International Economics 3307AFE Group Assignment |
Extend the table 1.3, examine the openness for various countries and analyse the relationship between the openness and the faster long-term growth in standard of living |
(Makin, A.J., 2002, p.10) |
Sanjeev Henny s2760582
Yu-Ting, Lin s2672341
Yen-Ting, Lee s2768300
World count: 985
With the increasing globalization of most economies, there is consequently more focus on understanding how international integrations influence macroeconomic performance. Economists use numerous indicators to measure the degree of an economy’s openness. One of the common indicators is the percentage of ...view middle of the document...
(Refer to Appendix A and D). Although the average of trade in Hong Kong, 232, is lower than Singapore, Hong Kong has overtaken Singapore in 2009. Moreover, Hong Kong is the country or area that increased their openness the most. It has dramatically increased about 146% over fifty years. (Refer to Appendix A and D). On the other hand, the average of Brazil, 18, is the least open-market in 34 countries. The trends of Brazil fluctuated between 10 and 30 in these fifty years. (Refer to Appendix A and E). In summary, Singapore is the most openness country, Brazil is the least openness country and Hong Kong has increased their openness the most.
As we have discussed above, Hong Kong has increased its openness the most and Brazil was found to be the least open country. We will now draw upon these two vastly different nations in order to compare and analyse their standards of living, and whether or not the level of openness has influenced this. For the purpose of simplicity we will be using Real GDP/Capita as the means of measuring the standard of living within a population. This measurement is used because overall it can be used as an indicator of all citizens benefitting from increased production within an economy. (Federal Reserve Bank of Boston, 2000). In analysis of the two graphs (refer to Appendix B and C), some common trends can be seen. Firstly, the overall trends of the plots in relation to one another are virtually identical. Over the past 20 years Hong Kong experienced an increase of 143% in openness, which is positively correlated with Real GDP/Capita increasing by 217%. In comparison, Brazil experienced vastly smaller amounts of growth in openness and Real GDP/Capita at 64% and 15% respectively. From these results we can gather two main points. Firstly, in the case of Hong Kong, it can be said that their level of openness is positively associated with faster long-term growth in living standards. Real GDP/Capita increased by 74% more than the nation’s openness did, so it is safe to assume that this factor was instrumental in raising living standards within Hong Kong. The second point to denote regards the results of Brazil. The change in openness is incredibly meagre, having fluctuating, yet overall increasing. On the other hand, Real GDP/Capita continued to rise very steadily. What can be taken from this is that a nation’s openness is not the sole determinant of living standards, yet the measure of openness does greatly contribute to overall Real GDP, and hence affects the results of Real GDP/Capita.
As a general rule, Trade (Net Exports and Net Imports) is a part of GDP, and hence the results between countries openness and the Real GDP/Capita should by definition be correlated. So, as trade...