Economic growth

I have read an article about economic growth and why governments try to achieve economic growth.

First of full, economic growth it is an increase in real GDP and an increase in productive capacity, which shows us the maximum output that the economy can produce.

Why governments want to achieve economic growth? The most important reason for that is that government wants to gain a benefit from it and it is including increasing material living standards. And government point out that economic growth has to include stability, because with stability, economic growth will be achieved.

For government of the country it is very important to have a sustainable economic growth, because it will stant for all the time, another words-stable economic growth, which can be maintained year after year and that can be enjoyed generation after generation. And I think that economic growth it's a really important thing for country, because in countries where economic growth is high, therefore conditions of living are much better and unemployment is lower.For achieving economic growth government should avoid the costs which arise from a negative output gap, such as unemployment and positive output gap, such as inflation.

Definitions

Economic growth: in the short run, an increase in real GDP, and in the long run, an increase in productive capacity, that is, in the maximum output that the economy can produce.


Unemployment: a situation where people are out of work but are willing and able to work.


Labour force: the people who are employed and unemployed, that is, those who are economically active.

Economically inactive: people of working age who are neither nor unempoyed.

Deflation: a sustained fall in the general price level.

Balance of payments: a record of money flows coming in and going out of a country.

Elastic: responsive to a change in market conditions.

Inflation rate: the percentage increase in the price level over a period of time.

Trend growth: the expected increase in potential output over time. It is a measure of how fast the economy can grow without generating inflation.

Full employment: a situation where those wanting and able to work can find employment at the going wage rate.

Hyperinflation: an inflation rate above 50 per cent.

Nominal GDP: output measured in current prices and so not adjusted for inflation.

Informal economy: economic activity that is not rec[orded or registered with the authorities in order to avoid paying tax or complying with regulations, or because the activity is illegal.

Demerit good.(Mcdonalds)

I am going to tell you about demerit goods and Mcdonalds company.

So, firts of full, demerit good it is a good where consumption of goods is more harmful than it's actually realised, therefore when people consume product, probably they have a harm on their health. Nowadays the most urgent demerit good it is a burger, fast food etc. Every day in many countries in the world people use fast food and the don't recognize, that it's really bad for their health.

Mcdonalds it is a main representative of demerit goods, and it's such a global company, it exists in many countries. So, Mcdonalds it is american company which created in 1940, it became the most popular food since 1947. Nowadays it is the largest food company in the world, their revenue makes up about 22 billion american dollars for 2008. It looks absolutely amazing, because many people know, that mcdonald burgers make a big harm on their health, but they still continue consume this products. Government in many countries try to decide this problem with obesity, for example, in USA, it becomes a political problem, people don't understand that they lose their health and pay money to this company. In some countries government banned Mcdonald cafes and restaurants, for example in my home country Kazakhstan, president has made a law, that in Kazakhstan won't be any Mcdonalds cafes, and I think that it is a great decision to avoid obesity. Also there is another problem, many years ago Mcdonalds company was a monopoly company, but few years ago, there appeared another fast food companies such as Subway, King Burger. It's a problem, because people have substitutes to one fast food company for another fast food company, if Mcdonalds make high prices on burgers, people will go to King Burger and over and over will be becoming fatty. But I think that the main problem in people, not in fast food companies, because people like this food and it is cheap food that's why people eat in fast food cafes. So, I think that government don't have to ban fast food companies, but maybe government can reduce create fast food cafes on every corner.

Russia - Gazprom monopoly

I am going to tell you about the biggest company in Russia, it is a gas company called Gazprom. Tis company is a gas monopoly in Russia.

So, first of full, this term exists when a specific individual or an interprise has sufficient control over a particular product or service.

So, Gazprom company is the largest company of natural gas and largesr Russian company. Also Gazprom is only one gas company in Russia. The main office of Gazprom is situated in Moscow also Gazaprom has some areas in United states, East Europe, Japan, South Korea and in Germany.

The president of company is Alexey Miller. Gazprom company produce about 540.7 billion cubic meters of natural gas and it is 21% of the worldwide gas production. Also Gazprom produce about 32 million tons of oil. Gazprom activates and increase about 10% of Russia's gross domestic product(GDP). In 2008 Gazprom sold 316 cubic metres to domestic consumers in Russia, 162 cubic metres to Europe and 98 cubic metres to countries of Baltic sea. Gazprom has deal with big companies such as oil company Shell and Exonmobile. Gazprom it is a big assistance for maintaining Russian economic system,Gazprom reduced taxes from domestic concumers of Russia and that's great because in Russia there are no many rich people who can pay expensive taxes for gas and since 2007 Gazprom have increased costs on gas for European countries, what is good for Russia as a whole. It is a vertically integrated company. It own all gas-processing facilities in Russia. Gazprom also controls assets in banking, insurance, agriculture and media. Also in 1999 Gazprom took over another russian gas company Novatek and Gazprom made a horizontal integration and it was horizontal monopoly. Gazprom became only one gas company in Russia. Nowadays Gazprom is a second largest gas company in the world after Exonmobile company.Income of Gazprom company for 2008 is 87 billion american dollars.In 2007 Gazprom made a deal with Kazakhstan, Turkmenistan and Azerbaijan, the deal means that Russia will build pipes in these countries for oil and gas transiting. In 2006 Gazprom made a contract with German government. According to this deal, German government will buy gas from Gazprom for nearly 10 years for 285 euro for 184.4 cubic metres.In 2009 Gazprom dealed with Japanese car company Mitsubishi and German energy corporation E.On. Gazprom is a main sponsor of all sport facilities in Russia.

Etihad helps to drive economic growth in UAE.

I have found some interesting information about economic achievements of UAE Etihad airlines.

So, Etihad airlines of United arabic emirates, which based in Abu Dhabi (it is a capital of UAE). It operates in many countries in the world, include Australia, countries of South America, and some countries of Africa. Etihad were established as national airlines of UAE in 2003. Since this year, Etihad airlines achieved absolutely astonishing aims in economics concepts, they rise their economic growth for 35 %, and every year this number is increasing and it is first airlines which made this progress. Etihad airlines have economic stability, their economic growth never fallen below 40% a year. In the financial concepts during 2008 year Etihad carried 6 million passengers and 330.000 tonnes of cargo. Nowadays Etihad airlines ranked on 4 place in the world in terms of economic growth. During last 10 years Etihad is set to support the creation of more than 100.000 jobs in the UAE during the next 10 years. Financial Times reported that Etihad airlines is playing crucial role in driving economic growth and supporting and driving tourism, business and investment.It is very significant and growing contribution to the economic growth of UAE. Researching in economic contribution defined at four levels: direct (within Etihad), indirect (suppliers to Etihad),induced (spending of direct and indirect employees) and catalytic(impact on many other industries). According to the Financial Times Etihad is already making significant contribution to Abu Dhabi's gross domestic product (GDP). Etihad airlines have made a direct economic contribution of Abu Dhabi non-oil GDP in 2007, employing 4.107 people within UAE. This report shows that Etihad make a positive role for UAE and Etihad is improvig links between Abu Dhabi and the rest of the rest of the global economy. With Etihad assistance UAE will increase their GDP for 28 billion AED (AED-UAE currency) supportin 140.565 jobs.After 3 years Etihad will make an investment at the airport infrastructure in Abu Dhabi. Also Etihad airlines make a big contribution to many other big companies such as Ferrari, where both companies made a deal where Etihad airlines are making a profitable sponsorship for Ferrari. Also last year Etihad became the main sponsor of English football club Manchester city, where Etihad invest about 50 million pounds for a year.

Climate change a market failure.

I have read a really interesting article about climate changing in a market failure.

So, the term market failure means that when the free market mechanism fails to achieve efficiency.

In 2007 at economic public lecture in Manchester, economist Sir Nicholas was talking about that climate change is a result of the greatest market failure that the modern world has seen and he clamed that climate change because of market failure in the world. Sir Nicholas believes that the problem of climated change involves a fundamental failure of markets and they damage others by emitting greenhouse gases and they generally do not pay. The evidence of the seriousness of the risks from inactivity or delayed action is now overwhelming. This problem is global and it must be a cooperation on a global scale. Also he discussed about that rich countries must lead the way in taking action. It means that: adopting ambitious emissions by reduction targets, encouraging effective market mechanisms, supporting programmes to combat deforestation, promoting rapid technological progress to appease the effects of climate change. The first involves rich countries by reducing their greenhouse emissions by at least 80%. Also Sir Nicholas claimed that countries must make a substantial trade between countries, including rich andpoor countries, in green gas emissions. He also said that for an international programme to combat deforestation, which contributes 15-20% of greenhouse gas emissions.And rich countries have to respect their commitments to 0.7% of GDP in aid by 2015. This will yield increases of 150-200 billion per year. The extra costs developing countries will face as a result of climate change more likely to be rising of 80 billion per year and it is massive that extra resources re avaible for new initiatives. Sir Nicholas claimed that this global deal includes effectiveness, efficiency and equity. In many countries there will be different choices of instruments such as taxes, trading, conditions and different technological mixes. In many countries there is a range for energy efficiency, which both reduces emissions and reduces money. So, rich countries have to reduce their gas emmisions otherwise market failure in the world will continue.

Government policy.

Government policy to reduce market failure, includes fiscal policy, where government takes taxes from producers to reduce negative externality as pollution.