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The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways (for example, in 2006 US dollars). It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economy – even if currently exploited in some way – and could be considered of latent value only in the same way as uncreated intellectual property, such as a previously unconceived invention.
Beyond the minimum standard of concerning value in production, use, and exchange on the planet Earth, definitions, representations, models, and valuations of the world economy vary widely.
It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services, or in cases in which a lack of independent research or government cooperation makes establishing figures difficult. Typical examples are illegal drugs and other black market goods, which by any standard are a part of the world economy, but for which there is by definition no legal market of any kind.
However, even in cases in which there is a clear and efficient market to establish a monetary value, economists do not typically use the current or official exchange rate to translate the monetary units of this market into a single unit for the world economy, since exchange rates typically do not closely reflect world-wide value, for example in cases where the volume or price of transactions is closely regulated by the government. Rather, market valuations in a local currency are typically translated to a single monetary unit using the idea of purchasing power. This is the method used below, which is used for estimating worldwide economic activity in terms of real US dollars. However, the world economy can be evaluated and expressed in many more ways. It is unclear, for example, how many of the world's 6.6 billion people have most of their economic activity reflected in these valuations.
Economy – overview
2005–2006
Current account balance 2006 [1]
Global output (gross world product) (GWP) rose by 4.4% in 2005, led by China (9.3%), India (7.6%), and Russia (5.9%). The other 14 successor nations of the USSR and the other old Warsaw Pact nations again experienced widely divergent growth rates; the three Baltic nations continued as strong performers, in the 7% range of growth.
Growth results posted by the major industrial countries varied from no gain for Italy to a strong gain by the United States (3.5%).
The developing nations also varied in their growth results, with many countries facing population increases that erode gains in output.
Externally, the nation-state, as a bedrock economic-political institution, is steadily losing control over international flows of people, goods, funds, and technology. Central governments are losing decision making powers and enhancing their international collective power thanks to strong economic bodies of which they democratically chose to become part, notably the EU. The introduction of the euro as the common currency of much of Western Europe in January 1999, while paving the way for an integrated economic powerhouse, poses economic risks because of varying levels of income and cultural and political differences among the participating nations.
Internally, the central government often finds its control over resources slipping as separatist regional movements - typically based on ethnicity - gain momentum, e.g., in many of the successor states of the former Soviet Union, in the former Yugoslavia, in India,the Kurdistan region of Iraq , in Indonesia, and in Canada.
2008
In 2008 after vigorous growth which produced a dramatic increase in the price of commodities such as oil and basic foodstuffs, the international economy began to slow in many countries providing relief from high commodities prices and increasing inflation. It was the opinion of some observers that the world economy had become somewhat overheated and was retracting to a more sustainable pace.[2]
Statistical indicators
Economy
GDP (GWP) (gross world product): (purchasing power parity exchange rates) - $59.38 trillion (2005 est.), $51.48 trillion (2004), $49 trillion (2002)
GDP (GWP) (gross world product) (IMF 179 countries [3]): (market exchange rates) - $43.92 trillion (2005 est.), $40.12 trillion (2004), $32.37 trillion (2002)
GDP - real growth rate: 4.3% (2005 est.), 3.8% (2003), 2.7% (2001)
GDP - per capita: purchasing power parity - $9,300 (2005 est.), $8,200 (92) (2003), $7,900 (2002)
GDP - composition by sector: agriculture: 4% industry: 32% services: 64% (2004 est.)
Inflation rate (consumer prices): developed countries 1% to 4% typically; developing countries 5% to 60% typically; national inflation rates vary widely in individual cases, from declining prices in Japan to hyperinflation in several Third World countries (2003)
Derivatives outstanding notional amount: $273 trillion (end of June 2004), $84 trillion (end-June 1998) ([4])
Global debt issuance: $5.187 trillion (2004), $4.938 trillion (2003), $3.938 trillion (2002) (Thomson Financial League Tables)
Global equity issuance: $505 billion (2004), $388 billion (2003), $319 billion (2002) (Thomson Financial League Tables)
Employment
Unemployment rate: 30% combined unemployment and underemployment in many non-industrialized countries; developed countries typically 4%-12% unemploymentcitation needed
Industries
Industrial production growth rate: 3% (2002 est.)
Energy
Yearly electricity - production: 15,850,000 GWh (2003 est.), 14,850,000 GWh (2001 est.)
Yearly electricity - consumption: 14,280,000 GWh (2003 est.), 13,930,000 GWh (2001 est.)
Oil - production: 79.65 million bbl/day (2003 est.), 75.46 million barrel/day (12,000,000 m³/d) (2001)
Oil - consumption: 80.1 million bbl/day (2003 est.), 76.21 million barrel/day (12,120,000 m³/d) (2001)
Oil - proved reserves: 1.025 trillion barrel (163 km³) (2001 est.)
Natural gas - production: 2,569 km³ (2001 est.)
Natural gas - consumption: 2,556 km³ (2001 est.)
Natural gas - proved reserves: 161,200 km³ (1 January 2002)
Cross-border
Yearly exports: $6.6 trillion (f.o.b., 2002 est.)
Exports - commodities: the whole range of industrial and agricultural goods and services
Exports - partners: US 17.4%, Germany 7.6%, UK 5.4%, France 5.1%, Japan 4.8%, China 4% (2002)
Yearly imports: $6.6 trillion (f.o.b., 2002 est.)
Imports - commodities: the whole range of industrial and agricultural goods and services
Imports - partners: US 11.2%, Germany 9.2%, China 7%, Japan 6.8%, France 4.7%, UK 4% (2002)
Debt - external: $2 trillion for less developed countries (2002 est.)
Gift economy
Yearly economic aid - recipient: Official Development Assistance (ODA) $50 billion...
Communications
Telephones - main lines in use: 843,923,500 (2007)
4,263,367,600 (2008)
Telephones - mobile cellular: 3,300,000,000 (Nov. 2007)[3]
Internet Service Providers (ISPs): 10,350 (2000 est.)
Internet users: 1,311,050,595 (January 18, 2008 [5] est.), 1,091,730,861 (December 30, 2006 [6] est.), 604,111,719 (2002 est.)
Transport
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- Airports
- Roadway
- Total: 32,345,165 km
- Paved: 19,403,061 km
- Unpaved: 12,942,104 km (2002)
- Railways
- Total: 1,122,650 km includes about 190,000 to 195,000 km of electrified routes of which 147,760 km are in Europe, 24,509 km in the Far East, 11,050 km in Africa, 4,223 km in South America, and 4,160 km in North America. And India alone has the length of 63,940 km (39,230 miles) of routes which makes it the second largest rail network in Asia.
- Broad gauge: 251,153 km
- Standard gauge: 710,754 km
- narrow gauge: 239,430 km
Military
Military expenditures - dollar figure: aggregate real expenditure on arms worldwide in 1999 remained at approximately the 1998 level, about $750 billion, about 1/2 of which was the United States(1999)
Military expenditures - percent of GDP: roughly 2% of gross world product (1999).
Superclass or super-affluent
- Further information: Oligarch
A new class —– the super-affluent or the super-class —– is emerging[4]. Superclass refers to the top (richest or powerful) companies and people in the context of the world-economy. They include the likes of Roman Abramovich to Prince Alwaleed bin Talal. These may be individuals or companies with extremely high net-worth (EHNW). If all entities in the world with either sales or GDP in excess of USD 50 billion are considered, there would turn out to be 166 such entities. Of these, only 60 would be countries; the rest 106 would be companies[5].
The Times states[6]:
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They are unaffected by the credit crunch, which they loftily dismiss as “some new breakfast cereal”.While most of us are tightening our belts, they are planning to increase spending, taking advantage of the falling price of everything from property to private jets. About 80% of those worth £50m or more plan to spend more this year, according to a survey by the US-based wealth analysts Prince & Associates.
Take Alwaleed. The small fortune he dropped on the Airbus is, it turns out, pocket change. The 53-year-old recently bought the Savoy hotel in London for £250m and is spending a further £100m giving the grande dame of the Thames the kind of makeover that would make Demi Moore blush. He is also doing up his other favourite five-star bolt holes, the George V in Paris and the Plaza in New York. But there’s no place like home. His £500m palace in Riyadh is constantly being remodelled and enlarged.
At the last count it had 317 rooms, including 20 kitchens that can cater for up to 1,000 people.
But even that is not enough. He is splashing a stratospheric £5 billion (five is his lucky number) on a new way to join the mile-high club: building the world’s tallest skyscraper, in Jeddah, in which he will have an office and an apartment.
…The bill for this spending spree is £300 billion. It’s an almost ungraspable figure – almost double every single foreign dollar invested in the US and China last year combined.
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References
See also
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