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Archive for April, 2011

GDP of a country gives some idea about how well it is doing in terms of production. In the last two centuries, Western economies overwhelmed others by far.

In the 1950s, US and Europe combined made up 60% of world economy. That’s not counting Canada, Mexico and Australia.

If we look at the fractional share of US+major European countries over the last four decades:

GDP of the US and Europe as fraction of world GDP

We see that their share has been falling over the years. From 62% in the early ’70s, to about 47% now.

So who’s gaining?

There’s a lot of talk about the so-called BRIC (Brazil, Russia, India and China) countries. These countries are supposedly rising stars in the world economy- and have seen unprecedented economic rise. Let’s see if that’s true.

Here is BRIC’s share of world economy over the years:

Fraction of world GDP controlled by the BRIC countries

So it did indeed go up from about 8% of world economy to about 16% now. Impressive.

However, it’s not the whole picture. Let’s examine each of the countries separately. First, Brazil-

Brazil’s GDP divided by the GDP of the world

Brazil has seen a steady rise in the last decade in it’s share of world economy. It now commands about 2.7% of world economy, not very unlike it’s share in 1996 (2.9%), 1982 (2.7%), and 1976 (2.6%). So its position now is by no means “unprecedented.”

Next, Russia:

Russia’s share of world GDP

Russia saw a steady decline in it’s share of world economy through the ’90s. It has recovered it’s strength of the early ’90s now. It had 2.5% of world economy in 1990, now it has about 2.7% too.

What about India?

Indian economy as a Fraction of world GDP

We can see that India has seen a steady rise in it’s share of world economy from the ’90s from about 1% to 2.2% now. But it’s nowhere near it’s best days in the early ’60s share of 3.5%. (Note that we fought two major wars right around that time- with China and Pakistan, and focus shifted from development to armament.)

So, as you’ve guessed, among the BRIC countries only one that has seen real unprecedented rise is China. Here is how it’s share of world economy have changed over the years from a mere 2% to about 7% over the last two decades. It is interesting to note that it had a share of world economy similar to India in the ’60s. Now China’s economy is four times that of India’s.

China’s GDP/world GDP.

But that’s not all. Here is the total share of the major Muslim economies in the world (Turkey + Indonesia + Malaysia + Saudi Arabia + UAE + Qatar + Pakistan + Bangladesh + Libya + Algeria + Kazakhstan).

Fractional share of Muslim economies in the world (total gdp of Muslim countries/world gdp)

That goes up from a baseline of approximately 2.7% in the ’90s to 5% (and rising) now.

This list includes Kazakhstan (became free only in 1991) and Bangladesh (created in 1971). Excluding Kazakhstan, and Bangladesh we see the following:

Fractional share of Muslim economies in the world (Excl. Kazakhstan and Bangladesh)

Therefore, Muslim economies have yet to reach the share they had in the ’80s, in spite of their rise in the last decade. I can only hope and pray that their growth will not be stifled this time. Ameen.

It would be good to know the causes and be able to make some predictions.

Data is from Wolfram Alpha.

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There are three factors driving crude prices higher.

1. NATO led War against Libya means a major supplier is unable to supply any oil.

2. Nuclear crisis in Japan makes people nervous about future of nuclear energy- especially in earthquake prone regions.

But that’s not all.

3. Production of oil in the US are low. The stockpile (reserve) is at their 25 year low. Keeping in mind US is the biggest oil importer by far, it is natural that oil prices will go up.

Oil is keeping around 120. Hopefully it’ll stay there for some time (a month or so) before starting to climb again. That’s because if it sees a spike, it’ll fall back to 120 if the baseline is established there, and not to 90.

We in the “third world” buy locally grown food, travel in public transport, save on electricity- and that makes our economies much more fuel efficient and robust against rise in oil prices. Only high prices of oil will force the “developed” countries to change their habits and become civilized. Otherwise they’ll blame us when their CO2 causes Bangladesh to sink under the sea.

Secondly, a high price of oil will cause the West’s hegemony to lose grip, iA.

I feel the pinch too, but we should be able to rise above saving a hundred (rupees) or two if that causes the poor to sink under the sea.

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The websites typically use archaic technology, and proprietary fonts. So bengali news-sites do not work with my system by default (Ubuntu Linux).

However, now that I am fishing for interesting news for TwoCircles.net for the election season as a volunteer, I needed to fix that problem. And AH, fixes were close at hand.

For Aajkaal.net, and Bartaman, all one needs to do is to go to their help pages and download and install the true type fonts. It’s very simple, really. Just browse to this page, click on the two links for the .ttf files, on the download dialog box, choose to open with font installer, and then click install. Then go to the homepages and refresh the page with F5.

Anandabazar patrika is a bit different. To be able to see their page, you will need an extension called Padma which is available for both firefox and chrome.

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Oil is now selling at $126 a barrel (at London Brent.) If it keeps going too high, leaving moving average (average price of a barrel for the past few days) too far behind, then people will expect price to fall, sooner or later. Sale will slow down, market will be oversupplied- leading to a precipitous fall in prices.

In that light, it is my sincere hope that oil price does not spike upwards, but keeps rising at a steady rate.

Now here is why I am cheering high prices of oil-

1. Oil is undervalued. Like gold, we have only a finite supply of it. Unlike gold, we are using it up at an ever accelerating rate. The price must go up for the consumption to slow down.

2. Burning fossil fuel is one of the leading causes for global warming. High prices of oil will force leading emitters to change their habit. Mere preaching has had no effect so far.

3. High price of oil will level the playing field for developed and developing countries. Developing countries are much more fuel efficient (Widespread public transport etc.) and are much more frugal about spending energy.

The rich countries, on the other hand, have built their system on cheap/stolen oil. As all oversupplied economies do, they are horribly inefficient in terms of energy usage. A high price of oil will  force them to become more energy efficient- something the poor countries have already got.

4. After trillions of new dollars (printed out of thin air as bailout money), the value of the dollar ought to be on the decline.

Etc. etc.

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