GROSS DOMESTIC PRODUCT

Fluctuations in GDP in Developing Countries

Fluctuations in GDP in Developing Countries

Introduction

The developing countries, the GDP fluctuates, the reason of this fluctuation can be various. In this context, this study focuses on one of the factor that can affect the GDP of developing countries. The factor that can affect the gross domestic product is government consumption. It is observed that in many countries the government consumption affect the gross domestic product, but it is important to know that whether the government consumption affect the gross domestic product in the developing countries or not. Therefore, it is important to study this phenomenon as it is essential and imperative to study the fluctuations in GDP in the developing countries. For the study, the data is collected from secondary source that is Office for National Statistics and HM Treasury

Hypothesis

H o: There is a relationship between gross domestic product and government consumption of developing countries.

H A: There is no relationship between gross domestic product and government consumption of developing countries.

Variables

In the study that is fluctuations in gross domestic product in the developing countries is based on GDP which is the dependent variable and government consumption which is the independent variable, to study the impact of government consumption on the GDP of developing countries.

Discussion

According to past research, it is observed that GDP growth is higher with the government revenues through taxes. If the government wants more income, should strengthen the conditions for non-speculative investment, that is the direct investment enterprises, and strengthen the conditions for existing businesses continue to grow. Gross domestic product is often used, despite its flaws, to measure economic growth. Sometimes, for international comparisons, gross domestic product is related to population to measure the productive potential of a population. To use the results of this: see the terms "growth" and "development" (Bureau of Economic Analysis, 2006).

Gross domestic product is often transformed into GDP / capita to measure the standard of living. International comparisons of gross domestic product pose specific problems that include the comparison over time. If we want to compare the value of GDP at different times in the same country, it is necessary to eliminate the effects of inflation. Indeed, it inflates prices as GDP and is calculated from prices, it automatically increase gross domestic product while it is only an appearance. We must always calculate real GDP that is adjusted for inflation (De Graaf, Wann & Naylor, 2001).

The comparison in space poses a much more serious. We want here to compare gross domestic product of several countries, possibly on several dates to compare their growth on a common unit. It often takes the dollar. But to convert yen into dollars or euros, you have to know what exchange rate hold. However, since the early 1970s, the dollar floats, that is to say it's over (the price we pay to buy) changes daily depending on supply and demand foreign exchange markets. And it does not change a bit: in the second half of 2002, one euro was worth around ...