This blog is about the GDP and the factors on which it varies for different countries. All the data is collected from various reliable websites, like data.gov.in and Wikipedia.com, knoema.com with the Excel sheets of data attached, both raw and refined.
Starting with GDP, in simple language, it is the overall income of the country or formally according to Wikipedia:
“Gross Domestic Product(GDP) is monetary measure of the value of all final goods and services produced in a period (quarterly or yearly)”
GDP estimates are commonly used to determine the economic performance of a whole country or region, and to make international comparisons.
Starting with comparing the growth rate of both the countries, we will try to figure out the reason for it among them!
GDP (PPP-based) is gross domestic product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GDP as a U.S. dollar has in the United States. A purchasing power parity (PPP) between two countries, A and B, is the ratio of the number of units of country A’s currency needed to purchase in country A the same quantity of a specific good or service as one unit of country B’s currency will purchase in country B. PPPs can be expressed in the currency of either of the countries. In practice, they are usually computed from large numbers of countries and expressed regarding a single currency, with the U.S. dollar (US$) most commonly used as the base or "numeraire" currency.
So, it is clearly visible that even though both the countries became independent at the same time, Pakistan showed very minimal growth in GDP in comparison to India comparing the last decade. So let's find out what could be the possible reasons for it!
Let's see the expenditure on the various sectors by both the countries:
Military expenditures data from SIPRI are derived from the NATO definition, which includes all current and capital expenditures on the armed forces, including peacekeeping forces; defense ministries and other government agencies engaged in defense projects; paramilitary forces, if these are judged to be trained and equipped for military operations; and military space activities. Such expenditures include military and civil personnel, including retirement pensions of military personnel and social services for personnel; operation and maintenance; procurement; military research and development; and military aid (in the military expenditures of the donor country). Excluded are civil defense and current expenditures for previous military activities, such as for veterans' benefits, demobilization, conversion, and destruction of weapons. This definition cannot be applied to all countries, however, since that would require much more detailed information than is available about what is included in military budgets and off-budget military expenditure items. (For example, military budgets might or might not cover civil defense, reserves and auxiliary forces, police and paramilitary forces, dual-purpose forces such as military and civilian police, military grants in kind, pensions for military personnel, and social security contributions paid by one part of government to another.)
>> HEALTH:
Total health expenditure is the sum of public and private health expenditure. It covers the provision of health services (preventive and curative), family planning activities, nutrition activities, and emergency aid designated for health but does not include the provision of water and sanitation.
Expenditures for research and development are current and capital expenditures (both public and private) on creative work undertaken systematically to increase knowledge, including knowledge of humanity, culture, and society, and the use of knowledge for new applications. R&D covers basic research, applied research, and experimental development.
So, from the above comparison, we can see that the expenditure on health and R&D(Technology) which are the key factor contributing towards GDP( as health, in turn, will build up the Human Resource and Technology involves the application of scientific methods and new production techniques) which are more in India as compared to Pakistan which invested more into Military which less contributes to economic growth.
A composite index measuring average achievement in three basic dimensions of human development—a long and healthy life, knowledge and a decent standard of living
Again, it is clear from the Human Development Index, it is clear that India has more prospered in comparison to Pakistan which in turn benefited the economic growth or GDP!
There are many other factors which can be used in comparison like the social and political reforms, natural resources,etc.
Starting with GDP, in simple language, it is the overall income of the country or formally according to Wikipedia:
“Gross Domestic Product(GDP) is monetary measure of the value of all final goods and services produced in a period (quarterly or yearly)”
GDP estimates are commonly used to determine the economic performance of a whole country or region, and to make international comparisons.
Starting with comparing the growth rate of both the countries, we will try to figure out the reason for it among them!
INDIA vs. PAKISTAN
Comparing the GDP(PPP) of both the countries:
GDP (PPP-based) is gross domestic product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GDP as a U.S. dollar has in the United States. A purchasing power parity (PPP) between two countries, A and B, is the ratio of the number of units of country A’s currency needed to purchase in country A the same quantity of a specific good or service as one unit of country B’s currency will purchase in country B. PPPs can be expressed in the currency of either of the countries. In practice, they are usually computed from large numbers of countries and expressed regarding a single currency, with the U.S. dollar (US$) most commonly used as the base or "numeraire" currency.So, it is clearly visible that even though both the countries became independent at the same time, Pakistan showed very minimal growth in GDP in comparison to India comparing the last decade. So let's find out what could be the possible reasons for it!
Let's see the expenditure on the various sectors by both the countries:
>> MILITARY:
Military expenditures data from SIPRI are derived from the NATO definition, which includes all current and capital expenditures on the armed forces, including peacekeeping forces; defense ministries and other government agencies engaged in defense projects; paramilitary forces, if these are judged to be trained and equipped for military operations; and military space activities. Such expenditures include military and civil personnel, including retirement pensions of military personnel and social services for personnel; operation and maintenance; procurement; military research and development; and military aid (in the military expenditures of the donor country). Excluded are civil defense and current expenditures for previous military activities, such as for veterans' benefits, demobilization, conversion, and destruction of weapons. This definition cannot be applied to all countries, however, since that would require much more detailed information than is available about what is included in military budgets and off-budget military expenditure items. (For example, military budgets might or might not cover civil defense, reserves and auxiliary forces, police and paramilitary forces, dual-purpose forces such as military and civilian police, military grants in kind, pensions for military personnel, and social security contributions paid by one part of government to another.)
>> HEALTH:
Total health expenditure is the sum of public and private health expenditure. It covers the provision of health services (preventive and curative), family planning activities, nutrition activities, and emergency aid designated for health but does not include the provision of water and sanitation.
>> R&D:
Expenditures for research and development are current and capital expenditures (both public and private) on creative work undertaken systematically to increase knowledge, including knowledge of humanity, culture, and society, and the use of knowledge for new applications. R&D covers basic research, applied research, and experimental development.
So, from the above comparison, we can see that the expenditure on health and R&D(Technology) which are the key factor contributing towards GDP( as health, in turn, will build up the Human Resource and Technology involves the application of scientific methods and new production techniques) which are more in India as compared to Pakistan which invested more into Military which less contributes to economic growth.
>> HUMAN DEVELOPMENT INDEX:
A composite index measuring average achievement in three basic dimensions of human development—a long and healthy life, knowledge and a decent standard of living
Again, it is clear from the Human Development Index, it is clear that India has more prospered in comparison to Pakistan which in turn benefited the economic growth or GDP!
There are many other factors which can be used in comparison like the social and political reforms, natural resources,etc.
>> CONCLUSION:
By analyzing the data and searching online, we have been able to find out the root factors affecting the growth of both the economies.
Human resource and Technology played a major contributing role!
REFERENCES:
http://www.nationmaster.com/country-info/compare/India/Pakistan/Economy
http://knoema.com/atlas/Pakistan
http://knoema.com/atlas/india
http://www.economicsdiscussion.net/economic-growth/5-factors-that-affect-the-economic-growth-of-a-country/4199
