Macro & Micro

Indicators of Business
Environment
GROWTH INDICATORS
 National income
 Sector wise share
 Industrial production
 Agriculture production
 Inflation rate
GROWTH INDICATORS..
 Capital Investment
 Retail trade turnover
 Industrial producers price index
 Exchange rate
 Employment
 Foreign trade
Growth indicators..
NATIONAL INCOME
Versions of national income:
 GDP

 GNP

 NDP

 NNP
Growth Indicators..
(National income)

GDP (Gross Domestic Product):

Value of all the final goods & services
produced within the country’s
geographical territory, irrespective of
the ownership of resources.
Growth Indicators
cont..
(National income)

GNP (Gross National Product)

Income produced through the
country’s owned resources,
irrespective of the place of
production..
Growth Indicators
cont..
(National income)

GNP= GDP- NFIA (Net Factor

Income from Abroad)
Growth Indicators..
(National income)

NDP (Net domestic product)

Total value of production minus
the value of amount of capital
used in producing that output..
Growth Indicators..
(National income)

NDP = GDP - Depreciation

Growth Indicators
cont..
(National income)

NNP (Net National Product)

It is the total income produced
through the country’s owned
resources minus the value of
capital consumed in generating
that income
Growth Indicators
cont..
(National income)

NNP = GNP - Depreciation

Growth indicators..
Sector wise Shares
In Industrialized countries service
sector makes the maximum
contribution..
(generally exceeding 60%)
Growth indicators..
Agricultural output
The level of agricultural output is a key
indicator of macro economic analysis..
Industrial Production
Contribution by different industries in total
industrial production..
Growth indicators..
Inflation

A process in which the general

price index records a sustained &
appreciable increase over a period
of time.
Inflation..
Type of inflation Inflation rate (%)
CREEPING 2-5
WALKING 5-10
RUNNING 10-20
GALLOPING 20-50
HYPER 50 & Above
Growth indicators..
Capital investment:
Domestic & foreign investment..

Retail trade turnover:

Revenue of retail trade..
Growth indicators..
Exchange rate
The price of one unit of a currency in terms
of the number of units of another currency.
Infrastructure
Power, telecommunications, roads, railways,
cargo handling etc..
Growth indicators..
Employment
Rate of employment & quality of
human resources
Foreign trade
Foreign trade as a percentage of
national income is commonly used as
a measure of a country’s openness to
globalization.
Growth indicators..
FOREX RESERVES
Consists of foreign currency assets, gold
holdings of central banks & SDR’s..
Forex reserves indicate the ability
of a country to:
 Pay of imports

 Discharge external liabilities

 Raise fresh borrowings

Measuring
Development..
HDI (Human Development
Index):
Devised by the UNDP to measure
the economic achievements of the
nation in combining economic
growth & social welfare.
Human development
index..
Based on 3 major factors:
1) Life expectancy at birth

2) Levels of educational attainment

3) Gross domestic product per

capita
HDI is essentially a score between 0
& 1.
Development
indicators..
GDI (Gender development index)

GEM (Gender empowerment

measure)

HPI (Human poverty index)

Indicators of
globalization
 Foreign Direct Investment
 Foreign portfolio investment
 Trade
 Global governance by international
organizations like WTO
 Business restructuring

Flexibility
 Closeness to markets
 Diversification
Goldman Sachs Economic
Research Report
 By 2050, the BRICs ( Brazil, Russia,
India, China) economies together
could be larger in U.S. dollar terms
than the G-6. (U.S, Germany,
Japan, U.K., France and Italy)