EW BEP L2 Growth
EW BEP L2 Growth
EW BEP L2 Growth
LECTURE 2
Abdul Bayes
GDP, GNP…..
Gross Domestic Product (GDP) is the most widely reported measure to indicate a country’s economic
performance
GDP is the market value of all final goods and services produced in a nation during a specific period
of time, usually a quarter or a year ;
Gross National Product (GNP) is the market value of all goods and services produced by nationals
(e.g. Bangladesh citizens) wherever they are located;
GDP/GNP are expressed in monetary terms, thus rely on the markets to establish the relative
values of goods and services;
GDP, GNP CONTD……….
GDP may be measured as the total output of final goods and services. This uses the concept of value added
Value added: difference between the value of a good as it leaves a stage of production and the costs of that good as it entered that stage
Summing the ‘v
alue-added’ of the different stages of production gives the total value of economic activities
GDP may be measured as the total income earned by the factors of production (i.e. land, labour and capital) derived
from producing the output => sum of factor incomes
GDP may be measured by using the expenditure on total output. It is measured initially at market prices, including
indirect taxes such as VAT but excluding subsidies.
This approach provides a very useful identity Y = C + I + G + X – M
NOMINAL AND REAL GDP
GDP can be either nominal GDP – production valued at current prices of commodities and services - or
real GDP.
Nominal GDP (p x q) can grow because of three reasons:
Output (q) rises and prices remain unchanged
Prices (p) rise and output remains unchanged
Both output and prices rise
In order to control for price changes GDP can be calculated using a base set of prices. The real
measures can then be obtained by deflating GDP by a relevant price index. In other words, real GDP
reflects changes in price levels or inflation in the economy.
WHY WORRY ABOUT GDP?
Employme
Real GDP Income
nt
GROWTH AND DEVELOPMENT
Y1
C the productivity
country of
is not
those resources it
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its will
A already
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Yo resources
push the PPF further
outwards.
Xo X1 Consumer Goods
ECONOMIC SECTORS
(FIGURES IN BRACKETS VALUE AT CRORE TAKA, CURRENT PRICE 2018/19 PROVISIONAL.
SOURCE: BANGLADESH ECONOMIC SURVEY 2019)
Agriculture and forestry (2,46,266)
Crop and vegetables
Animal resource
Forestry resource
Fishery resource (7,4,828)
Services
Electricity
Gas
Water
Road transport
Water transport
Air transport
Agriculture 3.31 3.31 2.23 3.10 3.14 5.50 4.46 3.33 2.79
Industry 5.13 6.72 4.57 6.98 7.45 9.80 9.02 9.67 11.09
Services 3.55 4.10 3.28 3.96 5.53 6.60 6.22 5.80 6.25
Overall 3.74 3.34 3.24 4.47 5.41 7.18 6.64 6.54
GDP (7.11 7.28 7.86)
STRUCTURAL CHANGE IN ECONOMY:
HISTORICAL PERSPECTIVE
1. Accelerating real GDP growth rate for decades – slow pace in 1970s but rapid in 1990s;
During 1970-90 growth was by 4% or less, 1990-2000, by 4.8% 2001-10 by 5.8% and 6% above in Sixth
Plan period; 7% plus in recent years preceding corona pandemic).
2. Per capita income rose from US$ 429 in 2000 to 1314 in 2015 with successful population growth control;
3. It took 20 years for per capita income to double – from US$ 200 in 1980 to 400 in 2002 but took only 7
years – from $600 in 2007 to 1400 in 2014 due to accelerating growth and deceleration population growth rate.
4. From primary to manufacturing exports – RMG!
5. Export of manpower!
6, Agricultural/Rural transformation – traditional to modern verities and irrigation, mechanized cultivation,
subsistence to commercialization – Michael Lipton’s three ‘F’s – food, farming and fertility.
7. Education, Health and Social development – women in work force, empowerment, school enrolment
(especially of girls), social indicators.
GDP GROWTH RATE (%)
PERCAPITA INCOME GROWTH
BANGLADESH’S GDP GROWTH AT CONSTANT
PRICES
SOURCE: MUJERI, M.K. (2020) , BANK PORIKROMA, SPECIAL ISSUE
Period Average yearly Annual per GDP per capita GDP per capita
Growth rate, % capita GDP (constant 2006 index, 2006 prices
(constant 2006 growth Rate, BDT) (2006=100)
prices) %, (constant 2006
prices)
1961-1970 3.77 1.01 22,700 68.41
1976-1980 3.99 1.40 18,293 55.13
1986-1990 3.62 1.07 20,490 61.75
1996-2000 4.61 2.62 25,346 76.39
2006-2010 5.52 4.60 36,637 110.42
2014-2018 6.63 5.54 54,485 164.21
A LOOK AT
SOURCE: MUJERI (2020)
LONG-TERM GROWTH RATE