An comparison between

Table of contentsTable of contentsIntroduction

Two countriesMacro economy circular-

flowMacroeconomic concepts

Income/InflationUnemploymentForeign tradeForeign direct investment

Major sectors of two economiesReferences

IntroductionIntroductionMicroeconomicsThe study of how house-holds and

firms make decisions and how they interact in market

MacroeconomicsThe study of economy-wide

phenomena, including inflation, unemployment, and economic growth

Two countriesTwo countries

We have chosen Malaysia and Algeria for our comparison in this assignment.

MalaysiaMalaysia

Malaysia is a South-East Asian country separated into two regions. The two parts are Peninsular Malaysia and Malaysian Borneo.

As of 2009, Malaysia’s total population stands at over 28 million. (World bank, 2010)

Malaysian economy witnessed an economic boom in the 1970s, following which it expanded to become a multi-sector economy from being a raw materials producer.

The country’s rich natural resources ensure sound developments in agriculture, forestry and mining. Malaysia’s well developed manufacturing sector produces a diverse range of goods.

The first three quarters of 2009, however, witnessed steep decline in the country’s economic growth. Volume of exports reduced drastically due to reduced consumer goods demand globally.

AlgeriaAlgeria Algeria is a North African nation which got

independence from French colonial rule in the year 1962.

It is the second largest country in Africa, in terms of its land area. The country is blessed with natural resources spanning eight largest natural gas reserves in the world.

The country has a mixed geography with a large portion falling in the Sahara desert region and a long coastal line along Mediterranean Sea in the north.

Based on its 2009 estimates, the country has a population of 35 million but 23% of the population is below poverty line (2006 estimated by world bank).

MEASURING A NATION’S INCOME

The Macroeconomic Circular-Flow DiagramThe Macroeconomic Circular-Flow Diagram

Markets for Factors of Production

Households

Firms

Income (=GDP)

Wages, rent, profit

(=GDP)

Factors of production

Labor, land,

capital

Spending (=GDP)

G & S bought

G & S sold

Revenue (=GDP)Markets for

Goods & Services

Macroeconomic conceptsMacroeconomic concepts

1) Income and Inflation:AlgeriaIncome level (based on World Bank

analysis): Lower middle income

Factors2008

GDP(Gross Domestic Product)

$166,545,000,000

Population34,373,426(2008)

GDP per capita$4,845

GNI per capita$4,190

Inflation4.4%(Source : World bank,2009)

MalaysiaIncome level(based on World Bank

analysis):Upper middle income

Factors2008

GDP (Gross domestic Product)

221,773,000,000

Population27,014,337

GDP per capita$8,209

GNI per capita$7,250

Inflation5.4%(Source : World bank, 2009)

Inflation comparisonInflation comparison

2) Unemployment Labor force definition: the total

number of workers, including both the employed and the unemployed

Unemployment: the percentage of the labor force that is unemployed

Algeria

2007% of labor force

Unemployment, Male13%

Unemployment, Female18.4%

Unemployment, Total13.8%

2007% of labor force

Unemployment, Male3.1%

Unemployment, Female3.4%

Unemployment, Total3.2%

Malaysia

(Source : World bank,2009)

3) 3) Foreign tradeForeign tradeExports of goods and services

Exports of goods and services represent the value of all goods and other market services provided to the rest of the world. They include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government services. They exclude compensation of employees and investment income (formerly called factor services) and transfer payments.

Exports / MALAYSIATotal exports of the country US $157.13 billion(Department of Statistics Malaysia, 2008). The US is the largest exporting partner.

Major items of export :Natural RubberPalm Oil & Palm Oil-Based ProductsCrude PetroleumPetroleum ProductsLiquefied Natural GasTimber & Timber Based Products Electrical & Electronic Products Articles of Apparel & Clothing AccessoriesOther Manufactured Goods and Articles

Exports / ALGERIATotal exports of the country US $46.03 billion(World bank, 2008). The US is the largest exporting partner. However, the country imports largely from France.

Major items of export :Crude PetroleumPetroleum ProductsLiquefied Natural GasHydrocarbons Animals and animal products

Imports of goods and servicesImports of goods and services represent the value of all goods and other market services received from the rest of the world. They include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government services. They exclude compensation of employees and investment income (formerly called factor services) and transfer payments.

External debt stocksTotal external debt is debt owed to nonresidents repayable in foreign currency, goods, or services. Total external debt is the sum of public, publicly guaranteed, and private nonguaranteed long-term debt, use of IMF credit, and short-term debt. Short-term debt includes all debt having an original maturity of one year or less and interest in arrears on long-term debt. 

4) Foreign direct investmentForeign direct investments are the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. This series shows net inflows in the reporting economy. Data are in current U.S. dollars.

2007MALAYSIAALGERIA

Exports of goods and services (% of GDP)

110.2%46.5%

Imports of goods and services (% of GDP)

89.9%23.3%

External debt stocks ( % of GNI)

33.7%4.3%

Foreign direct investment(FDI,

BoP, current US$)

7,376,000,000(year 2008)

2,646,000,000(year 2008)

Major sectors of the Major sectors of the economyeconomy

MalaysiaMalaysia industrial sector accounts for

48.1 percent of total GDP . The industrial output is ranked 32nd in the world(WTO, 2008). The industrial sector is regulated and promoted by Malaysia Industrial Development Authority (MIDA).

Malaysia have 18 companies that rank in the Forbes Global 2000 ranking for 2009.(Forbes Global 2000, 2009)

The most important sectors are in Malaysia: Industry

Includes Telecommunications and computer, Automotive, Electronics, Food, Drink & Tobacco, Transportation and etc.(except Oil and Gas industry)

Finance and banking includes banks, financial institutes and Insurances Oil and gas

Malaysia has a energetic Oil and Gas industry. The national oil company, Petronas, provides 32% of the federal budget in taxes. The oil company ranked 121 in Fortune Global 500 list of companies in 2007. It also ranked 18 in the industry of the same list. The company has move up to the rank by being 95th in 2008 in terms of revenue and 8th most profitable company in the world and the most profitable in Asia.(BNM, 2009)

Tourismincludes Hotels, Restaurants & Leisure

More than 20 millions tourists come to Malaysia every year(Malaysian Tourism center official website)

Major sectors of the Major sectors of the economyeconomy

AlgeriaOil and gas

Hydrocarbon products constituted at least 85percent of export earnings. The principal exports were petroleum, natural gas, and petroleum products. (world bank, 2009)

MineralsAlgeria is rich in minerals; the country has many iron, lead, zinc, copper, calamine, antimony and mercury mines. The most productive items for exporting are iron and zinc.

Agriculture, forestry, and fishingAlgeria’s agricultural sector, which contributes about 8 percent of gross domestic product (GDP) but employs 14 percent of the workforce, is unable to meet the food needs of the country’s population. As a result, some 45 percent of food is imported. The primary crops are wheat, barley, potatoes and dates. 

In next chartsIn next charts…… Services include value added in wholesale and

retail trade (including hotels and restaurants), transport, and government, financial, professional, and personal services such as education, health care, and real estate services. Also included are imputed bank service charges, import duties, and any statistical discrepancies noted by national compilers as well as discrepancies arising from rescaling.

Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. It is calculated without making assumptions for depreciation of fabricated assets or depletion and degradation of natural resources.

ReferencesReferencesDepartment of statistics Malaysia,

Statistical Releases,2009-2010 , at this address:http://www.statistics.gov.my/portal/index.php?option=com_content&view=section&id=7&Itemid=61&lang=en

World bank databases and statistics, World Development Indicators, 2008 and 2009At this address: http://data.worldbank.org/indicator/NE.IMP.GNFS.ZS

Bank of Algeria(central bank of Algeria), Statistical Releases,2008-2009 , at this address: http://www.bank-of-algeria.dz/indicateur.htm

Thank You!