States & Markets

Dynamic theme as a World Indicator

By Abhijit Pathak

State & Markets

Principle indicator which facilitates other indicators to thrive and play

their role in growth and development.

Indicators Shaping States &Markets Are

• Economic activity - facilitates growth of the economy, helps in reduction of poverty. Economic activity may be determined by the govt regulations, tax rates, credits etc.

• Financial system- stock markets & banks are the source of finance. Lower economy are more relied on banking structure where as higher economy enjoys confidence of investors, so it is more stock market oriented.

• Open economy, effective macroeconomic policies, protection of investors, acute legal system facilitates financial markets.

Continued…

• Tax revenue- required to cover public expenditures. Low ratio tax revenue shows weak administration and subjected to evasion of taxes.

• Military expenditure- higher military expenditure shows failure of foreign diplomacy and belligerency towards neighbours disrupts the growth of the economy.

Continued..

• Infrastructure- nature of infrastructure offered by the economy also define the kind and quantity of investment received by the economy.

• High technology exports- shows the advancement of infrastructure and nature of economy whether the product oriented or supply oriented.

Major changes in last few decades

Continued _________

Electricity consumptions many inferences

Regressive taxation bane for lower incomes and boon for investors.

Global Links

• Present world is composed of open economy which is mainly characterized with trade of goods & services, financial flows and movement of people.

• Global links measures the size and direction of flows and pick out the few indicators which decides the flow.

Components of global links

• Trade in goods.• Tourisms.• Migration & personal remittances.• Equity inflows.• External debt.

Major highlights in last few years

Relying on domestic non- banking funds shows the churning feature of economy.

World recession showed moderate effects on middle income economies

Reduction in debt ratios shows recovery and boom of exports

Defeat of communal harmony disrupts developmental activities.

Commodity prices fall means existence of recession in world markets