Investment - Teacher Presentation
This revision presentation is ideal for AS Macro students who wish to build their knowledge and understanding of the important topic of investment and its role in driving macroeconomic performance. The presentation stays clear of AD-AS or PPF diagrams as we cover this analysis next - I will post a second presentation on applying investment to the AD-AS framework sometime next week.
Launch interactive presentation on the economics of investment
Download printable pdf (slides)
Broadband and economic development
Access to and the speed and reliability of broadband infrastructure is one of the key institutional factors that impact on economic development. The lack of an affordable and cost-effective broadband network can be a huge barrier to economic growth especially in an age where companies in many rich countries are looking to outsource their back office and call centre services to countries where operating costs are lowest. The 2009 UNCTAD Information Economy Report provides a wealth of background information on the global digital divide.
According to the latest report, businesses and consumers are 200 times more likely to have access to broadband in developed countries than in the poorest Least Developed Countries (LDCs). And the monthly cost of broadband access varies to an incredible degree - from over $1,300 a month in Burkina Faso, the Central African Republic to less than $13 in Egypt.
read more...»Rwanda invests in connecting the young
A deeply encouraging and inspiring report from Rory Cellan Jones on the One Laptop per Child policy being rolled out in Rwanda - a policy that aims to equip 100,000 students with access to the internet. Are there more important priorities than building an IT infrastructure such as meeting people’s basic needs and wants? Or can technology transform the economy just fifteen years after the genocide?
Infrastructure investment to keep the Chinese economy driving forward
The Chinese government has moved heaven and earth to keep their economy growing during the global economic crisis. The focus has been on boosting domestic demand such as consumer spending and capital investment. The government is behind the world’s largest stimulus programme - investing around $566bn - and the government has pledged to go ahead with large-scale projects. Quentin Sommerville reports on a huge infrastructural project - a good video to use to illustrate the multiplier effects of capital spending.
Full speed ahead
Yesterday, Network Rail proposed a new £34 bn high-speed railway line linking Scotland and London by 2030, which would get passengers from London to Manchester in an hour; and London to Glasgow in two and a quarter hours.
read more...ȣ1bn programme to electrify the Great Western Mainline
This Times article covers the announcement of a major investment in the rail network - £1bn of extra spending to electrify the Great Western Mainline. About 300 miles (480km) of line will be upgraded at a cost of £1.1billion, including tracks from Didcot to Oxford, Reading to Newbury and Liverpool to Manchester. Lord Adonis the current Transport Minister is quoted as saying that the scheme will “pay for itself over a 40 year time period”. The investment might make a good case study for cost benefit analysis: Students might generate a series of advantages / disadvantages and then discuss how they divide into private and social costs and benefits.
India’s Stunning Progress
Martin Wolf has a super piece in the Financial Times considering that must happen in India for the country to sustain the remarkable economic progress achieved in recent years. Fast growth creates economic, social, political and environmental challenges. India’s growth potential remains strong but, given the country’s increasing openness in the world economy, her fortunes will be guided increasingly by the health of the global economic system. Infrastructure bottlenecks must also be addressed especially in the way in which poor infrastructure damages the performance of India’s major cities.
Martin Wolf writes:
“The recent past offers at least four reasons for optimism. First, the rate of growth has been accelerating: over the five years up to and including 2008, the average annual rate of economic growth was 8.7 per cent, up from 6.5 per cent at the previous peak in 1999. Second, vastly higher savings and investment underpin this acceleration, with gross domestic savings up to 38 per cent of GDP in the financial year 2007-08. Third, India’s economy has globalised, with the ratio of trade in goods and services up to 51 per cent of GDP in the last quarter of 2008, up from 24 per cent a decade before. This was not far behind China’s 59 per cent of GDP.”
Transport Economics - Crossrail construction under way
Construction work has begun on the biggest transport project since the Channel Tunnel - London’s £16bn Crossrail…
read more...»Revision: Trend Growth
This revision note looks at trend or long term growth in an economy. The trend rate of growth is the long run average rate for a country over a period of time. Measuring the trend requires a long-run series of data to identify the different stages of the economic cycle and then calculate average growth rates from peak to peak or trough to trough.
Australia’s Broadband Superhighway
It is ambitious, expensive and will take years to roll out - but the Australian government’s newly announced $43 billion project to extend super-fast broadband across the country is the type of government funded infrastructure project that makes you sit up and take notice. This article in the Times could be a good one to use when teaching about the supply-side consequences of government spending. And it is another example of how fiscal policy can be used to kick start domestic demand with the creation of thousands of ‘shovel-ready’ jobs.
“The project, which will start in Tasmania next year, requires the installation of fibre cables across Australia - a vast undertaking that the Government said would create 25,000 jobs a year during the eight years of construction.”
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