State of the Economy Essay
State of the Economy
The Papua New Guinea (PNG)’s growth in recent years have been shaped in two dimensions: positively and negatively. Negatively when they experienced a drought in 1997/98 when they were adversely affected by the Asian financial crisis . The effect of which caused a sharp contraction in the economic activity. They are stated below as: 1. The kina (the country’s currency) and foreign reserves fell to their lowest levels for some time. 2. Interest rates and inflation remained high in 1999 3. After a brief recovery in late 1999, the kina slid back to record low levels in early 2000.
Also problems with budget management and a slump in private sector confidence led to a deteriorating economic environment. Positively when the government sought for help from the appropriate quarters in order to correct the economic downslide. In contrast, the US economy is a self sustaining economy. This is because the United States economy has not just one source where they focus their energy. They are involved in bio-diversity. Even in the recent economic meltdown, the United States have managed to maintain a steady face and a good foundation for economic prosperity.
Their reserves are their sustenance- this is owing to the population and their various ways of generating income from the people. 2. Explain why the development of Papua New Guinea ‘s infrastructure is so important to economic growth and development. Hint: a necessary part of this answer is a definition of what a nation’s infrastructure is. Include the definition and what Papua New Guinea must do to its infrastructure and how that will make a difference. ANSWER: National Infrastructure is defined as the basis physical and organizational structures that are operative in a society.
They are present so that the country can function properly. These structures are good roads, good water supply, power, and telecommunications. They are technical structures that support society. Their absence is disastrous. Imagine the absence of these infrastructures and many more unlisted; there can be no economic growth. This is because these(infrastructures) are markers of how much progress they have made in the economy and how much they have bettered the lives of their citizens. Papua New Guinea‘s responsibility is to concentrate on themselves and what they have.
It all starts with that. Even the Super Powers of today didn’t arrive at where they are today, They all concentrated on what they have and they harnessed it to full productivity to get what they want from the rest of the world. They have certain commodities that other countries don’t have . It is wise that they harness those materials till they can be called the best at what they do. When that happens, they are invariably improving their welfare and reduce the intrusion of the other bodies (IMF, W orld Bank ) 3.
Explain why it is important for developing economies like Papua New Guinea to expand their industrial sectors in order to achieve economic growth. ANSWER: From the case study, we can see that aside the subsistence means of income they live on, The industrial sector speaks about the exportation arm of the country. The importance of the expansion is so that production can be high. Also noting that the aim of production is to make profit. Also certain challenges will be combated like: inflation, poor health care, social welfare will be improved. Crime rate will decrease, standard of living will rise. 4.
.Explain the importance of Papua New Guinea investing in human capital. Hint: Make sure you explain what it means to invest in human capital. Give examples. ANSWER: in Human Capital means the set of skills which an employee acquires on the job, through training and experience, and which increase that employee’s value in the marketplace. There is an saying that goes thus. .’You can’t give what you don’t have. This means that Papua New Guinea can’t ‘harvest’ the minds of its people if it doesn’t empower them. This focuses the light on education. If Papua people are not well educated, they can’t serve their country.
Therefore both males and females alike should be educated so that they can give out of what they have back to Papua New Guinea. 5. With regard to the following key economic indicators, has Papua New Guinea ‘s economy worsened or improved since 2000? What explanation(s) can you offer for the changes? Hint: In order to answer this question thoroughly, you must find up to the date information on the Papua New Guinea economy. That means after 2000! The information you use to answer this question MUST be documented or your score will be lowered by a minimum of two letter grades.
Economic growth Inflation Unemployment Net foreign debt Balance of Payments data ANSWER: Economy Nominal GDP (2007): U. S. $6. 39 billion; PGK 18. 72 billion. Average exchange rate (2008): U. S. $1 = PGK 2. 7. Real GDP growth rate (2007): 6. 5%. Inflation rate (2009): 7. 0%. Per capita GDP: U. S. $1,012. Natural resources: Gold, copper ore, crude oil, natural gas, timber, fish, oil palm, tea, rubber, logs. Forestry (4% of GDP); marine (1% of GDP); minerals and oil (82% of GDP). Agriculture (13% of GDP): Major products–coffee, cocoa, coconuts, palm oil, timber, tea, vanilla.
Industry (25% of GDP): Major sectors–copra crushing; palm oil processing; plywood production; wood chip production; mining of gold, silver, and copper; construction; tourism; crude oil production, refined petroleum production. Trade: Exports–66% of GDP: gold, copper ore, oil, timber, palm oil, coffee. Major markets (in order by value–high to low)–Australia, Japan, Philippines, Germany, South Korea, China, United States, United Kingdom, Singapore, and Malaysia. Imports–31% of GDP: machinery and transport equipment, vehicles, manufactured goods, food, mineral fuels, chemicals.
Major suppliers (in order by value–high to low)–Australia, United States, Singapore, Japan, China, New Zealand, Malaysia, Hong Kong, Indonesia, and United Kingdom. The financial sector enjoyed high liquidity, with increased lending due to low interest rates. Inflation has been dealt with to a certain degree because looking at the statistics amongst all the issues to deal with, inflation is not on the list. Inflation, Average Consumer Prices (Indexed to Year 2000) for Papua New Guinea in year 2009 is 178. 291 (Index, Base Year 2000 = 100). Data for inflation are averages for the year, not end-of-period data.
The index is based on 2000=100. Inflation (Average Consumer Price Change %) for Papua New Guinea in year 2009 is 6. 919 %. Data for inflation are averages for the year, not end-of-period data. Inflation, End of Year (Indexed to Year 2000) for Papua New Guinea in year 2009 is 177. 084 (Index, Base Year 2000 = 100). Data for inflation are end of the period, not annual average data. The index is based on 2000=100. Inflation (End of Year Change %) for Papua New Guinea in year 2009 is 5. 677 %. Data for inflation are end of the period, not annual average data. Employment has been growing modestly BALANCE OF PAYMENTS
The balance of payments for 2001, which includes extraordinary financing associated with the Structural Adjustment Program (SAP), but excludes balance of payments support from the International Monetary Fund (IMF) is projected to show a surplus of K200 million, compared to a surplus of K359 million in 2000. References: Economy Watch retrieved from http://www. economywatch. com/economic-statistics/country/Papua-New-Guinea on July 19th , 2010 U. S Department of State retrieved from http://www. state. gov/r/pa/ei/bgn/2797. on July 19th , 2010 Papua New Guinea retrieved from http://www. infoplease. com/ipa/A0107875. on July 19th , 2010
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 27 October 2016
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