GDP IN DEVELOPING COUNTRIES

Fluctuations in GDP in Developing Countries

Fluctuations in GDP in Developing Countries

Introduction

The study is based on the fluctuations in GDP in developing countries. GDP is considered as an important determinant for the economic growth, which depends on various factors. This study particularly focuses on imports and exports of services and goods of developing countries. These two factors which determine the balance of trade or balance of payment are vital for the economic growth of developing countries. The reason of this is that the imports and exports of services and goods contribute in the increase in the gross domestic product of developing countries. furthermore, data for the research study is taken from the secondary source that is “Office for National Statistics and HM Treasury”.

Hypothesis

H 1: There is a relationship between gross domestic product of developing countries and imports of services and goods.

H 2: There is a relationship between gross domestic product of developing countries and exports of services and goods.

Variables

In the study, following variables are used to determine the fluctuations in GDP in the developing countries;

Dependent variable = Gross domestic product

Independent variable = Imports of services and goods and Exports of services and goods

Discussion

Gross domestic product is a macroeconomic indicator of the market value of all final services and goods (that is intended for direct consumption) produced per year in all sectors of the economy in the States for consumption, exports and savings, regardless of ethnicity used the factors of production. There are nominal and real GDP (Sullivan, 2012). The nominal (absolute) GDP expressed in current prices of the year. Real (inflation adjusted) expressed in the prices of the previous, or any other base year. Real gross domestic product takes into account the extent to which GDP growth is determined by the real growth of production, rather than rising prices. The ratio of nominal GDP is the real GDP deflator. The real gross domestic product is the GDP is in part-time employment, which reflects the realized capacity of the economy. Moreover, the potential gross domestic product is a GDP at full employment; it reflects the potential of the economy. The latter may be much higher than the real ones (Anderson, 1991).

GDP can be expressed in national currency and, if necessary reference to recalculate exchange rate in foreign currency, and may be represented by purchasing power parity that is PPP (for a more accurate international comparisons) (England and Harris, 1997). Today the so-called "market value" cannot be certain or stable value, so the GDP and other similar concepts and categories are just some common abstraction. In addition to this, the GDP of a country will increase if the government or companies within the same borrow abroad, obviously, this will decrease the GDP in future periods (Christian, 1987).

Analysis

Model Summary b

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

Change Statistics

R Square Change

F Change

df 1

df 2

Sig. F Change

1

.553a

.306

.108

.54900

.306

1.545

2

7

.028

a. Predictors: (Constant), Imports of services and goods, Exports of services and goods

b. Dependent Variable: GDP

ANOVA b

Model

Sum of Squares

df

Mean Square

F

Sig.

1

Regression

.931

2

.466

1.545

.028 ...