Limitations of GDP

An environmentally damaging practice that can diminish a natural resource thus negating the continued use or availability of that resource.E.G 1.1. China fishing industry- One of the largest fishing

industries in the world.2. 2005 – Aquaculture harvest was 32.4million tonnes.3. Exports valued at $7.7billion US.4. UN FAO – estimated 70% of the fish population is fully

used or in crisis.

1. Unsustainable practises

E.G 2. Fossil fuel consumption

1. Limited supply2. Mass consumption of cheap fossil fuels3. Saudi Arabia – worlds largest oil producer approaching

end of production4. Replenishment rate of fossil fuels takes millions of

years

1. Unsustainable practises

32,400,000-22,680,000 9,720,000 tonnes

China fishing industry 7,700,000,000-5,390,000,000$2,310,000,000 US

-70%

The sum of all goods and services which are produced

by a country in a given period of time. Bad composition of GDP – how diversified the

production within an economy is.E.G 1.1. Saudi Arabia 2009: Agriculture – 3.2%

Services – 36.4% Industry – 60.4%

2. Petroleum & petroleum products made up 90% of total exports.

2. Bad composition of GDP

E.G 2.1. Mozambique 2007: Industry – 8%

Services – 15% Agriculture – 77%

2. Main exports include: Cotton, sugar, cashews and citrus.

2. Bad composition of GDP

Transactions which producers provide to people for free or at economically insignificant prices.E.G 1.1. Second hand sales – old equipment, vehicles,

un-used stock. E.g. Bus van = €25,000 – annual depreciation 20%

Value after 3 years = €10,000Sold for €9,500

Non-production transactions

E.G 2.1. Transfer payment – social welfare,

unemployment benefits, pension.2. 2012 – 1.469million people in receipt of a

weekly welfare payment.3. 2012 expenditure - €20.774billion4. Decrease of 0.9% over 20115. Not counted as it is money transferred rather

than paid for products or services.

The unequal distribution of household or individual income across the various participants in an economy.1. E.g. 70% of the total income is controlled by

20% of the population.2. Overall wealth of a country is primarily

determined by the larger income of the minority of the population.

Income inequality

E.G 1.1. Gini coefficent - measures degree of

inequality in distribution of income in a country.

2. 0=perfect equality, 1=perfect inequality3. 2011 EU average = 30.74. 2011 – Ireland rank 20 – 31.15. Norway rank 1 – 22.9

E.G 2.Saudi Arabia 1. Oil industry 2012 - $300billion2. Population – 28million3. ¼ of population on or below poverty line4. Estimated 2-4million natives live on less than

$530 a month - $17 a day5. King Abdullah's personal fortune at $18bn

Population

China

20121. Population – 1.351

billion2. GDP – 8.227trillion

(USD)3. Per capita – 6,091.01

Switzerland

20121. Population –

7.997million2. GDP – 632.2billion (USD)3. Per capita – 79,052.34

Underground economy – any economic activity that takes place outside of government control.Annual cost Ireland - €6.1billionE.G 1.1. Construction industry – cash only/cash in-

hand, no VAT2. Legitimate contractors- €250m to €500m

back into the industry

6. Black economy

E.G 2.1. Tobacco industry - €3 million per week from

illegal tobacco.2. 2011- 15% of smokers consuming illegal

cigarettes3. 2012- 95.6 million cigarettes seized valued at

€43.3 million

6. Black economy

Unemployment1. Ireland 2013 – 13.3%2. 2012- 1.469million people in receipt3. 2012 social welfare - €20.774billion4. Budget 2014 – Job seekers allowance 14 Jan:

- No children, aged 18-24 = €100 per week-No children, aged 25 = €144 per week-Aged 26 increase = €188 per week

B. ii)Economic effects of black market in

Ireland

5. High unemployment benefits – beneficial to

remain unemployed and continue to claim benefits, rather than work for a lower wage.

6. Nixers- people working off the books, cash in hand, continue to claim unemployment benefits.

B. ii)Economic effects of black market in

Ireland

Lost tax revenueCigarette smuggling1. Annual government loss - €937million lost tax

revenue.2. Retailers - €537million, job losses.3. 32.8% discarded cigarette packs are non-

domestic.4. Ireland – largest smoker of smuggled

cigarettes in entire EU 2012

B. ii)Economic effects of black market in

Ireland

5. Ireland 2013 – most expensive price per pack

of 20 cigarettes in Europe.6. Retail price - €9.50 per pack7. Collected tax - €7.728. Illegal cigarettes purchased - €0.50c per pack9. Selling price - €4.5010.Difference - €5.00

B. ii)Economic effects of black market in

Ireland