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Economics Demystified: Principles

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Nigel Jump, Chief Economist at the South West RDA/SWO Economy Modules, takes us through a presentation of the fundamental principles of economics.

Nigel Jump, Chief Economist at the South West RDA/SWO Economy Modules, takes us through a presentation of the fundamental principles of economics.

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    Economics Demystified: Principles Economics Demystified: Principles Presentation Transcript

    • Economics Demystified: Principles October 2010, Nigel F Jump, Chief Economist
      • Scarcity, Choice & Resource Allocation
      • Effectiveness & Efficiency, Benefit & Cost
      • Uncertainty / Risk & Reward
      • Macro & Micro
      Economics Is
      • Politics - value judgements/prescription
      • Money
      • - unit of account, store of value, payments mechanism
      • Forecasting
      Economics Is Not
    • Economics Is Micro Demand & Supply household & business behaviour - price, income, tastes, - utility & opportunity cost - motives, aspiration & welfare - externalities & market failure
      • Growth
      • - wealth & productivity
      • Inflation
      • - pull & push, always money
      • Unemployment
      • International Trade
      • Structure & Cycles - trend & volatility
      Economics is Macro
      • Stabilisation - fiscal & monetary policy
      • International relations
      • - trading & currency groups, & markets
      • - trans-national agencies
      • Development
      • - regional & local policy
      • - intervention, technology & regulation
      Economic Policy is
    • Economic Sectors are Primary – resources = agriculture, mining & minerals Secondary – goods = manufacturing, construction & utilities Tertiary – services = retail & distribution, hotels & catering, = transport & communication = banking & finance, & business services = leisure, social & personal services = public, education & health services
    • Economics Principles: Summary Economics is choice & resource allocation Economics is micro – consumers, households, businesses & markets Economics is macro - growth & inflation, international trade
    • Economics Demystified: Growth & Productivity October 2010, Nigel F Jump, Chief Economist
      • Increase in value created between times
      • a flow … not a stock
      • Issues: purchasing power
      • nominal & real
      • absolute & per capita
      • measurement:
          • real GDP, wealth, happiness
      Growth Is
    • zero sum game – winners & losers invention, aspiration, population Growth = productivity + employment 3 = 2 + 1, but boom & bust = f ( R, K, L, T ) Accounting for growth Incomes: Y = w + s + p + oy Output: Q = m + e + g + s Expenditure: S = C + I + G + nX + ^S the “no” growth mirage
    • Ratio of outputs to inputs - labour productivity - total factor productivity - resource productivity Drivers - investment in physical capital/infrastructure - skills & innovation - enterprise / entrepreneurship - competitiveness Productivity Is
    • Productivity in UK regions source: ONS, 2009 10 78.9 16.2 N Ireland 3 97.9 20.1 Scotland 12 74.3 15.2 Wales 102.4 21.0 England 5 91.5 18.8 South West 2 105.7 21.7 South East 1 169.5 34.8 London 4 94.9 19.5 East of England 8 85.1 17.5 West Midlands 6 87.9 18.0 East Midlands 9 83.3 17.1 Yorks & Humber 7 85.6 17.6 North West 11 77.4 15.9 North East 100.0 20.5 UK Rank Index £ ('000) GVA per Head
    • Productivity in SW England source: ONS, 2009-10 102.4 15.2 Gloucs, Wilts & N Somerset 103.5 15.4 Dorset & Somerset 91.4 13.6 Devon 87.5 13.0 Cornwall & Isles of Scilly Index £ ('000) GDY per Head (2008) 109 21.8 Gloucs, Wilts & N Somerset 84 16.8 Dorset & Somerset 76 15.2 Devon 64 12.7 Cornwall & Isles of Scilly Index £ ('000) GDP per Head (2007)
    • Peripherality – cost, ICT & infrastructure, access Population – demographics & choice International Trade – FDI & competitiveness Fiscal & regulatory framework Urban hubs, local labour markets, agglomeration Capital funding access/availability Best v worst Productivity : SW issues
    • Human Capital - education (formal & informal) - skills (accumulation & use) Physical Capital - technology, dissemination and use, innovation & R&D Environmental Capital - resource stock & flow - waste management Social/cultural Capital - risk takers, partnership Productivity : investment base
    • Economics: Growth & Productivity Summary Growth is desirable High & growing productivity is the means Value adding productivity is what SW lacks/needs