Unit 6-Economic Environment
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Transcript of Unit 6-Economic Environment
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Presented By:
Sujaya Thapa
KVC, IV Sem
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Concept The totality of economic factors, such as employment,
income, inflation, interest rates, productivity, andwealth, that influence the buying behavior ofconsumers and institutions.
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Types of Economic System Market Allocation
Market system is economic democracy where consumerdecides what will be produced & by whom.
Command Allocation Government ownership & control of basic means of
production, distribution & exchange.
State planners determine number & types of
commodities to be produced, distribution & prices. Mixed Allocation
Falls between market & command allocation systemwith both public & private sector co-exist.
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Dimension of the Economy The Economic dimension
Indicates purchasing power & pattern of consumption ofpeople. Eg: GNP, Per Capita Income, Income Distribution
The Socio-economic dimension
Provides data on quantity of people, indicate demographiccomposition of a country. Eg: Population, Regionaldistribution & density
The Industrial & Agricultural dimension Potential to supply goods, services, raw materials.
The Economic Development dimension
Reflected in economic development plans, policies, strategies.
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Economic Dimensions Gross National Product (GNP)
It is the total sum of all goods & services produced in ayear including net property income from abroad (i.e. net
profit, dividends, rent & interests). Gross Domestic Product (GDP) Gross National Product all foreign incomes
National Income (NI)
Total value of all income in a nation during a given period Per Capita Income
Total national income divided by the number of peoplein a nation.
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Contd
Inflation It is a rise in the general level of prices of goods and services
in an economy over a period of time.
Monetary Policy It is the process by which the monetary authority of a country
controls the supply of money, often targeting a rate of interestfor the purpose of promoting economic growth and stability.
Fiscal Policy It is the use of government revenue collection (taxation) and
expenditure (spending) to influence the economy.
The two main instruments of fiscal policy are governmenttaxation and expenditure.
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Socio-economic Dimensions Population
Higher the number of inhabitants in a country, greaterthe market potential.
Population size provide basis for estimating consumptionfor durable, luxurious, low priced products.
Regional Distribution & Density
Regionally distributed in Mountain & Hilly regioncontain 78.8% of land with 51.5% people & 21.2% land inTerai region covered with 48.5 % people.
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Contd
Age & Sex structure
15 years & above is 59.7% of total population, below 15 yearsare 40.3% & 49.8 % of total population are male & 50.2% are
female that determines market of a nation. Labor Force Composition
All types of skilled, semi-skilled & un-skilled labor withdifferent age, gender & ethnicity
Employment Trends Quitting traditional family occupations like farming,
cottage.
Moving towards cities for good jobs.
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Contd
Migration & foreign Employment
Increasing migration in urban areas due to familypressure, better living standards etc.
Migration also results due to better employmentopportunities.
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Industrial & Agricultural
Dimensions Industry
In year 1960s, jute processing, tea production were done.
70s & 80s, export oriented carper, garment industries
which contributed 16% in GDP. Service Sector (tourism, education, healthcare etc)
Agriculture Involvement of 80% of population & backbone of Nepal.
It is the source of living for 90% of poor population.
33% of contribution in GDP.
Fishery Floriculture, Poultry Farming
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Economic Development
Dimensions Business sectors were highly influenced by National
Planning activities.
Era of planned development programs were started
from year 1956. First Plan (1965-1961)
Objective of economic & social development
Second Plan (1963-1965) Objective of infrastructural development
Third Plan (1965-1970) Rapid economic growth through transportation &
electricity
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Contd
Fourth Plan (1970-1975)
Emphasis on regional development
Fifth Plan (1975-1980) Development in infrastructure & social sectors like,
roads, power, telecommunication, family planning etc
Sixth Plan (1980-1985) Priority to sectoral growth that focus on human resource
development & participations. Seventh Plan (1985-1990)
Prioritized minimum quality of life for the people.
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Contd
Eighth Plan (1992-1997)
Economic policy reforms, Foreign Direct Investment
Ninth Plan(1997-2002) Poverty alleviation & Industrial development
Tenth Plan(2002-2007)
Poverty alleviation
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Thank You!!!