Per capita income
Per capita income or average income measures the average income earned per person in a given area in a specified year. It is calculated by dividing the area's total income by its total population. Per capita income is national income divided by population size. Per capita income is used to measure an area's average income and compare the wealth of different populations. Per capita income is used to measure a country's standard of living, it is expressed in terms of a used international currency such as the euro or United States dollar, is useful because it is known, is calculable from available gross domestic product and population estimates, produces a useful statistic for comparison of wealth between sovereign territories. This helps to ascertain a country's development status, it is one of the three measures for calculating the Human Development Index of a country. In the United States, it is defined by the U. S. Census Bureau as the following: "Per capita income is the mean money income received in the past 12 months computed for every man and child in a geographic area."
Critics claim that per capita income has several weaknesses in measuring prosperity: Comparisons of per capita income over time need to consider inflation. Without adjusting for inflation, figures tend to overstate the effects of economic growth. International comparisons can be distorted by cost of living differences not reflected in exchange rates. Where the objective is to compare living standards between countries, adjusting for differences in purchasing power parity will more reflect what people are able to buy with their money, it does not reflect income distribution. If a country's income distribution is skewed, a small wealthy class can increase per capita income while the majority of the population has no change in income. In this respect, median income is more useful when measuring of prosperity than per capita income, as it is less influenced by outliers. Non-monetary activity, such as barter or services provided within the family, is not counted; the importance of these services varies among economies.
Per capita income does not consider whether income is invested in factors to improve the area's development, such as health, education, or infrastructure. List of countries by average wage List of countries by GDP per capita—GDP at market or government official exchange rates per inhabitant List of countries by GDP per capita—GDP calculated at purchasing power parity exchange per inhabitant List of countries by GNI per capita List of countries by GNI per capita List of countries by income equality Total personal income
The law or principle of comparative advantage holds that under free trade, an agent will produce more of and consume less of a good for which they have a comparative advantage. Comparative advantage is the economic reality describing the work gains from trade for individuals, firms, or nations, which arise from differences in their factor endowments or technological progress. In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. One does not compare the monetary costs of production or the resource costs of production. Instead, one must compare the opportunity costs of producing goods across countries. David Ricardo developed the classical theory of comparative advantage in 1817 to explain why countries engage in international trade when one country's workers are more efficient at producing every single good than workers in other countries.
He demonstrated that if two countries capable of producing two commodities engage in the free market each country will increase its overall consumption by exporting the good for which it has a comparative advantage while importing the other good, provided that there exist differences in labor productivity between both countries. Regarded as one of the most powerful yet counter-intuitive insights in economics, Ricardo's theory implies that comparative advantage rather than absolute advantage is responsible for much of international trade. Adam Smith first alluded to the concept of absolute advantage as the basis for international trade in The Wealth of Nations: If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it off them with some part of the produce of our own industry employed in a way in which we have some advantage; the general industry of the country, being always in proportion to the capital which employs it, will not thereby be diminished but only left to find out the way in which it can be employed with the greatest advantage.
Writing several decades after Smith in 1808, Robert Torrens articulated a preliminary definition of comparative advantage as the loss from the closing of trade: f I wish to know the extent of the advantage, which arises to England, from her giving France a hundred pounds of broadcloth, in exchange for a hundred pounds of lace, I take the quantity of lace which she has acquired by this transaction, compare it with the quantity which she might, at the same expense of labour and capital, have acquired by manufacturing it at home. The lace that remains, beyond what the labour and capital employed on the cloth, might have fabricated at home, is the amount of the advantage which England derives from the exchange. In 1817, David Ricardo published what has since become known as the theory of comparative advantage in his book On the Principles of Political Economy and Taxation. In a famous example, Ricardo considers a world economy consisting of two countries and England, which produce two goods of identical quality.
In Portugal, the a priori more efficient country, it is possible to produce wine and cloth with less labor than it would take to produce the same quantities in England. However, the relative costs of producing those two goods differ between the countries. In this illustration, England could commit 100 hours of labor to produce one unit of cloth, or produce 5/6 units of wine. Meanwhile, in comparison, Portugal could commit 90 hours of labor to produce one unit of cloth, or produce 9/8 units of wine. So, Portugal possesses an absolute advantage in producing cloth due to fewer labor hours, England has a comparative advantage due to lower opportunity cost. In the absence of trade, England requires 220 hours of work to both produce and consume one unit each of cloth and wine while Portugal requires 170 hours of work to produce and consume the same quantities. England is more efficient at producing cloth than wine, Portugal is more efficient at producing wine than cloth. So, if each country specializes in the good for which it has a comparative advantage the global production of both goods increases, for England can spend 220 labor hours to produce 2.2 units of cloth while Portugal can spend 170 hours to produce 2.125 units of wine.
Moreover, if both countries specialize in the above manner and England trades a unit of its cloth for 5/6 to 9/8 units of Portugal's wine both countries can consume at least a unit each of cloth and wine, with 0 to 0.2 units of cloth and 0 to 0.125 units of wine remaining in each respective country to be consumed or exported. Both England and Portugal can consume more wine and cloth under free trade than in autarky; the Ricardian model is a general equilibrium mathematical model of international trade. Although the idea of the Ricardian model was first presented in the Essay on Profits and in the Principles by David Ricardo, the first mathematical Ricardian model was published by William Whewell in 1833; the earliest test of the Ricardian model was performed by G. D. A MacDougall, published in Economic Journal of 1951 and 1952. In the Ricardian model, trade patterns depend on productivity differences; the following is a typical modern interpretation of the classical Ricardian model. In the interest of simplicity, it uses notation and definitions, such as opportunity cost, unavailable to Ricardo.
The world economy consists of two countries and Foreign, which produce wine and cloth. Labor, the only factor of production, is not internationally. We denote the labor force in Home by
In economics and marketing, product differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as a firm's own products; the concept was proposed by Edward Chamberlin in his 1933 The Theory of Monopolistic Competition. Firms have different resource endowments that enable them to construct specific competitive advantages over competitors. Resource endowments allow firms to be different which reduces competition and makes it possible to reach new segments of the market. Thus, differentiation is the process of distinguishing the differences of a product or offering from others, to make it more attractive to a particular target market. Although research in a niche market may result in changing a product in order to improve differentiation, the changes themselves are not differentiation. Marketing or product differentiation is the process of describing the differences between products or services, or the resulting list of differences.
This is done in order to demonstrate the unique aspects of a firm's product and create a sense of value. Marketing textbooks are firm on the point; the term unique selling proposition refers to advertising to communicate a product's differentiation. In economics, successful product differentiation leads to competitive advantage and is inconsistent with the conditions for perfect competition, which include the requirement that the products of competing firms should be perfect substitutes. There are three types of product differentiation: Simple: based on a variety of characteristics Horizontal: based on a single characteristic but consumers are not clear on quality Vertical: based on a single characteristic and consumers are clear on its qualityThe brand differences are minor; the physical product need not change. Differentiation is due to buyers perceiving a difference; the major sources of product differentiation are as follows. Differences in quality which are accompanied by differences in price Differences in functional features or design Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing Sales promotion activities of sellers and, in particular, advertising Differences in availability.
The objective of differentiation is to develop a position. The term is used when dealing with freemium business models, in which businesses market a free and paid version of a given product. Given they target the same group of customers, it is imperative that free and paid versions be differentiated. Differentiation affects performance through reducing directness of competition: As the product becomes more different, categorization becomes more difficult and hence draws fewer comparisons with its competition. A successful product differentiation strategy will move your product from competing based on price to competing on non-price factors. Most people would say that the implication of differentiation is the possibility of charging a price premium. If customers value the firm's offer, they will be less sensitive to aspects of competing offers. Differentiation makes customers in a given segment have a lower sensitivity to other features of the product. Edward Chamberlin’s seminal work on monopolistic competition mentioned the theory of differentiation that says that for the available products within the same industry, customers may have different preferences.
However, a generic strategy of differentiation, popularized by Michael Porter that it is any product perceived as “being unique” by At least one set of customers. Hence, it depends on their perception the extent of product differentiation; until 1999, the consequences of these concepts were not well understood. In fact, Miller proposed marketing and innovation as two differentiation strategies, supported by some scholars like Lee and Miller. Mintzberf proposed more specific but broad categories: quality, support, image and undifferentiated products, which got support from Kotha and Vadlamani. However, IO literature did deeper analysis into the theory and explored a clear distinction between the wide use of vertical and horizontal differentiation. If both A and B products are charged the same price to the consumer the market share for each one will be positive, according to the Hotelling model; the major theory in this all consumers prefer the higher quality product if two distinct products are offered at the same price.
A product can differ in many vertical attributes such as its operating speed. What matters is the relationship between consumers willingness to pay for improvements in quality and the increase in cost per unit that comes with such improvements. Therefore, the perceived difference in quality is different with different consumer, so it is objective. A green product might be having a lower or zero negative effect on the environment, however, it may turn out to be inferior than other products in other aspects. Hence, it depends on the way it is advertised and the social pressure a potential c
Stockholm School of Economics
The Stockholm School of Economics is one of Europe's leading business schools. SSE offers BSc, MSc and MBA programs, along with regarded PhD- and Executive Education programs. SSE's Master program in Finance is ranked no.18 worldwide as of 2018. The Masters in Management program is ranked no. 12 worldwide by the Financial Times. QS ranks SSE no.26 among universities in the field of economics worldwide. The school is the only funded university in Sweden and is considered as the most selective and prestigious academic institution in the Nordics. SSE is accredited by EQUIS and is a member of CEMS. SSE has founded sister organizations: SSE Riga in Riga, SSE Russia in St Petersburg and Moscow, Russia, it operates the European Institute of Japanese Studies, a research institute in Tokyo, Japan. The Stockholm School of Economics was founded in 1909 on private initiative as a response to rapid industrialization and a growing need for well educated businessmen and company managers and has maintained close ties with the business community since.
The foundation followed a substantial donation in 1903 by Knut Agathon Wallenberg. The name handelshögskola was a parallel to the German term Handelshochschule, used by a number of German institutions started in the years before, commencing with Handelshochschule Leipzig in 1898; the term högskola was at this time established for specialised higher educational institutions outside the universities, such as the Royal Institute of Technology, Tekniska högskolan, which bore that name from 1877. While founded as a business school, the subject of economics featured prominently in the research and curriculum of the school from the beginning; the most well known scholars of the Stockholm School of Economics are arguably the economists Eli Heckscher, Bertil Ohlin. Heckscher is known as the founder of economic history as an independent academic discipline and his work Svenskt Arbete och Liv is a fundamental work within this subject. Ohlin was a leading figure within the school of doctrine with the same name, the so-called Stockholm school.
This school of doctrine was to have a profound influence on post-WWII Swedish economic policy and the development of the modern Scandinavian Welfare state. Heckscher and Ohlin jointly developed the so-called Heckscher-Ohlin theory, the standard international mathematical model of international trade. Bertil Ohlin received the Nobel Prize in Economics in 1977. Other prominent members of the Stockholm school were the Stockholm University professor Gustav Cassel, who developed standard economic theory of Purchasing power parity and economist Dag Hammarskjöld, Secretary-General of the United Nations in New York City, United States. For Master programmes, applicants have to have a GMAT score of over 600 and a TOEFL iBT score of over 100 in order to be considered suitable for applying. In the academic year 2012/2013 the university received 3261 applications for the four Masters programmes which it offered at the time. Therefore, the according acceptance rate would have been low. Stockholm School of Economics offers the following programs: Bachelor of Science in Business and Economics Bachelor of Science in Retail Management Master of Science in Finance Master of Science in Business & Management Master of Science in Accounting & Financial Management Master of Science in Economics Master of Science in International Business Doctoral Program with three specializations MBA Program The MSc programs are all conducted in English.
The Master of Science in Business and Management is a two-year program. There are offered three specializations: International Business and Marketing & Media Management. Within their specialization, students write a Master's thesis worth 30 ECTS credits; the MSc in International Business is a two-year program targeting students who see the world as their home and is integrated with CEMS MIM. The current CEMS Club Board is represented by Sebastian Schaaf and Julia Gerwien; the MSc Program in International Business takes part in the FT Masters in Management ranking. The latest ranking placed the program 12th out of 100 participating top international business schools; the in Economics is a program designed for students with a background in economics or business. As well as the other master programs it is a two-year program with 120 ECTS. There are offered two specializations: International Economics; the MSc in Finance and Accounting is a two-year program. There are offered three different specializations: Investment Management, Corporate Finance and Accounting & Financial Management.
The SSE EMBA program was launched in 2001. Since 2001, the year the Financial Times began its Executive MBA ranking, the SSE Executive MBA has been the first in the Nordic league. Worldwide its average rank in the last three years was 56; the SSE PhD Program has graduated more than 500 PhDs. There are three separate PhD programs at SSE: Business Administration Economics Finance Stockholm School of Economics alumni are defined as previous students that have graduated from one of SSE’s degree programs. Today
International trade is the exchange of capital and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product. While international trade has existed throughout history, its economic and political importance has been on the rise in recent centuries. Carrying out trade at an international level is a complex process when compared to domestic trade; when trade takes place between two or more nations factors like currency, government policies, judicial system and markets influence the trade. International economic and trade organizations address the process of trade as the political relations between two countries influences the trade between them and the obstacles of trading affect the mutual relationship adversely. To smoothen and justify the process of trade between countries of different economic standing, some international economic organisations were formed; these organisations work towards the growth of international trade.
A product, transferred or sold from a party in one country to a party in another country is an export from the originating country, an import to the country receiving that product. Imports and exports are accounted for in a country's current account in the balance of payments. Trading globally gives consumers and countries the opportunity to be exposed to new markets and products; every kind of product can be found in the international market: food, spare parts, jewellery, stocks and water. Services are traded: tourism, banking and transportation Advanced technology, industrialisation and multinational corporations have major impact on the international trade system. Increasing international trade is crucial to the continuance of globalisation. Nations would be limited to the goods and services produced within their own borders without international trade. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not.
Carrying out trade at an international level is a more complex process than domestic trade. The main difference is that international trade is more costly than domestic trade; this is due to the fact that a border imposes additional costs such as tariffs, time costs due to border delays, costs associated with country differences such as language, the legal system, or culture. Another difference between domestic and international trade is that factors of production such as capital and labor are more mobile within a country than across countries. Thus, international trade is restricted to trade in goods and services, only to a lesser extent to trade in capital, labour, or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example of this is the import of labor-intensive goods by the United States from China.
Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country; the history of international trade chronicles notable events that have affected trading among various economies. There are several models which seek to explain the factors behind international trade, the welfare consequences of trade and the pattern of trade; the following table is a list of the 21 largest trading nations according to the World Trade Organization. Source: International Trade Centre President George W. Bush observed World Trade Week on May 18, 2001, May 17, 2002. On May 13, 2016, President Barack Obama proclaimed May 15 through May 21, 2016, World Trade Week, 2016. On May 19, 2017, President Donald Trump proclaimed May 21 through May 27, 2017, World Trade Week, 2017.
World Trade Week is the third week of May. Every year the President declares that week to be World Trade Week. Lists List of countries by current account balance List of countries by imports List of countries by exports List of international trade topics Jones, Ronald W.. "Comparative Advantage and the Theory of Tariffs". The Review of Economic Studies. 28: 161–175. Doi:10.2307/2295945. McKenzie, Lionel W.. "Specialization and Efficiency in World Production". The Review of Economic Studies. 21: 165–180. Doi:10.2307/2295770. Samuelson, Paul. "A Ricardo-Sraffa Paradigm Comparing the Gains from Trade in Inputs and Finished Goods". Journal of Economic Literature. 39: 1204–1214. Doi:10.1257/jel.39.4.1204. Data on the value of exports and imports and their quantities broken down by detailed lists of products are available in statistical collections on international trade published by the statistical services of intergovernmental and supranational organisations and national statistical institutes; the definitions and methodological concepts applied for the various statistical collections on international trade differ in terms of definition and coverage.
Metadata providing information on definitions and methods are published along with the data. United Nations Commodi
An economist is a practitioner in the social science discipline of economics. The individual may study and apply theories and concepts from economics and write about economic policy. Within this field there are many sub-fields, ranging from the broad philosophical theories to the focused study of minutiae within specific markets, macroeconomic analysis, microeconomic analysis or financial statement analysis, involving analytical methods and tools such as econometrics, economics computational models, financial economics, mathematical finance and mathematical economics; the professionalization of economics, reflected in academia, has been described as "the main change in economics since around 1900." Economists debate the path. It is a debate between a scholastic orientation, focused on mathematical techniques, a public discourse orientation, more focused on communicating to lay people pertinent economic principles as they relate to public policy. Surveys among economists indicate a preference for a shift toward the latter.
Most major universities have an economics faculty, school or department, where academic degrees are awarded in economics. Getting a PhD in economics takes six years, on average, with a median of 5.3 years. The Nobel Memorial Prize in Economics, established by Sveriges Riksbank in 1968, is a prize awarded to economists each year for outstanding intellectual contributions in the field of economics; the prize winners are announced in October every year. They receive their awards on the anniversary of Alfred Nobel's death. Economists work in many fields including academia, government and in the private sector, where they may "...study data and statistics in order to spot trends in economic activity, economic confidence levels, consumer attitudes. They assess this information using advanced methods in statistical analysis, computer programming they make recommendations about ways to improve the efficiency of a system or take advantage of trends as they begin."In contrast to regulated professions such as engineering, law or medicine, there is not a required educational requirement or license for economists.
In academia, to be called an economist requires a Ph. D. degree in Economics. In the US government, on the other hand, a person can be hired as an economist provided that they have a degree that included or was supplemented by 21 semester hours in economics and three hours in statistics, accounting, or calculus. A professional working inside of one of many fields of economics or having an academic degree in this subject is considered to be an economist. In addition to government and academia, economists are employed in banking, accountancy, marketing, business administration and non- or not-for profit organizations. Politicians consult economists before enacting economic policy. Many statesmen have academic degrees in economics. Economics graduates are employable in varying degrees depending on the regional economic scenario and labour market conditions at the time for a given country. Apart from the specific understanding of the subject, employers value the skills of numeracy and analysis, the ability to communicate and the capacity to grasp broad issues which the graduates acquire at the university or college.
Whilst only a few economics graduates may be expected to become professional economists, many find it a base for entry into a career in finance – including accounting, insurance and banking, or management. A number of economics graduates from around the world have been successful in obtaining employment in a variety of major national and international firms in the financial and commercial sectors, in manufacturing, retailing and IT, as well as in the public sector – for example, in the health and education sectors, or in government and politics. Small numbers go on to undertake postgraduate studies, either in economics, teacher training or further qualifications in specialist areas. In Brazil, unlike most countries in the world where the profession is not regulated, the profession of Economist is regulated by Law. 1411 of August 13, 1951. The professional designation of economist, according to the said law, is exclusive to the bachelors in economics graduates in Brazil. According to the United States Department of Labor, there were about 15,000 non-academic economists in the United States in 2008, with a median salary of $83,000 the top ten percent earning more than $147,040 annually.
Nearly 135 colleges and universities grant around 900 new Ph. D.s every year. Incomes are highest for those in the private sector, followed by the federal government, with academia paying the lowest incomes; as of January 2013, PayScale.com showed Ph. D. economists' salary ranges as follows: all Ph. D. economists, $61,000 to $160,000. D. corporate economists, $71,000 to $207,000. The largest single professional grouping of economists in the UK are the more than 1000 members of the Government Economic Service, who work in 30 government departments and agencies. Analysis of destination surveys for economics graduates from a number of selected top schools of economics in the United Kingdom, shows nearly 80 percent in employment six months after graduation – with a wide range of roles and employers, including regional and international organisations, across many sectors; this figure compares favourably with the national picture, with 64 percent of economics graduates in employment. Some current we
Wassily Wassilyevich Leontief, was a Russian-American economist known for his research on input-output analysis and how changes in one economic sector may affect other sectors. Leontief won the Nobel Committee's Nobel Memorial Prize in Economic Sciences in 1973, four of his doctoral students have been awarded the prize. Wassily Leontief was born on August 5, 1906, in Munich, the son of Wassily W. Leontief and Zlata Leontief. W. Leontief, Sr. belonged to a family of old-believer merchants living in St. Petersburg since 1741. Genya Becker belonged to a wealthy Jewish family from Odessa. At 15 in 1921, Wassily, Jr. entered University of Leningrad in present-day St. Petersburg, he earned his Learned Economist degree in 1925 at the age of 19. Leontief sided with campaigners for academic autonomy, freedom of speech and in support of Pitirim Sorokin; as a consequence, he was detained several times by the Cheka. In 1925, he was allowed to leave the USSR because the Cheka believed that he was mortally ill with a sarcoma, a diagnosis that proved false.
He continued his studies at the Frederick William University and, in 1928 earned a Ph. D. degree in economics under the direction of Werner Sombart, writing his dissertation on The Economy as Circular Flow. From 1927 to 1930, he worked at the Institute for the World Economy of the University of Kiel. There he researched the derivation of statistical supply curves. In 1929, he traveled to China to assist its ministry of railroads as an advisor. In 1931, he was employed by the National Bureau of Economic Research. During World War II, Leontief served as consultant at the U. S. Office of Strategic Services. Leontief joined Harvard University's department of economics in 1932 and in 1946 became professor of economics there. In 1949, Leontief used an early computer at Harvard and data from the U. S. Bureau of Labor Statistics to divide the U. S. economy into 500 sectors. Leontief modeled each sector with a linear equation based on the data and used the computer, the Harvard Mark II, to solve the system, one of the first significant uses of computers for mathematical modeling, along with George W. Snedecor's usage of the Atanasoff–Berry computer.
Leontief set up the Harvard Economic Research Project in 1948 and remained its director until 1973. Starting in 1965, he chaired the Harvard Society of Fellows. In 1975, Leontief joined New York University and founded and directed the Institute for Economic Analysis, he taught undergraduate classes. In 1932, Leontief married poet Estelle Marks, their only child, Svetlana Leontief Alpers, was born in 1936. Leontief's wife Estelle wrote a memoir and Wassily, of their relations with his parents after they came to the US as emigres; as hobbies Leontief enjoyed fly fishing and fine wines. He vacationed for years at his farm in West Burke, but after moving to New York in the 1970s moved his summer residence to Lakeville, Connecticut. Leontief died in New York City on Friday, February 5, 1999 at the age of 93, his wife died in 2005. Leontief is credited with developing early contributions to input-output analysis and earned the Nobel Prize in Economics for his development of its associated theory, he has made contributions in other areas of economics, such as international trade where he documented the Leontief paradox.
He was one of the first to establish the composite commodity theorem. Leontief earned the Nobel Prize in economics for his work on input-output tables. Input-output tables analyze the process by which inputs from one industry produce outputs for consumption or for inputs for another industry. With the input-output table, one can estimate the change in demand for inputs resulting from a change in production of the final good; the analysis assumes. Input-output inspired large-scale empirical work. Leontief used input-output analysis to study the characteristics of trade flow between the U. S. and other countries, found what has been named Leontief's paradox. S. exports were labor-intensive when compared to U. S. imports. This is the opposite of what one would expect, considering the fact that the U. S.'s comparative advantage was in capital-intensive goods. According to some economists, this paradox has since been explained as due to the fact that when a country produces "more than two goods, the abundance of capital relative to labor does not imply that the capital intensity of its exports should exceed that of imports."Leontief was a strong proponent of the use of quantitative data in the study of economics.
Throughout his life Leontief campaigned against "theoretical assumptions and non-observed facts". According to Leontief, too many economists were reluctant to "get their hands dirty" by working with raw empirical facts. To that end, Wassily Leontief did much to make quantitative data more accessible, more indispensable, to the study of economics. 1925: Баланс народного хозяйства СССР. in Planovoe Khozyaystvo.