Developed Nations and Underdeveloped Nations Economic Growth

Developed Nations and Underdeveloped Nations Economic Growth Forecasting the gap of Economical Growth between the Developed Nations and Underdeveloped Nations (Application of Winter Forecasting). Muhammad Bilal Literature Review: In 1981 street of Beijing, China was filled with pedestrians, bicycles, a few cars and small buildings. Thirty years later the same street having traffic-jam of cars and skyscrapers. How this city transformed into a mega-city having underground train stations, state of the art technology and high standards of living. This is the effect of sustain and rapid economic development. What is economic development? and how we can obtain these astonishing results out of it. During the speech of 1949, US President Harry Truman, identified the main concern for the west is development of underdeveloped region. The term Economic Development is generally used in many other synonymous terms such as economic growth, economic welfare, secular change and economic progress. Economic development, as it is now generally understood, includes the development of agriculture, industry, trade, transport, means of irrigation, power resources, etc. Economic development has been defined in different ways and as such it is difficult to locate any single definition which may be regarded entirely satisfactory. Economic development applies in the context of peoples sense of morals (Normative Concept). Michael Todaro defines economic development as an raise in living standards, self-esteem and freedom from unjust exercise of authority as well as a greater options. Distinction was drawn between standards of living (subjective or value based concept of economic development) and levels of living (objective and fact based concept) in article International Definition and Measurement of Standards and Levels of Living (UN, 1954). Positive economics or levels of living can be tested. So we can say that economic development is the quantitative and qualitative changes in the economy. Economic development is sum of actions of policy makers and communities that encourage the standard of living and economic health. Such actions can involve multiple dimensions including development of human capital, critical infrastructure, regional competitiveness, environmental sustainability, social inclusion, health, safety, literacy, and other initiatives. Economic development and economic growth are different concept. Whereas economic development concern with policy intervention which originated in aftermath of war the reconstruction started by the US. The economic development of a nation or humanity is generally linked with growing incomes and associated increases in consumption, investment, and savings. These points are clearly open to debate. Dictionary of Economics’ article on Development Economics, Bell (1989) utilized the pioneer and latecomer as an organizing framework given that independent countries start out as poor in a world where at that point rich nation. Economic development was visually perceived as a process in which latecomer get closer to pioneers. Per capita income can be use as proxy for measurement of development as various social indicators for instance educational attainment, health, etc. As discussed above, it is sensible to come to the point that international organizations approach to ‘development construct’ are very differently. One justification for this variety of concept is that economic theory does not give any direction to that matter. Although another explanation is that every organization has their own specific mandate therefore may approach this matter with different mindset and perception. Economic development refers to an upward trend in real national output over a long period. Although the upward trend means that each successive cyclical peak and trough is generally at a higher level of real national output than the preceding peak and trough respectively. There is a positive relationship between the real national income and economic development if all other things remain the same. Higher real national income of a country is considered to be an indication of higher economic development and vice versa. In Short it is implies that the real national income is a good tool for measuring economic development of a country. However it could be an inadequate tool for measuring economic development, but it can be used for global development comparisons among nations. Purchasing power of national income should be taken into account while quantifying economic development. There is another method (HDI) for measuring development which takes into account the literacy rates and life expectancy which affects output and could result in Economic Growth. It also entails raise in the per capita income. Economic development leads to the economic growth which is a necessary condition but not sufficient and we can say Economic growth follows many different ways, and not all of them are sustainable. Certainly, there are numerous researchers who argue that globe has limited resources so any form of economic growth is sooner or later unsustainable. Economic Growth does not consider the reduction in natural resources which might lead to greenhouse gasses, overcrowding and diseases. Development however is concerned with sustainability which means meet the requirements of the present with no compromise on future. From now on we take a look at what exactly Economic Growth is and will go through some measures of it. Economic growth is the increase in the capacity or increase in the market worth of the goods and services produced by a country over period. Economic growth indicator like GDP is used to compare economy of one period of time to another or one country to other. It is traditionally calculated in nominal term (which means inflation adjusted GDP), the ratio of GDP to population; it is also called per capita income. -Economic growth is a process in which country achieve high real national income in long period of time. There are a few approaches to gauge Economic growth. The fact should be consider while using Economic Growth as proxy for economic development that it does not take into consideration the informal economy also known as the black economy. Development improves the standards of living and proper employment with appropriate shelter. Consequently, as well known economist Amartya Sen points out that Economic Growth is a piece of the big puzzle the economic development. During the period of high inflation the Growth rate may be much higher. The fact should be considered that growth rate (in short term) also rise and fall with business cycles. Economic boom accompanied the rising inflation which is followed by recession. It has been observed by statisticians that Developed countries have higher GDP per capita (Easterly 2002). It is argue that GDP per capita may increase due to the increment in incomes of richer groups in the society so we can say that per capita GDP growth may not reduce the poverty or societal development. It is observed by Dependency theorists that poor nations sometimes experience economic growth with modest or no economic development initiatives. There are many indicator of economic growth like Increase in the capital, progress in technology, and enchantment in the quality and literacy Rate are considered to be the main factors of economic growth. Recently the idea of sustainable growth has brought in additional factors. Underdeveloped nations which are not using their resources fully and having lower livelihood, low Human Development Index (HDI) as compared to other countries. A GDP that is growing at a high rate is thought to be greatest sign that an economy is developing and thriving. This is the reason nations like China and Brazil were considered so important in 2010s. It wasnt on account of they had gotten to be major economic power it was on the argument that they were headed to wind up major financial powers because of their high GDP development rates. So nations regularly stay informed regarding how rapid different nations are developing to anticipate (describe a possible future event) what the worldwide economy will look like later on. Influential economies need to know who their new enemies will be. Gross Domestic Product (GDP) is a sort of monetary apparatus that is used by governments and economists as a method for measuring economic growth in an expressed period. For the most part, the estimation of GDP is used because of its significance in the figuring of how well the economy is performing. All things considered, the relationship in the betw een the GDP and economic growth is the way that GDP serves as a method for study how an economy is acting. GDP tries to gauge the aggregate utilization of resource inside the economy. Although, GDP is a part measure of the numerous features of our modern economy. The most well-known refrain went for GDP is that it lets us know minimal about our general or individual monetary welfare. Development concerns not only mans material needs but also the improvement of the social condition of his life. Development is, therefore, not only economic growth, but growth plus change in social, cultural and institutional as well as economic. This definition encompasses economic and non-economic aspects of development the central point of this definition is that quantitative and qualitative changes in development variables are considered essential ingredients of economic development. Thus, we can conclude that economic development is a process rather than the result of it which results in a rise in real national income, and the net national product must have a sustained increase i.e., it must be over a long period of time. How do we construct a classification system based on countries development attainment? The World Bank and the IMF approach this issue differently. Do high levels of GDP necessarily correspond with high levels of development? Necessarily not because countries like India and China having way higher levels of GDP than countries like Belgium and New Zealand, but hardly any would suggest that latter are economically less developed than the former. Main reason behind that may be politically acceptable minimum living standards differ greatly from country to country it implies poverty lines are country specific, which hinder comparison of countries with respect to their economic development. There is no criterion (either grounded in theory or based on an objective benchmark) that is generally accepted for classifying countries according to their level of development because development is not a concept that can provide a basis upon which countries can be classified. There are large differences in the standard of living enjoyed by citizens of different countries. For example, in 2009 a citizen in Burkina Faso earned on average US$510 as compared to US$37,870 for a Japanese citizen, and while in Burkina Faso 29 percent of the adult population was literate and a new-born baby could expect to live 53 years, virtually all adults in Japan were literate and a Japanese new-born baby could expect to live 83 years. Another possible justification for the absence of a generally accepted classification system is the inherent normative nature of any such system. In 1960s developing and developed words are became the more common way to characterize countries, especially in the context of policy discussions on transferring real resources from richer (developed) to poorer (developing) countries (Pearson et al, 1969). This could suggest that a developing/developed country dichotomy is too restrictive and that a classification system with more than two categories could better capture the diversity in development outcomes across countries. It is more complicated develop a classification system. There are two problems that need to be addressed. One, it is not clear what is the correct number of categories. Two countries measured development attainment are most likely all different and a procedure is needed to tweak the development attainments that is to say construct a synthetic distribution to ensure that countries within each category have the same. A developed economy is the characterized by increase in capital resources, improvement in efficiency of labor, better organization of production in all spheres, development of means of transport and communication, growth of banks and other financial institutions, urbanization and a rise in the level of living, improvement in the standards of education and expectation of life, greater leisure and more recreation facilities and the widening of the mental horizon of the people. 1) Significance of Industrial Sector. 2) High Rate of Capital Formation. 3) Use of High Production Techniques and Skills. A country that is less  developed  economically  than most others, with little  industry  and little  money  spent  on  education,  healthcare. There is huge debate on this topic that which countries fit these two categories of developed and underdeveloped, although GDP is general reference points to compare nations. This paper use time series method to forecast the upcoming condition of economy. It comprises the use of statistical methods and using factor GDP. We will use GDP to forecast the economical growth gap between the developed nations and underdeveloped nations. It is an important tool for countries as they devise future planning and strategies. I will use Holt winter to forecast the gap of economic growth. The Holt-Winters method has found to be the best and simple method to forecast time series. References: Bradford, C. (2010). Economic Growth and Equity Investing. Financial Analysts Journal, 66, 54-64. Reddaway, W. (1963). The Economics of Under-Developed Countries. The Economic Journal, 73, 1-12. William, F. (1964). Differential rates of growth, developed and underdeveloped nations, and their implications. Journal of farm economics, 46, 1043-1050. Minh, Q. (2009). Poverty, income distribution, and Agriculture in developing Countries. Journal of economic,36, 168-183. Harold, B. (1969). Growth in developed nations. The review of economics and statistics, 51, 143-148. Williams, T. (1987). Adaptive Holt-Winters Forecasting. The Journal of the Operational Research Society, 38, 553-560.

Analysis of the Investment Opportunities in Amp and Qbe Essay

This study investigates the opportunities to make an investment decision between AMP limited and QBE Insurance Group Limited. In order to find that, this study has done ratio analysis, risk and return assessment, SWOT analysis and analysis regarding the influence of the external environment. Both AMP limited and QBE Insurance Group Limited are in the insurance industry whereas QBE provides general insurance service and AMP has two business units which includes AMP Financial Services and AMP Capital Investors. Considering profitability analysis, systematic risk and cost control policy, investing in AMP Limited is found out to be a better choice than investing in QBE Insurance Group Limited, even though EPS and P/E ratio contrary the choice. This study has also done SWOT analysis on the insurance industry and external environment analysis which may affect the investment decision. Therefore, after considering all these analysis, this study concludes that investing in AMP limited decision would be worthwhile than investing in QBE Insurance Group Limited. 1. Introduction The purpose of the report is to make a conclusive investment decision between AMP and QBE companies based on educated analysis which includes ratio analysis, risk and return assessment, SWOT analysis and impact of external environment on the AMP and QBE. Therefore, company’s financial performance, future profitability opportunity associated with risk can be speculated prior to the investment decision. 2. Company profile As one of the largest companies in Australia, QBE Insurance Group Limited provides general insurance services not only in Australia, but also in all over the world. And for AMP limited, it is an Australian financial corporation which focuses on insurance services to the customers in Australia and New Zealand. 3. Risk Assessment 3.1 Current ratio For the financial year ended 31st Dec 2010, AMP has a current ratio of 9.99 which is larger than the QBE figure 1.30. Since current ratio is a measure of short-term solvency of companies, the ratio indicates that AMP is more liquid than QBE in 2010 financial year. In a historical view from Table 1 in appendix, the current ratios of AMP were constantly larger than QBE figures in the past 10 year. 3.2 Debt/equity ratio From the balance sheets provided by Annual Report Online Database (n.d.), the D/E ratios can be calculated as 29.36 for AMP and 3.08 for QBE in 2010 financial year. The enormous difference between D/E ratios of the chosen firms indicates that AMP has bigger debt components in its capital structure than QBE does. The D/E ratios of AMP and QBE for years between 2006 and 2010 shows AMP shareholders are bearing more risks than QBE shareholders because of the heavy portion of debts the company has to generate value for each dollar in equity. 3.3 Return on equity In 2010 financial year, AMP gives us a ROE of 24.45%, compared with the ROE of QBE which is 12.30%. The ROE figures indicate that each dollar in AMP’s equity could generate more profit than that in QBE’s. From information provided in Fin Analysis Database (n.d.) and illustrated in Table 2 in appendix, we can analyze the historical trends of the two companies. From 2005 the ROE ratio of AMP had a continuously growth above QBE and reach the peak of 52.43% in 2007. After that period, both AMP and QBE had slight contraction in ROE, however the ROE of AMP maintained larger than QBE till now. From the ratio analysis above, we can briefly conclude that the AMP has more risks in long-term solvency than QBE; however, it is much more profitable than QBE for each dollar invested in its equity. Considering analysis above, investing in AMP is better over QBE from the profitability point of view. 3.4 Systematic risk analysis 3.4.1 AMP Provided by Fin Analysis Database (n.d.), the beta coefficient of AMP is 1.73. The beta figure suggests that the systematic risk of AMP is greater than the average risk in the market. Based on coupon rate of 5-year and 10-year government bonds as well as the market risk premium for 2010 provided by Pablo Femandez (n.d.), the expected return of investing in AMP is 14.78% for 5 years and 15.78% for 10 years. 3.4.2 QBE From Fin Analysis Database (n.d.), the beta coefficient of QBE is 0.50, which is smaller than an average risky asset and the beta of insurance industry. The expected return of investing in QBE is calculated as 7.65% for 5 years and 8.65% for 10 years. As illustrated above, the systematic risk of AMP is larger than QBE, this result in a greater expected return on investment in AMP for a five to ten years period. 4. Return analysis 4.1 Earnings Per Share As we can see from the historical data from Fin Analysis (n.d.), as at 30/12/2010, the EPS of QBE was $121.73, obviously higher than that of AMP which was $36.90. For the last ten years, the EPS of QBE was generally indicated a trend of stable growth from 2001 to 2007 and peaked at 2007 of nearly $225.67, however, from 2008 to 2010, the EPS started to decrease, especially decreased from $196.41 in 2009 to $121.73 in 2010. As for AMP, on the other hand, there was a significant change of EPS in 2003, during which time the EPS decreased from -$78.73 to -$399.86, afterwards it also had ups and downs, but the trend was quite smooth with an EPS around $40.00. Therefore, considering the trend in the last ten years, OBE has a higher EPS with reasonable fluctuation. 4.2 Net Profit Margin Net profit margin is commonly used to evaluate the effectiveness of the company’s ability of converting revenue into actual profit. During the last ten years, both AMP and QBE experienced a generally increasing trend in the Net Profit Margin except for the year 2008. The average net profit margin of QBE and AMP was around 5% and 10% respectively, which indicates that AMP might have a more effective cost control policy compared to QBE. 4.3 P/E ratio (PER) As we can see from the database of Financial analysis (n.d.) which showed in Table 3, from 2003, the PER trend of both QBE and AMP were quite smooth without much fluctuations. Also QBE generated a slightly higher PER than AMP, which indicates that QBE yields higher returns and is more price sensitive than AMP. 5. SWOT analysis 5.1 Strengths: The life and the non-life insurance section in Australia are certainly considered as an attractive place where to do business, because both segments are expecting to grow over the future period more at a rate of 7% per annum compared to the growth rate for the industry as a whole. 5.2 Weaknesses: Non-life insurance premiums are barely developing because this segment is fully grown in mature market, so it is difficult to invest and benefit to investors. There is also a lack of reinsurance capacity in the local market and the local market of investments is exposed to the requirements of the global market. 5.3 Opportunities: There is a strong linkage between life insurance products and superannuation funds which mean the growth of the superannuation funds will benefit to life insurance in Australia. Voluntary motor insurance and non-life insurance are growing quite dramatically in Australia, so there is still a possibility of investments to these products. 5.4 Threats: The investment risks in connection with the popular insurance products are placed with the clients, not with the insurers. That is, fluctuation in global financial markets may easily have a negative impact on life premiums. 6. Impact of external environment of insurance industry The world economy is not stable in recent several months. That means the growth of world economy cannot be reasonably guaranteed. It is due to the fact that two of the most important and largest economic bodies in the world cannot seek appropriate solutions to their own economic problems. As the largest economy in the world, American economy has been in difficult situation and struggling since the world financial crisis. The US economic statistic data have revealed that the recovery of the America’s economy will probably be a long process. For example the unemployment level of the last six months in America is between 9 to 10 percent. It should be mentioned that the US average unemployment rate is 5.7 percent. Even though the data indicates that the US manufacturing industry rebounded last month, the probability of recession is still high. The economy of European Union (EU) is also experiencing difficulties. The European debt crisis has been spreading from Greece to Spain and Italy. It is an unambiguous fact that Greece is insolvent. Even though Spain and Italy is not insolvent, they have liquidity problems. The suddenly deteriorated finance in Europe has resulted in the loss of confidence of investors. The insurance industry has been growing steadily since global financial crisis. But the natural disasters such as the flood and hurricane in Queensland have important influence on insurance industry .More specifically, QBE suffered from these catastrophes such as storms in Queensland and Victoria. Besides, the 12 tornadoes that happened in America and Christchurch’s fourth major earthquake in New Zealand also affected QBE’s profit. But these natural disasters failed to decrease QBE’s profit. Instead, it was the contraction in insurance margins led to the shares of QBE to decrease. 7. Conclusion In conclusion, AMP limited is better choice than QBE Insurance Group Limited to invest due to high profitability opportunity, considering systematic risk and cost control policy although EPS and P/E ratio indicates in favor of QBE. According to returns, AMP is slightly better than QBE in terms of investment decision. Therefore, it would be highly recommended to invest 1 million dollar in AMP limited rather than QBE Insurance Group Limited.

Narrative Essays

1 †¢ †¢ †¢ †¢ Generic application software Software Software refers to computer programs. A program is a sequence of instructions that tells the computer’s processor what to do. There are two types of software: †¢ system software †¢ application software. System software: manages the computer hardware provides a uniform environment for application programs to run performs housekeeping and monitoring tasks.Application software: allows the user to do useful tasks with the computer such as playing games, writing a letter or monitoring hospital patients †¢ is often supplied as a package †¢ can be generic (off-the-shelf) and is general purpose †¢ can be bespoke, where it is custom-written for a specific task. Application programsApplication programs commonly have facilities for: †¢ working in a graphical user interface (GUI) †¢ managing data files and working on multiple files †¢ navigating through the work and changing the ‘zoom level’ †¢ importing files and inserting embedded objects †¢ creating and editing drawings †¢ formatting text and graphics and editing content using insertion, deletion, cut-and-paste, copyand-paste and find-and-replace and Undo and Redo commands †¢ language checking †¢ saving and using templates †¢ viewing a file as it will be printed (WYSIWYG) †¢ creating macros and assigning them to buttons and images †¢ hyperlinking †¢ exporting files in other formats †¢ printing files. Generic application programs You may be asked to justify your choice of a type of generic application software (no brand names) for a particular purpose. For the particular features of each type of software, refer to the  coursebook, especially if you do not have practical experience of it. Cambridge IGCSE Computer Studies  © Cambridge University Press 2011 Revision notes: 1 Generic application software 1 Generic Application software desktop publishing (DTP) word processing spreadsheet General use of software ublications with complex layout, e. g. posters, newsletters and magazines text-intensive material, e. g. letters, business/legal documents, and mail merges repeatable financial, scientific and engineering calculations, mathematical modelling and simple databases input, storage and retrieval of records to provide useful information on screen and in printed reports fax, telephony, video-conferencing, email and instant messaging web authoring, for producing HTML and scripting code for interactive web pages database management system (DBMS) communication web browser search engine graphics computer-aided design (CAD) computer-aided manufacture (CAM) multimedia authoring or interactively accessing information in the form of text and other media from remote web servers a web application for finding information available on Internet servers drawing and editing images, both bitmap and vector for drawing product designs for manufacturing products from CAD designs producing multimedia ‘movie files’ for animated advertisements and games within web pages or presentations, whole websites, or cinema films for creating slideshows (successions of multimedia pages), or multimedia or printed posters for recording data automatically for scientific, engineering and statistical purposes writing, compiling and debugging computer programs presentation data-logging programming Customising generic application programs Off-the-shelf generic application programs are readily available, relatively cheap and well tested. They can be customised to the purchaser’s requirements by: †¢ hiding the standard menus and toolbars †¢ creating new menus or toolbars with just the essential requirements †¢ making cosmetic changes to the colour scheme and logo †¢ creating macros run by toolbar buttons or keyboard shortcuts.A macro is program code recorded automatically or written in a scripting la nguage to improve access to existing commands or to create new ones. Bespoke software Bespoke software (custom-written) is software specially written to suit the needs of a particular customer. It is often very efficient because it does exactly what is required, is easy to learn and has good customer support and maintenance. Cambridge IGCSE Computer Studies  © Cambridge University Press 2011 Revision notes: 1 Generic application software 2 Comparing off-the-shelf with bespoke software Off-the-shelf software has a number of advantages and disadvantages relative to bespoke software. Off-the-shelf software’s advantages t is immediately available it is usually much cheaper to buy it may have many powerful features developed  over many years if it belongs to a suite, it is likely to be able to exchange data and files easily with other programs in the suite it is well tested by previous users there is support available from experienced trainers and user groups Off-the-shelf sof tware’s disadvantages it may be overly complex and difficult to learn it may be a compromise between the requirements of different types of users an organisation may be forced to adapt its business procedures to the software errors may not be fixed rapidly Cambridge IGCSE Computer Studies  © Cambridge University Press 2011 Revision notes: 1 Generic application software 3

Theu.s. Housing Market And The U.s. Financial Crisis

The credit crunch, which occurred in the U.S. housing market between 2007 and 2009, led to the biggest global financial crisis. The impact of this crisis extended over the world, and the economies of many countries were damaged. Kawai stated that: ‘The ongoing global crisis has had a profound impact on the Asia and Pacific region, particularly on its exports.’ (2009:1) There were a lot of factors which brought about the crisis. Due to limited space, this essay will look at the U.S. housing market and the U.S. financial system, and discuss the increasing demand of the subprime market as the most important factor bringing about this crisis. There are three parts in this essay. The first part of this essay will focus on the causes of the†¦show more content†¦According to Marshall (2009), the dramatic increase of house price in the US was more than double from 1998 to the end of 2005, and the rising house prices were the result of large increase in demand. Increasing demand in houses caused the housing bubble. There were three causes which supported subprime market and the creation of the bubble. The first cause of the housing bubble is low interest rates which resulted from inflow of large amount of foreign money since investors from other countries believe that investment in the U.S. provided low risk and good returns for them. Holt illustrated that: ‘Mortgage interest rates were falling despite the low savings rate in the U.S. because of an influx of saving entering the U.S. from other countries’ (2009:121) The Federal Reserve preserved low interest rates policy in order to stimulate economic growth. The interest rates of mortgage market were kept low therefore demand of mortgage lending market went up rapidly. Moreover, mortgage agencies made low short term interest rates for example adjustable rate mortgages (ARMs) to encourage house buyer and investment with borrow money. The low interest rates encouraged more people to borrow money in financial market that led to excessive demand in the market and the housing bubble. The second cause of housing bubble