The current Economic Situation in SA, India and Germany
Table of contents
1. Introduction Error: Reference source not found
1. Introduction 1
2. Discussion 2
Fig. A.9 in Appendix A indicates the gross fixed capital formation (GFCF) and gross savings for SA, IN and GE for the period 1995 to 2020. The main resources employed by and entrepreneur are: Raw Materials; Labour and Capital. Capital can be in the form of machinery, equipment, buildings and anything used in the production of goods and services. The spending on capital within a country leads to the production of more goods and services as well as increasing the variation in goods and services i.e. developing new markets. This expenditure in due course leads to economic growth. Over the period 1995 to 2005, in comparison to GE and IN, SA has not been spending the same proportions of the GDP on GFCF. SA won the bid to host the 2010 FIFA world cup and this fuelled spending within SA and from foreign investors on GFCF. A large portion of this expenditure was in hotels, hospitality, tourism and infrastructure which took SA from an average of 16.5% between 1995 and 2005 to just over 20% of GDP for the period 2006 to 2014. Since the successful hosting of the world cup football 2010 SA has sustained GFCF at just under 20%. IN has been spending a large portion of its GDP on GFCF and this increased even more in 2004 to 2007 when they saw an increase from approximately 25% to 33%. GE has seen a gradual decline in GFCF however we expect to see this continue at the same rate as Germany continues to invest in renewable energy technology and infrastructure. Extrapolating IN and SA GFCF to 2020 we expect to see much the same ratio and a moving average extrapolation through to 2020 has been used for both countries. Economic theory states that gross savings, made up from the surplus between income and expenditure of households, business and government, is used to finance GFCF. The assumption is that these savings are stored in financial institutions and these institutions
1. Introduction Error: Reference source not found
1. Introduction 1
2. Discussion 2
Fig. A.9 in Appendix A indicates the gross fixed capital formation (GFCF) and gross savings for SA, IN and GE for the period 1995 to 2020. The main resources employed by and entrepreneur are: Raw Materials; Labour and Capital. Capital can be in the form of machinery, equipment, buildings and anything used in the production of goods and services. The spending on capital within a country leads to the production of more goods and services as well as increasing the variation in goods and services i.e. developing new markets. This expenditure in due course leads to economic growth. Over the period 1995 to 2005, in comparison to GE and IN, SA has not been spending the same proportions of the GDP on GFCF. SA won the bid to host the 2010 FIFA world cup and this fuelled spending within SA and from foreign investors on GFCF. A large portion of this expenditure was in hotels, hospitality, tourism and infrastructure which took SA from an average of 16.5% between 1995 and 2005 to just over 20% of GDP for the period 2006 to 2014. Since the successful hosting of the world cup football 2010 SA has sustained GFCF at just under 20%. IN has been spending a large portion of its GDP on GFCF and this increased even more in 2004 to 2007 when they saw an increase from approximately 25% to 33%. GE has seen a gradual decline in GFCF however we expect to see this continue at the same rate as Germany continues to invest in renewable energy technology and infrastructure. Extrapolating IN and SA GFCF to 2020 we expect to see much the same ratio and a moving average extrapolation through to 2020 has been used for both countries. Economic theory states that gross savings, made up from the surplus between income and expenditure of households, business and government, is used to finance GFCF. The assumption is that these savings are stored in financial institutions and these institutions
References: Roux, A. 2014. Everyone’s guide to the South African economy. Eleventh Edition. Cape Town: Zebra Press. World Bank. 2014. World Economic Indicators. [Online] Available: http://www.worldbank.org Trading Economics United Nations Development Program (UNDP). 2014. [Online] Available: http://hdr.undp.org/en/countries Appendix A