Sunday, May 23, 2021

Japan – Well-being

 Japan performs well in some measures of the OECD Better Life Index Ranking. They rank top at personal security. The ranks for income and wealth, education and skills, jobs and earning, housing, personal security and environmental quality are above the OECD average, however, they are below the average in rankings in regards to civic engagement, subjective well-being, social connections, work-life balance and health status. Japan is in the 56th place for the Happiness Index Ranking, an improvement from their 2020 ranking of 62nd. 


In terms of eco-friendliness, Japan has a score of 28.3 in the Happy Planet Index, ranking 58th out of 140 countries. They are in the lower quartile in terms of scores. Although their life expectancy (83.2 years old) and well-being (6/10) is alright, their ecological footprint is high, at 5 global hectares per person. The inequality in Japan is quite low, at 9%.


Japan, financially as a country, does well. Japan has one of the highest GDP per capita in the world, as they score high on traditional factors of life quality (income, wealth, education, jobs, earnings, housing and personal security – which all positively correlate with each other.) However, there seems to be a lack of connection between society with one another. They are lower in civic engagement, subjective well-being, social connections, work-life balance and health status. They could focus on this to improve overall life quality for citizens in Japan.


Canada - Wellbeing

OECD Better Life Index

Canada performs very well relative to most other countries in the Better Life Index. It ranks above average in all of the measurements and 4th overall.

Metric

Score

Housing

7.8

Income

5.4

Jobs

8.0

Community

7.6

Education

7.9

Environment

8.3

Civic engagement

6.8

Health

9.6

Life Satisfaction

9.1

Safety

9.1

Work-Life Balance

7.3

Table 1: Canada’s score in each of the OECD better life index’s categories

Canada performs significantly well at health, with a life expectancy of 82 years, two years higher than the OECD average of 80 years. The level of atmospheric PM2.5 is 7.3 micrograms per cubic meter, lower than the OECD average of 13.9 micrograms per cubic meter. Canada also does well in terms of water quality, as 91% of people say they are satisfied with the quality of their water, more than the OECD average of 81%.

Canadians are also more satisfied with their lives than the OECD average. When asked to rate their general satisfaction with life on a scale from 0 to 10, Canadians gave it a 7.4 grade on average, higher than the OECD average of 6.5.

Money, while it cannot buy happiness, is an important means to achieving higher living standards. In Canada, the average household net-adjusted disposable income per capita is USD 30 854 a year, lower than the OECD average of USD 33 604 a year. But there is a considerable gap between the richest and poorest – the top 20% of the population earn about six times as much as the bottom 20%.

Although only 4% of Canadians work very long hours, less than the OECD average of 11%, they only devote 14.6 hours to personal care and leisure, slightly lower than the OECD average of 15 hours. They also have a significant gender disparity, with males working the majority of the long hours compared to women.

Happiness Index

In the world happiness report’s Happiness Index, Canada also performs similarly well, placing 14th out of the 196 countries considered. Although it’s placing is significantly lower than in the OECD Better Life Index, percentage-wise, it actually performs better, placing above the 95th percentile in the World Happiness Index compared to just below the 90th percentile in the OECD Better Life Index.

The World Happiness Index is much more concerned with how individuals perceive their own happiness than their actual well-being. While this can be considered subjective, at the end of the day how well someone perceives their life is going can be more impactful to their total well-being than how well-off they are (compared to others). In any case, Canada performs excellently in both metrics.

Graph 1: Canada’s Human Development Index vs. its Happiness Index plotted with time

It is interesting, however, to note that Canada’s Happiness Index has decreased on average across the last 15 years. Even though its Human Development Index has steadily increased, reaching above 0.92 in 2019, the Happiness Index has decreased from 74.2 to  71.8. Perhaps having more material goods has made society more materialistic as a whole, causing total happiness to decrease. Increased social instability and political conflict may have also led to a decreasing total Happiness Index, a trend that may be mirrored and experienced by other countries as they continue to develop. Truly, money doesn’t always buy happiness.

Happy Planet Index

The Happy Planet Index is a more long-term and objective attempt to interpret the findings of the World Happiness Index, combining it with average life expectancy, inequality and ecological footprint to get a weighted score for each country. In this metric, although Canada performs excellently in life expectancy and inequality as well, the country places 85th due to its large ecological footprint (136th out of the 140 countries measured), It is to be noted, however, that the happiness score used here (which should be solely based on the world Happiness Index) differs from the ranking found in the 2020 report, potentially suggesting that old data has been used (and Canada may place even lower).

Category

Amount

Relative Ranking

Average Life Expectancy

81.7 years

11th

Happiness Index

7.4 / 10

7th

Ecological Footprint

8.2 global hectares / person

136th

Inequality

9%

17th

The significant ecological cost that comes with such a high happiness indicates a conflict of interests between present happiness and future happiness, with the environment being sacrificed to satisfy people’s present wants and needs. Clearly then, Canada’s model for achieving happiness is not sustainable on a global scale, and even within Canada itself, so the country must look for ways to maintain current happiness without jeopardizing the future. This is an extremely difficult task that requires societal attention and cooperation, but with the democratic structure of Canada’s government, it seems challenging for any long-term oriented initiatives to pass legislation, especially with the incumbent politicians oriented towards current needs in order to get re-elected. How Canada deals with improving the balance between current and future happiness levels is an extremely difficult but interesting problem to watch out for in the coming years.

Wednesday, May 12, 2021

Poland - Economic Growth

 Context

Poland is a central-eastern european country with a population of around 38 mln. It’s economy emerged after the liberalization of highly inefficient planned economy following the economic reforms of 1989 after the fall of eastern block.  It’s achieved a stable growth over 28 years of around 6% , a record high in the EU and only surpassed by Australia in the world economy, and making it the only country in europe to avoid financial crisis recession in 2007-2008. It’s considered to be a developed and industrialized economy, with very high standards of living, safety and economic freedom. The largest component of its economy is the service sector (62.3.%), followed by industry (34.2%) and agriculture (3.5%).


Raw Data Tables




2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Real GDP bln $

479.16

528.67

500.85

524.41

545.28

477.58

471.85

526.75

587.15

592.40

580.89

Real

GDP growth %

3.7%

4.8%

1.3%

1.1%

3.4%

4.2%

3.1%

4.8%

5.4%

4.5%

-2.8%

Real GDP per capita $

12,601$

13,886$

13,158$

13,777$

14,342$

12,566$

12,427$

13,871$

15,460$

15,600$

15,303

$




Generally, there has been a stable growth observed in the economy between years 2010 to 2020 of around 4%. The diagram shows a natural business cycle present in the economy, with economic boom (growth of around 4.3%) in years 2010-2011, then economic slowdown in years 2012-2013 (growth around 1.2%), economic recovery (growth around 3.5%) in the following three years and economic boom in years 2017-2019 (growth around 5%). The rise in output slowed down by the 2019 covid pandemic which resulted in a relatively mild recession of -2.8%.

The Real GDP per capita increased by around 2% annualy, which gives a broad estimate of the wealth increase in the country. The GDP per capita is projected to increase rapidly as Poland faces a problem of low fertility rate and the declining population, while with still growing economy. The population decline however could hinder the long term economic growth. 

Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

GDP Per capita PPP

21,088

22,827

23,745

24,567

25,475

26,862

28,322

30,160

32,987

35,165

33,739


A even greater growth wa observed in the GDP per capita PPP which adjusts for the average prices in the economy and it shows the more accurate measure of wealth of an average person in the country. The country has achieved a increase of around 6% growth annualy the value of this indicator. The covid pandemic caused it to decrease by 5%, however it’s expected to rise again in the following years. It can be mentioned that in 2019 Poland surpassed Portugal in this indicator making it a relatively more wealthy nation. Moreover, it’s projected that Poland will surpass Spain and Italy by the end of this decade which has already happened in the case of Poland’s southern neghbor - the Czech republic, which already surpassed both of these countries.


New Zealand - Economic Growth

 Context

New Zealand is an island country in the South Pacific Ocean which has a population of around 5 million people. Over the last 30 years, New Zealand’s economy “has gone from being one of the most regulated in the OECD to one of the least regulated, most free-market based economies.” With exports accounting to 30% of its GDP, New Zealand has an internationally competitive and very export-driven economy dependent on its exports of agricultural products and has been expanding its trade relations over the past 50 years. 


GDP Analysis

From 2010-2020, New Zealand’s nominal GDP and real GDP have been unstable; its real GDP  experienced increases from 2010-2014 and 2015-2018 and decreases from 2014-2015 and 2018 to 2019. 

Real GDP per capita continuously increased from 2010-2014 succeeding an unprecedented reduction of 13.5% from 2014-2015 resulting from a recession in New Zealand’s real GDP in the same year. The percentage change in the real GDP should be the same as the percentage change in the real-GDP per capita. This may have resulted in a decrease in consumer spending, decrease in production for firms, lower employment rates, and other economic activities that may have led to a decrease in the overall wellbeing of New Zealanders. Real GDP and real-GDP per capita continued to increase from 2015-2018 before experiencing another recession and a decrease in real-GDP per capita of 0.48%. This may have not led to much drastic changes in the economy, but its negative externalities may have affected low-income households more significantly. 


Table 1: Nominal GDP, Real GDP, Real GDP % Change & Real GDP per capita. 

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Real GDP (current prices) in USD

146.619 Billion

168.51 Billion

176.248 Billion

190.846 Billion 

200.922 Billion

177.468 Billion

188.244 Billion

205.416 Billion

207.921 Billion

206.929 Billion

Nominal GDP (2010 prices)

146.619 Billion

150.078 Billion

153.439 Billion

157.472 Billion

163.182 Billion

169.087 Billion

175.305 Billion

180.85 Billion

186.486 Billion

191.728 Billion

Real GDP Growth 

1.6%

2.4%

2.2%

2.6%

3.6%

3.6%

3.7%

3.2%

3.1%

2.8%

Real GDP per capita (current prices) in USD

33,700

38,438

39,983

42,963

44,486

38,501

39,928

42,674

42,428

41,558

Source: The World Bank

https://data.worldbank.org/country/new-zealand


Figure 1: Real GDP per capita (plotted on MS Excel)



Extension Exploration GNI Per Capita Analysis 


Table 2: New Zealand’s GNI and GDP 2010-2018

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

Real GNI (current prices) in USD

139.336 Billion

160.881 Billion

168.914 Billion

183.321 Billion

192.813 Billion

171.56 Billion

182.141 Billion

197.636 Billion

202.647 Billion

Nominal GDI (2010 USD prices)

139.336 Billion

143.216 Billion

147.047 Billion

151.089 Billion

156.422 Billion

163.292 Billion

169.416 Billion

173.623 Billion

179.632 Billion

GNI Per capita (current intl. $) 

29,710

31,260

31,620

34,800

35,720

36,110

38,520

40,510

43,000

Real GDP (current prices) in USD

146.619 Billion

168.51 Billion

176.248 Billion

190.846 Billion 

200.922 Billion

177.468 Billion

188.244 Billion

205.416 Billion

207.921 Billion

Nominal GDP (2010 prices)

146.619 Billion

150.078 Billion

153.439 Billion

157.472 Billion

163.182 Billion

169.087 Billion

175.305 Billion

180.85 Billion

186.486 Billion

Real GDP per capita (current intl. $) 

31,260

32,743

32,996

36,231

37,221

37,354

39,804

42,101

44,117

Source: The World Bank

https://data.worldbank.org/country/new-zealand


GNI per Capita Analysis:

GDP is the total market value of all final goods and services produced in an economy in a given period of time. GNI, on the other hand, is the total income earned by a country’s factors of production regardless of where the assets are located, in contrast to GDP, which only includes production which takes place on the country’s land. Net income from abroad means that income earned by factors of production by non-nationals in the domestic economy is deducted, while income earned by factors of production outside domestic territory and owned by nationals is added.

GDP per capita is consistently around 2.5% higher than GNI per capita. This may stem from there being a sum of overseas workers working in New Zealand and international assets based within the country. This makes GNI arguably a better indicator of wellbeing, when comparing both GNI and GDP.  

Widening the lens (looking back at GNI growth since 1990)

Figure 2: GNI per capita growth (WorldBank)

Data Source: https://data.worldbank.org/indicator/NY.GNP.PCAP.PP.CD?locations=NZ


WorldBank has a graph Note that 2020 data is not yet available here. However, I found that GNI per capita had actually been increasing year-on-year (this is shown as annual growth above 0%) not just since 2010, but all the way back to 1991. 


New Zealand’s Big Mac Index

The Big Mac Index was introduced by The Economist in 1986 as a way to measure the purchasing-power parity between two varying countries’ currencies. It tests the idea that in the long run, exchange rates should move towards the rate that equalises prices in different countries by looking at the McDonald’s Big Mac burger as it is available in most countries around the world.


Taking into account the “varying labour costs, barriers to migration, and trade” that may undermine the purchasing-power parity,  the Big Mac GDP-adjust index predicts what the actual prices of Big Macs should be depending on a country’s GDP per capita. “The difference between the predicted and the market price is an alternative measure of currency valuation”(The Economist, 2021)


In relation to New Zealand, according to The Economist, as of January 2021, the “New Zealand dollar is 4% overvalued against the US dollar”; however, “a Big Mac costs 14% less in New Zealand (US$4.87) than in the United States (US$5.66) at market exchange rates.” This comes to show that even if the value of New Zealand’s currency is higher than that of US's, the factors of “varying labour costs, barriers to migration, and trade” may have highly influenced the result. Furthermore, the US has a much higher GDP per capita in comparison to New Zealand with the UNited States having real GDP per capita 42.8% higher than that of New Zealand’s. 

Figure 3: Overview of the GDP-adjust Big Mac Index for New Zealand 2011-2021 (The Economist)


Data Source: https://www.economist.com/big-mac-index


As of the 12th of January, based on differences in GDP per person, a Big Mac should cost 17% less suggesting that the dollar is 4.1% overvalued.(The Economist, 2021) This figure implies that the value of New Zealand dollars have been unstable in the past 10 years — experiencing a shifting increase and decrease in its value. 



Sources: 

https://www.newzealandnow.govt.nz/invest-innovate-in-new-zealand/nzs-business-environment/economic-overview

https://www.stats.govt.nz/topics/population

https://www.britannica.com/place/New-Zealand

https://www.stats.govt.nz/indicators/gross-domestic-product-gdp

https://data.worldbank.org/country/new-zealand

https://www.economist.com/big-mac-index