Revision as of 21:33, 23 January 2018

PPP

World's 3rd-largest economy by 2011

India became 3rd-largest economy in 2011 from 10th in 2005

PTI | Apr 30, 2014

India emerged as the world's third-largest economy in 2011.

"The economies of Japan and the UK became smaller compared to the US, while Germany increased slightly, France and Italy remained the same," according to data released on Wednesday by the International Comparison Program (ICP), hosted by the Development Data Group at the World Bank Group.

"The relative rankings of the three Asian economies — China, India, and Indonesia — to the US doubled, while Brazil, Mexico and Russia increased by one-third or more," the report said. The world produced goods and services worth over $90 trillion in 2011 and that almost half of the total output came from low and middle-income countries, it said.

According to the major findings of the ICP, six of the world's 12 largest economies were in the middle-income category (based on the World Bank's definition).

When combined, the 12 largest economies accounted for two-thirds of the world economy and 59 per cent of the population, it said.

The purchasing power parities (PPPs)-based world GDP amounted to $90,647 billion, compared with $70,294 billion measured by exchange rates, it said, adding that the share of middle-income economies in global GDP is 48 per cent when using PPPs and 32 per cent when using exchange rates.

The six largest middle-income economies — China, India, Russia, Brazil, Indonesia and Mexico — account for 32.3 per cent of world GDP, whereas the six largest high-income economies — US, Japan, Germany, France, UK and Italy — account for 32.9 per cent, the report said.

Asia and the Pacific, including China and India, account for 30 per cent of world GDP, Eurostat-OECD 54 per cent, Latin America 5.5 per cent (excluding Mexico, which participates in the OECD and Argentina, which did not participate in the ICP 2011), Africa and Western Asia about 4.5 per cent each.

"China and India make up two-thirds of the Asia and the Pacific economy, excluding Japan and South Korea, which are part of the OECD comparison. Russia accounts for more than 70 per cent of the CIS, and Brazil for 56 per cent of Latin America. South Africa, Egypt, and Nigeria account for about half of the African economy," said the report.

"At 27 per cent, China now has the largest share of the world's expenditure for investment (gross fixed capital formation) followed by the US at 13 per cent.

India, Japan and Indonesia follow with 7 per cent, 4 per cent, and 3 per cent, respectively," the report said.

China and India account for about 80 per cent of investment expenditure in the Asia and the Pacific region.

The report said low-income economies, as a share of world GDP, were more than two times larger based on PPPs than respective exchange rate shares in 2011.

Yet, these economies accounted for only 1.5 per cent of the global economy, but nearly 11 per cent of the world population.

Roughly 28 per cent of the world's population lives in economies with GDP per capita expenditure above the $13,460 world average and 72 per cent are below that average.

The approximate median yearly per capita expenditure for the world — at $10,057 — means that half of the global population has per capita expenditure above that amount and half below, it said.

The five economies with the highest GDP per capita are Qatar, Macao, Luxembourg, Kuwait and Brunei.

The five economies with highest actual individual consumption per capita are Bermuda, US, Cayman Islands, Hong Kong and Luxembourg.

The world average actual individual consumption per capita is approximately $8,647, it said.

Prosperity Index

2016> 2017: Legatum

December 12, 2017: The Times of India

Score in Legatum Prosperity Index, India, Pakistan, and other countries
From: December 12, 2017: The Times of India

HIGHLIGHTS

The gap between China and India's prosperity has narrowed by four ranks since 2016.

The Legatum Prosperity Index is an annual ranking developed by the London-based Legatum Institute.

The gap between China and India's prosperity+ has narrowed by four ranks since 2016 and to a quarter of what it was in 2012, according to the latest Legatum Prosperity Index, an annual ranking developed by the London-based Legatum Institute.

The upward trend in India's prosperity is significant in view of the fact that India registered lower GDP growth following demonetisation and implementation of the GST reform in 2017. India closed in on China+ through gains in business environment, economic quality and governance, the report said.

The Legatum Institute applauded India for improving governance by legislation "that increased the ability to challenge regulation in the legal system". The report attributed the gains in business environment and economic quality to improvement in intellectual property rights and massive rise in bank account holders.

The Prosperity Index determined by nine sub-indices — business environment, governance, education, health, safety and security, personal freedom, social capital and natural environment — is reviewed by a panel of academics from various disciplines and reputed schools like London School of Economics, Tufts University, Brookings Institution and University of California, San Diego.

In the 2017 Legatum Prosperity Index, based on 104 different variables analysed across 149 nations, India has significantly improved in the economic quality and education pillars. "More people are now satisfied with their standard of living and household incomes," the report said.

China, according to the report, has lost out "economically as people perceived greater barriers to trade and less encouragement of competition; and educationally through a falling primary school completion rate".

Overall, world prosperity increased in 2017 and now sits at its highest level in the last decade even as the world went through turbulence due to terrorism, war against Islamic State and displacement of massive number of people in West Asia and North Africa. The global prosperity is now 2.6% higher than in 2007. While prosperity improved around the world in 2017, no region grew as fast as Asia-Pacific.

The Asia-Pacific region, which includes China and India, registered greatest improvement in business environment and worst performance towards natural environment.

Trade

1990-2016: Trade as percentage of GDP- India, China and the USA

January 22, 2018: The Times of India

Trade as percentage of GDP, India, China and the USA, 1990-2016
From: January 22, 2018: The Times of India

See graphic:

Trade as percentage of GDP, India, China and the USA, 1990-2016

One of the measures of globalisation is trade (export and import) as percentage of GDP. In 1990, trade accounted for only 15 per cent of India's GDP, nearly half of China's trade-GDP ratio. But the picture now is very different. In 2016, India's trade had risen to nearly 40 per cent of GDP, whereas it was only 37.05 per cent in the case of China, and this despite a slight drop in trade.

Of course, in the case of China, trade peaked at 63 per cent of GDP before falling again, reflecting a change in the structure of the economy towards being more driven by domestic demand. Wonder what finance minister Arun Jaitley has in store in Budget 2018 to give a leg up to both trade and domestic consumption?