Factors and implicatons of Gross Domestic Product

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There are 15 major bomber sector those have major part to GDP such as Service, Industry, Agriculture etc. Forestry, harvests, piscaries and farm animal are included in Agriculture sector. Vegetables, fruits, milk, fish, meat, sugar, pulsations and cereals are major nutrient of agribusiness. Tobacco, jute, tea etc. are major harvests in Industrial sector. Bangladesh has three categories of industry such as big graduated table industries, medium graduated table industries and little and cottage industries. Fabricated metal merchandises, non-metallic mineral merchandises, basic metal industries, chemicals and chemical merchandises, wood merchandises and wood ; publishing an publication, paper merchandise, paper ; leather, dress and fabric ; baccy, drink and nutrient ; and other handcrafts and industries are the major industrial division. Service sector becomes late the largest subscriber to GDP. Financial mediators such as insurance and bank ; public defence and disposal ; wellness ; instruction ; storage and conveyance ; public-service corporation ( H2O, gas, power ) ; building, other personal and societal activities, and other professionals are the major bomber sector of service. Seafood and frozen fish, readymade garments, chemical merchandises, tea, leather, jute goods and jute etc. are the major exports thing in our state. Rice, sugar, wheat, bit vass, oil merchandises, comestible oils, equipment and machinery, fertiliser, steel and Fe, chemicals etc. are the major imports point in our state.

If GDP is looked intensely, it would be found that the economic system of Bangladesh was rearward. After independency of this state, the GDP ‘s entire size, the growing rates and per capita GDP was really little. From the beginning of 1990, the status has improved. The structural alteration of GDP and its growing tendency in our state is non equal. The GDP ‘s growing form in our state is given into the following table 2:

Table 2: Growth form of Real Gross Domestic Product ( GDP ) in Bangladesh

Year

Annual per centums of Real GDP at changeless monetary values

Percentage Change

1980

0.375

1981

3.076

720.27 %

1982

3.206

4.23 %

1983

4.61

43.79 %

1984

4.177

-9.39 %

1985

3.744

-10.37 %

1986

3.985

6.44 %

1987

2.931

-26.45 %

1988

2.388

-18.53 %

1989

4.298

79.98 %

1990

4.603

7.10 %

1991

4.203

-8.69 %

1992

4.801

14.23 %

1993

4.324

-9.94 %

1994

4.513

4.37 %

1995

4.77

5.69 %

1996

5.013

5.09 %

1997

5.304

5.80 %

1998

5.044

-4.90 %

1999

5.421

7.47 %

2000

5.6

3.30 %

2001

4.834

-13.68 %

2002

4.845

0.23 %

2003

5.776

19.22 %

2004

6.108

5.75 %

2005

6.302

3.18 %

2006

6.525

3.54 %

2007

6.305

-3.37 %

2008

5.959

-5.49 %

2009

5.64

-5.35 %

2010

5.778

2.45 %

Beginning: International Monetary fund – 2010 World Economic Outlook

The above tabular array shows that the rate of growing is highest in 2005 and that of lowest in the twelvemonth of 1988. Besides the per centum alteration is the lowest in 1987 and that of lowest in the twelvemonth of 1981. The growing rate of GDP is lower in the recent old ages like 2008, 2009, 2010 than the old old ages estimated growing rate. GDP is estimated now on the footing of 1995-1996 old ages but in old old ages it was estimated on the footing of 1984-1985. In this instance the 2005-2006 twelvemonth was non count.

It is believing now to study assorted sectors such as bundle ceremonial and satellite channel, industry of ship devising, rent and other concern, existent province, private medical intervention system, English medium school, and private university to see the twelvemonth of 2010-2011 as the base twelvemonth for GDP numeration.

Figure 5: Growth Pattern of GDP of Bangladesh

The sector that has highest part to GDP in 2009-2010 is service that was besides in the old twelvemonth and in the twelvemonth 2009-2010 it was 40.90 % and that of 49.67 % for the old twelvemonth. In the twelvemonth 2009-2010, the industry sector adds 29.95 % and that was 29.73 % for the old twelvemonth. In the twelvemonth 2009-2010, the agricultural sector adds 20.48 % and that was 20.16 % for the old twelvemonth. In the twelvemonth 2008-2009, the entire GDP was 61,47,950 million taka at the monetary value of current market and it was entire 69,05,710 and 36,06,090 million taka later for the twelvemonth of 2009-2010 and 1995-1996. At presently market monetary value, the per capita GDP is $ 684 or 47,281 taka.

4.2 Deduction of GDP

It is Gross Domestic Product ( GDP ) that referred with the market value of all services and concluding goods produced inside a state in a given period, is by and large considered as the index of the criterion of life of a state. Economists widely used the GDP to mensurate the economic systems wellness, as rapidly identified its fluctuations. Its value is considered to be limited although it is considered as the index for the living criterion. Between the hapless and rich GDP does non do any income disparity. Assorted activities such as voluntary or unpaid services and family production those the market does non supply are excluded by GDP. Consequently, it is understand about the GDP. It is unreported the revenue enhancement avoiding and illegal trade that result the underestimated the GDP. GDP omits such types of economic system where no money comes into drama i.e. , non-monetary economic system, as a consequence GDP becomes abnormally low and inaccurate. For case, the state where informally occurred most of the concern dealing, it is non easy registered the local economic system ‘s part. It is bartering that may be more of import than the money usage, even it cab be extended to services. Production that is subsistence such as those merchandises those are non seting for new merchandises and quality betterments can besides be ignored by GDP ; it understates economic growing that is true. For illustration, For case, while today ‘s computing machines are less expensive and more powerful than the past computing machines, they are treated by GDP as the same merchandise in footings of the pecuniary value accounting. It is besides hard to mensurate the new merchandises debut accurately and GDP non reflect it in malice of the fact that the populating criterion may increase. Normally GDP is estimated work that generates no net alteration or those consequences from mending injury. For case, reconstructing after a natural catastrophes or war me generate a considerable sum of economic activity and therefore better GDP. The economic value of wellness attention is another typical illustration it may raise GDP if many people are ill and they are having expensive intervention, but it is non a desirable state of affairs. GDP ignores outwardnesss or economic dreadful such as harm to the environment. By ciphering goods which increase public-service corporation but non deducting bad or accounting for the negative effects of high production such as more pollution, GDP is exaggerating economic public assistance. The ultimate advancement index is therefore urging by ecological economic experts and green economic experts as a replacement for GDP, anticipating a consensus on relevant informations to mensurate advancement. The states which are extremely dependent on resources extraction or with high ecological footmarks the disparities between GDP and GPI can be really big, directing ecological wave-off. Some environmental costs like cleaning up oil spills is besides included in GDP.GDP is non a agency of economic projections which would do it subjective ; it is merely a measuring of economic activity. That is why it does non gauge what is considered the sustainability of growing. A state may achieve high GDP for the short term by over working natural resources or by misallocating investing. One major job is ciphering GDP growing over clip is that the buying power of money varies in different proportion for different goods, so when the GDP figure is deflated over clip GDP growing can change greatly depending on he basket of goods used and the comparative proportions used to deflate the GDP figure. For case, in the past 80 old ages the GDP per capita of the United States if measured by buying power of murphies did non turn significantly. But if it is estimated by the power of eggs, it shows that it grew several times. For this ground, economic experts comparing multiple states by and large use a varied basket of goods. Cross-border comparings of GDP can be inaccurate as they local differences do non take into history in the quality of goods, even in instance when adjusted for buying power equality. Transfer pricing on cross-border trades between associated companies may change import and export step. As a step of existent gross revenues monetary values, GDP does non restrict the economic excess between the monetary value and subjective value received and can therefore underestimate aggregative public-service corporation. Improper income, although it increases some people ‘s criterion of life is non included in GDP figures.

However, GDP is regarded as an economic growing of a state because of its ability to existent GDP is more accurate, because it takes the effects of rising prices into history. Each twelvemonth GDP is analyzed and we can work out whether the state ‘s economic state of affairs is bettering or non. Comparing the comparative importance of sectors in a state economic development can be classified by the importance of each sector during different stages. More GDP means more production GDP = ( Production-consumption- net export ) . It symbolizes the entire value of the state ‘s production consists of purchases of domestically produced goods and services by persons, concerns, aliens and the authorities. Because the GDP is the all inclusive step of economic activity, it non merely depicts and image of the overall economic system but besides provides investors with insight about of import tendencies within the large image. The constituents of GDP that watchful investors include consumer disbursement, concern and residential investing and monetary value indexes and besides supply chances and counsel in pull offing portfolio. Typically, or the by and large talking stock investors like to see tough economic growing because it converted into higher corporate net incomes. Bond investors are really receptive to rising prices and it is believed that strong economic growing could potentially take to rising prices.

The GDP are reported in two signifiers the current monetary value and the changeless monetary value. Current monetary value GDP is calculated utilizing today ‘s monetary value and makes comparing between clip periods hard because of the rising prices consequence. On he other manus changeless monetary value GDP solves this job by changing the current information into some standard peiod dollar such as 1995-1996 taka. This procedure factors out the effects of rising prices and permits simple comparings between periods. It is of import to distinguish GDP from GNP ( Gross national Product ) . GDP includes merely goods and services produced within the geographic boundary of a state regardless of the manufacturer ‘s nationality. On the other manus GNP does non include goods and services yielded by foreign manufacturer instead include goods and services produced by houses runing in foreign states. It is an aggregative step of entire economic production for a state consisting personal ingestion, authorities purchases, private stock lists, paid-in building costs and the foreign trade balance. The growing rate in GDP is closely evaluated by the cardinal bank to happen out whether the economic system is turning to slowly or excessively rapidly. Recession on the other manus describes a two back-to-back quarters od contraction in GDP. Investors truly worry about the negative GDP growing which is one of the factors that economic experts use to reason whether an economic system is in a recession.

5.0 Remittance and Risk

Now about 59 million people of our state are migrated. In he twelvemonth 2008-09 the sum of remittal was $ 9689.16 million and in 2009-10 the T sum is $ 9191.18. The diminution in remittals can be illustrated by planetary economic recession, diminution in new migrators, and contract clip over migratory people lack of new understanding deficiency of standard proficiency of our adult male power and so on. The remittal effects refering both the macroeconomic an macroeconomic position in developing states like ours remittance lend a important part to GDP in each twelvemonth. However, planetary jobs and national ignorance make it unsure and jeopardize growing tendency of migratory people life and their household finally foreign modesty which is contributed about 20-27 % of GDP. Recent Lybia job, Tsunami of Japan, clangs of Middle East states and Malaysia migration jobs are illustration of such jobs. In fact his uncertainness makes it hard for policy shapers to pass and implement the policies suitably.

6.0 Findingss

There is no direct relation between remittal and GDP. It has indirect relation with GDP. The last few old ages informations can be used to happen out relationship between GDP and remittal, are given below:

Two variables such as economic growing and per capita remittal for the twelvemonth 1996 to 2006 are used by us in instance of our state. From the assorted issues of the World Bank the information was collected.

Fig 6: Remittance per Capita and GDP per capita

Beginning: World Bank, World Development Indicators ( 2007 )

From the above figure it can be seen that in instance of both series there is an upward tendency and it besides indicates that both may non stationary in their original signifier. It is suggested by different series of economic growing and per capita remittal that there is no grounds of altering agencies and it indicate that economic growing and per capita remittal series can be integrate to one order i.e. , both series are I ( 1 ) .

To look into the Effect of Remittance on GDP we tested it through Regression analysis. But when we calculate the consequence that shows that the Effect of Remittance on GDP are presented in the followers.

Table 3: Fiscal twelvemonth study and GDP

Fiscal Year

Remittance in Billion $

GDP

2005-2006

4.8

6.63

2006-2007

5.9

6.43

2007-2008

7.9

6.21

2008-2009

9.5

5.6

2009-2010

12.1

6

Beginning: Major economic indexs, Bangladesh FY2006-FY2010

Y-Y=r ( X-X )

Here,

Y= Gross National Product ( GDP )

Y= Mean of GDP ( Dependent Variable ) = 6.174

r= Correlation between Remittance and GDP= -0.77

?x= Standard divergence of remittal

?y= Standard divergence of GDP

X= Remittance ( Independent Variable )

X= Mean of Remittance = 8.04

= 1.16

Substituting the value in the equation we get the consequence

Y= -0.8932X+13.35

Fig 7: Arrested development between Remittance and GDP growing Rate.

It shows by the estimated equation that the relationship between remittal and GDP is negative. It indicates that GDP will 12.4568 if remittal is change 1 unit i.e. , 1 taka. Every twelvemonth remittances consequence on GDP is non in increasing order. The above figure shows that the grounds those are most possible in this instance are the remittal per centum to put, ingestion are non same which are used to cipher GDP.

7.0 Decision

The betterments of homo ‘s capitals are non associated with the remittal directing entirely due to the challenge of right balance happening between conformity with domestic development end in one manus and international criterion on another manus. In truly, families use the remittal in basic ingestion goods buying, instruction, lodging and wellness attention, etc. A better understanding about remittals macroeconomic effects may assist the policy shapers to do policies. Investing or ingestion can increased by remittal and besides it serves the debt, heighten fiscal capital and foreign exchange. So families are encouraged by public policy to fruitfully used the remittals are hard to implement and the fiscal intermediation ‘s importance as a stipulation of development impact maximization. Among remittance receiver households the fiscal intermediation could hold big effects on their life quality.