate 1. Govt. 2. Business people, 3. Civil society.
4. Classifying countries: as a country which classification does it fit, developed/ developing/ under developed.
#growth stages:
1. Traditional society: no organized view, nation or currency. Only barter system existed, that is Exchange of product was the only means of survival. Society was agro based.
2. Precondition to takeoff:
a) Demand for raw materials: demand for raw materials immerged. Seeds were required for agricultural need. Resources produced by other country is also felt to be required in this stage.
b) Commercial agriculture based economy: agricultural products are attained with exchange of something valuing a formal structure.in this stage irrigation, port facilities were introduced and focused.
c) Existent technology development: technology that already exist were improved in this stage.
d) Development of national identity and shared economic interest: national interests are generated after national identity allocation. Countries interact politically throughout emergence of political economy.
3. Take off: industrialization and urbanization mainly in terms of initiating industrial agriculture. World economy flourished in this take off stage in terms of better management of input output. Intense modification during 1940s- 1960s came about as in agricultural revolution & later on in industrial revolution.
4. Drive to maturity: in order to be a matured economy needed factors are,
a) Diversification of industrial base
b) Transportation improvement
c) Manufacturing activities are to be shifted from investment driven concept to consumer centric orientation, that is mkt becomes consumer based product mkt
d) Focus shifts from capital goods to consumer durables
5. Mass consumption: fully industry based national economy with no extra incomes from other sources. Each sector has to be industrialized. Luxurious high value product consumption has to be increased.
6. Beyond consumption:
a) Influenced by law of diminishing marginal utilities. If similar products are purchased regularly and repeatedly then the newest additions won’t generate the previous level of satisfaction.
7. Economic transition: lags between growth stages.
#drawbacks in the path of economic development:
1. Lack of managerial expertise/ leadership expertise
2. Environmental degradation/ destruction
3. Cultural differences
4. Shortage/ lack of capital.
#role of pvt. Sectors:
1. FDI promotion: a) GDP growth rate demonstration.
b) PPP scope e;mphasized.
Facilities to be given by govt. to promote foreign investment (FDI):
a) Economy: our economy is of -20 trillion us $ GDP value. The larger the GDP value the larger the mkt.
b) Uninterrupted supply of electricity: power supply level is crucial to maintain a production level.
c) Infrastructural facility: roads, transports, support services etc. easy access ability.
d) Congenial environment: business environment is to be good in terms of :
i) Raw materials availability
ii) Consumer availability
iii) Legal bindings- ease of doing business according to doing business report.
iv) Industry specific analysis- industry is sustainable or not.
e) Tax holiday/ tax exemption: investor oriented tax policy is more attractive.
f) Implementation strategy: state of PPP, govt. Collaboration state, ADB annual development program indicate govt. investment structure which is crucial for FDI decisions.
g) Investment climate: security level of investments for both expected returns and retaining investors.
h) Credit rating: s&p, standard and poor state of the country credit rating in terms of iits ability to repay interest.
i) Joint venture investment: specialized economic zone creation among countries, specialized collaboration for sustainable investment climate.
