What is economy?

About

SIM – Country Economy is an Assignment where you unpack the term economy and compare the economies of three countries.

Estimated Time

An estimated 90 minutes is needed to complete this activity.

What is economy?

Typically, when we hear “economy” we think of jobs and the stock market. While these terms are relevant, they only scratch the surface of what economy is.

Economy are the micro-level transactions between individuals and firms, and the macro-levels activities and actions of the market and government.

The CIA World Factbook defines economy as including “the entries dealing with the size, development, and management of productive resources, i.e., land, labor, and capital.” Below is a list of 35 features that help define, measure, and explain an economy:

Economic overview

GDP real growth rate

Inflation rate (consumer prices)

Credit ratings

GDP (purchasing power parity) – real

GDP (official exchange rate)

GDP – per capita (PPP)

1. Gross national saving
2. GDP – composition, by sector of origin
3. GDP – composition, by end use
4. Ease of Doing Business Index scores
5. Agriculture – products
6. Industries
7. Industrial production growth rate
8. Labor force
9. Labor force – by occupation
10. Unemployment rate
11. Population below poverty line
12. Household income or consumption by percentage share
13. Budget
14. Taxes and other revenues
15. Budget surplus or deficit
16. Public debt
17. Fiscal year
18. Current account balance
19. Exports
20. Exports – partners
21. Exports – commodities
22. Imports
23. Imports – commodities
24. Imports – partners
25. Reserves of foreign exchange and gold
26. Debt – external
27. Exchange rates
28. Why is economy important in Comparative Politics?
29. Economy is important to comparative politics for at least two reasons.
30. First, the economy is intertwined with government and political geography. What micro-transactions occurs between individuals and firms within a country depend on its raw materials, natural resources, and baseline demand for things like water, food, and shelter. The macro-level activities of the market and government can promote or inhibit economic activities in some sectors compared to others.
31. For example, if a country is rich in a natural resource, say oil, then it is likely to adopt public policies that support the extraction, refinement, and distribution of oil and its derivative products, like user-end oils and fuels. Countries with an absence of this same natural resource will adopt public policies, such as strategic investments and trade agreements with oil-producing countries to ensure its economy has the fuel it needs to power its residential, commercial, and industrial sectors.
32. Second, the economy offers comparativists another dimension to work with. If we compared countries by just looking at government, or just looking at geography, we can learn a lot, but these dimensions have their limits. However, the economy provides another, and arguably more complex, dimension by which to compare countries. When trying to explain why some countries “succeed” and other countries “fail”, looking to the current state of both countries’ economies can help us explain these outcomes.
33. Instructions
34. Step 1: Select two countries, which are different from the prior “Government” and “Political Geography” assignments, to learn about their “economy”

Go to One Page Summaries — The World Factbook – Central Intelligence Agency (cia.gov)Links to an external site.

Select two new and different countries that you want to learn more about

Step 2: Review the One Page Summary for the United StatesLinks to an external site.

Step 3: Explain each of the following comparisons in 3 or more sentences

Compare economy of country 1 to the United States

Compare economy of country 2 to the United States

Compare economy of country 1 to country 2

Step 4: Make a list of the four different countries you have compared so far

At this point, your list should have 6 countries total: 2 from Government, 2 from Political Geography, and 2 from this Economy assignment

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