Sunday, May 9, 2010

Measuring the Size of Economies


I just constructed these measurements for selected countries in Asia plus the US and Australia for the sake of comparison. The data is from the IMF. The measurements are for an Open University Course I'm writing called The Political Economy of East Asia. The course should probably be called The Political Economy of Power in East Asia but that's a bit too much of a mouthful. The particular module is called Rising Powers II: ASEAN and India.
Table 10.1 shows the relative size of all relevant economies for our course. It shows the continuing dominance of the US economy and the amazing growth of the Chinese economy since 1990. China will overtake Japan (on USD terms in 2010 – it passed it a while ago on PPP terms). Japan has done poorly since 1995, especially on USD terms as the value of the yen declined after the mid-1990s. On USD terms, the Japanese economy is roughly the same size it was in 1995! The table also shows just how well Australia has done since the 1990 recession.

The countries that make up ASEAN now grew rapidly between 1990 and 1995 but then contracted during 1995 and 2000, showing the major impact of the East Asian financial crisis. The figure for 2010 is an estimate, but is an estimate that factors in recent turmoil in the global economy. The figures were constructed for the April 2010 IMF World Economic Outlook Database.

India too has grown rapidly since 1990 from a smaller GDP on USD terms than Australia in 1990 to considerably larger in 2010.

Table 10.2 measures the size of our selected countries and ASEAN on purchasing power parity terms. It shows that on this basis ASEAN is much larger as is China and India. Indonesia is a considerably larger economy than Australia on PPP terms and ASEAN is nearly four times larger. None of our Asian countries, which contracted between 1995 and 2000 on an exchange basis, contracted when measured in this way. One of the impacts of the financial crisis was a sizeable decline in the se countries exchange rates in relation to the USD.

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