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  • Be ssgd

    1. 1. Economic SystemEconomic StructureEconomic Growth & Development Prepared By: Anurag Sharma Avinash Masih Bhavana Ajmeri Brajmohan Mandloi Chanchlesh Dehariya
    2. 2. IMS DAVV - MBA (FT) 2011-2013
    3. 3. Adam Smith Adam Smith (1723-1790) is considered the father of modern economic theory IMS DAVV - MBA (FT) 2011-2013
    4. 4. Economic SystemsIntroduction What is an economic systems? Why economic systems? Economic goals and values Economic efficiency Economic freedom Economic security Economic equity Economic growth Other goals IMS DAVV - MBA (FT) 2011-2013
    5. 5. Determination How to determine society economic system? What goods and services should be produce? How should these goods and services should be produce? Who consumes these goods and services? IMS DAVV - MBA (FT) 2011-2013
    6. 6. Economic Systems Unlimited Needs Scarce Productive and Wants Resources Relative Scarcity Basic Economic Questions The Need for an Economic System IMS DAVV - MBA (FT) 2011-2013 2-6
    7. 7. Existance Does a pure economic system really exist? No- they are all mixed economies to some degree IMS DAVV - MBA (FT) 2011-2013
    8. 8. Types of Economic Systems There are four types of Economic Systems Traditional economic system Command economic system Market economic system Mixed economic system IMS DAVV - MBA (FT) 2011-2013
    9. 9. Traditional Economic Systems •Found in Rural, undeveloped countries •Customs governs the economic decisions •Farming, hunting and gathering are done the same way as the generation before •Traditional economic systems are usually based on subsistence-based agriculture •Economic activities are usually centered toward the family IMS DAVV - MBA (FT) 2011-2013
    10. 10. Examples  Australian aborigines IMS DAVV - MBA (FT) 2011-2013
    11. 11. The Mbuti in Central Africa IMS DAVV - MBA (FT) 2011-2013
    12. 12. The Inuit of Northern Canada IMS DAVV - MBA (FT) 2011-2013
    13. 13. Advantages Disadvantages• Everyone knows what role • Technology is not used;to play difficult to improve•Life is generally stable, •Tend to discourage newpredictable, and continuous ideas and new ways of doing things •Punishes people who break rules •Lower standard of living IMS DAVV - MBA (FT) 2011-2013
    14. 14. Command Economic Systems  Also known as Planned or Managed Economy  Strong Command – where government makes all decisions (communism – Cuba)  Moderate Command – where some form of private enterprise exists but the state owns major resources (socialism – France and Sweden)  This system has not been very successful & more and more countries are abandoning it IMS DAVV - MBA (FT) 2011-2013
    15. 15. Examples IMS DAVV - MBA (FT) 2011-2013
    16. 16. North Korea IMS DAVV - MBA (FT) 2011-2013
    17. 17. Advantages Disadvantages•Less crime less poverty •Consumers get low priority•Guarantees equal standardof living for everyone •Little freedom of choice •All resources are owned by the government IMS DAVV - MBA (FT) 2011-2013
    18. 18. Market Economic Systems•Adjusts to change based on consumer wants•High degree of individual freedom•Low levels of government interference IMS DAVV - MBA (FT) 2011-2013
    19. 19. Examples of market economies  USA, Canada, etc. IMS DAVV - MBA (FT) 2011-2013
    20. 20. Advantages Disadvantages•People can start their own •The desire for money may lead to poor quality of goods andbusinesses services•People have choice •Business owners have to risk losing money•Variety of goods andservices •High degree of uncertainty people lose jobs, businesses fail IMS DAVV - MBA (FT) 2011-2013
    21. 21. Mixed Economic Systems•There are no pure command•Market + Command = Mixed•Most democratic countries fall in this category (there are no truly pureMarket or Command economies). IMS DAVV - MBA (FT) 2011-2013
    22. 22. Example IMS DAVV - MBA (FT) 2011-2013
    23. 23. Advantages Disadvantages•balance of needs and •citizens have to pay taxeswants met by governmentand in marketplace IMS DAVV - MBA (FT) 2011-2013
    24. 24. Which economic system is best?Market system has proven to be best because itpromotes the goals of growth, freedom, &efficiency IMS DAVV - MBA (FT) 2011-2013
    25. 25. Comparing Economic Systems Economic System Who answers the 3 ?’s Traditional Customs Market Individuals Command Central Government Mixed Individuals with some government involvement IMS DAVV - MBA (FT) 2011-2013
    26. 26. Conclusion of ES An economic system is a part of the social system and hierarchically equal to the law system, political system, cultural, etc. There is often a strong correlation between certain ideologies , political systems and certain economic systems (for example, consider the meanings of the term "communism"). Many economic systems overlap each other in various areas (for example, the term "mixed economy" can be argued to include elements from various systems. IMS DAVV - MBA (FT) 2011-2013
    27. 27. IMS DAVV - MBA (FT) 2011-2013
    28. 28. Economic StructureIt is the main source of income in a town or city it is used to determine the growth rate of a cities economy.The economic structure of an economy is a function of the sum of all the different economic activities in the geo-political boundaries of that area.Over the last 56 years, the Indian economy has experienced a gradual structural change IMS DAVV - MBA (FT) 2011-2013
    29. 29. It has become rapid after the introduction of new economic reforms in the decade of the nineties.At the time of independence, Indian economy was predominantly rural and agriculturalcontribution of the primary sector (agriculture, forestry and logging, fishing) in GDP at factor cost was largest followed by tertiary sector and secondary sector respectively IMS DAVV - MBA (FT) 2011-2013
    30. 30. The pace of transition of the Indian economy from an agricultural economy to an industrial one was quite slow since 1951A major shift in the macroeconomic policies in the decade of the nineties accelerated the pace of the structural transformation of the Indian economy and set India on a high growth trajectoryThe performance in the nineties (6.5%) was better than that recorded in the eighties (5.8%). IMS DAVV - MBA (FT) 2011-2013
    31. 31. CLASSIFICATION OF SECTORSRicardo sectors. High technology sectorsHeckscher - Ohlin sectors IMS DAVV - MBA (FT) 2011-2013
    32. 32. RICARDO SECTORS:Ricardo sectors are those which use natural resources intensively in their production process. Production of agricultural crops and other allied activities like milk and milk products, animal services, forestry and logging, fishing are basically natural resource intensive and therefore treated as Ricardo sectors.The industries like leather products, petroleum products, cement are characterized by intensive use of natural resources and therefore are regarded as Ricardo sectors. IMS DAVV - MBA (FT) 2011-2013
    33. 33. HIGH-TECHNOLOGY SECTORSThe sectors requiring relatively higher proportion of research and development are included into the second category called High-Technology sectors (H-T sectors) This category contains most of the sophisticated technology- using manufacturing sectorsEXAMPLEindustrial electrical and non-electrical machines, electronic equipment, transport equipment, communication equipment, pesticides, heavy chemicals etc. IMS DAVV - MBA (FT) 2011-2013
    34. 34. Education and research, medicines and drugs, medical and health, communication are also regarded as H-T sectors because these sectors require higher proportion of research and development IMS DAVV - MBA (FT) 2011-2013
    35. 35. HECKSCHER-OHLIN SECTORSThe sectors that use relatively standardized production technologies are regarded as Heckscher-Ohlin sectors (H-O sectors).In other words, H-O category contains the sectors which are either capital or labor intensive.This category consists of capital intensive sectors like iron & steel, fertilizers, synthetic fiber and resin, non-ferrous basic metals, rubber and plastic products etc. IMS DAVV - MBA (FT) 2011-2013
    36. 36. And labor intensive sectors like printing and publishing, furniture and fixtures, miscellaneous manufacturing etc.Being 6 labour intensive sectors banking and insurance, transport services, trade, other services and public administration also find place in this category IMS DAVV - MBA (FT) 2011-2013
    37. 37. IMS DAVV - MBA (FT) 2011-2013
    38. 38. CURRENT SCENARIO Indias economic growth is expected to remain robust in 2012 and 2013. Moodys has uplifted Indian bond market by upgrading credit rating of the Indian. India is the second most preferred destination for foreign investors, by Ernst & Young. India has emerged as the worlds top recipient of officially recorded remittances. IMS DAVV - MBA (FT) 2011-2013
    39. 39. Indias Growth Potential Story Consumer spending Manufacturing sector Media and entertainment Handset market Indian banking The footwear industry textile and apparel food processing IMS DAVV - MBA (FT) 2011-2013
    40. 40. FII – Recent Developments FIIs invested Indias foreign exchange reserves FIIs registeredFDI – Recent Developments FDI inflows foreign exchange reserves (forex) Equitas Micro Finance TV Vision Sterlite Grid IMS DAVV - MBA (FT) 2011-2013
    41. 41. IMS DAVV - MBA (FT) 2011-2013
    42. 42. Major M&A Deals Undertaken By India Inc. I gate buys majority stock in patni USD 1.2 billion computers Sahara india buys 42.5% stakes in Force USD 6 billion india GVK aquired Hancock Coal USD 1.3 billion Adani Acquired Abbot Point USD 2 billion IMS DAVV - MBA (FT) 2011-2013
    43. 43. Major M&A Deals Undertaken By India Inc. M & M buys 70% stock in Ssang yong USD 463 Mllion ICICI buys Bank of Rajasthan Rs 3000 cr. Airtel aquired Zain USD 10.7 billion Vedanta Acquired Cairn USD 8.6 billion IMS DAVV - MBA (FT) 2011-2013
    44. 44. Thank YouPresented By:Anurag SharmaAvinash MasihBhavana AjmeriBrajmohan MandloiChanchlesh Dehariya IMS DAVV - MBA (FT) 2011-2013