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Mexico and India

Introduction

Macroeconomics refers to the study of an aggregate economy as a whole. It does not involve the behavior of particular markets, individuals or companies that exist in a country, but the whole country’s economy. It mainly revolves around forecasting the national economy as a whole, analyzing all relevant economic factors, trends and patterns and how they influence each other. The factors ascribed to macroeconomics include gross domestic product and its growth rate, employment and unemployment rates, exchange rates, inflation rates, trade deficit and interest rates on government debts in short term periods. The gross domestic product is used to measure a country’s economy in light of national income and output. Inflation is the increase of price levels of goods and services bringing an imbalance of demand and supply of money and is measured in percentage while the exchange rate is viewed as the conversion of one currency to a different currency. Trade deficit takes place when the price of imports exceeds the value of exports of a country. Other areas it covers are economic growth, monetary and fiscal policies and the investment levels of a country. I will look into two large macro economies-Mexico and India.

Mexico is known in Latin America to be the second largest economy with a population of 122.3 million with a GDP of 1,260,914,660,977.1 dollars, growth rate of 1.1% and an inflation rate of 2.0% as of 2013 (Mexico 82). It has recorded a good increase in its GDP for the last ten years as of 2013 at 1,260,914,660,977.1 dollars, 2012 at 1,186,460,890,129.9 dollars, 2011 at 1,170,085,556,895.9 dollars, 2010 at 1,051,627,949,327.0 dollars, 895,313,142,212.0 dollars in 2009, 2008 at 1,099,073,123,655.0 dollars, 1,043,394,940,067.7 dollars in 2007, 2006 at 966,735,935,557.8 dollars, 866,346,483,685.3 dollars in 2005, 2004 at 770,267,585,947.2 dollars and 713,284,260,879.8 in 2003. The poverty level in Mexico is as follows: 2012 at 52.3%, 2010 at 51.1%, 2008 at 47.8%, 2006 at 42.9% and 2005 at 47.0%. These statistics bring the unemployment rate of Mexico’s population for the last ten years in, 2013 at 4.9%, 2012 at 4.9%, 2011 at 5.3, 2010 at 5.2 %, 2009 at 5.4%, 2008 at 3.9%, 2007 at 3.7%, 2006 at 3.59%, 2005 at 3.5% and 2004 at 3.9%. Mexico has a high rate of employment as compared to unemployment rates due to these statistics. Challenges faced in maintaining a high rate of employment are attributed to the population within the country. Mexico’s income level stands at the upper middle income. Its GDP growth rate for the last ten years are as follows, 2013 at 1.1%, 2012 at 4.0%, 2011 at 4.0%, 2010 at 5.1%, 2009 at (4.7%), 2008 at 1.4%, 3.1% in 2007, 2006 at 5.0%, 3.0% in 2005, 2004 at 4.3% and 1.4% in 2003. Mexico’s GDP growth rate is good and reflects how its economy is growing rapidly. Its inflation rate for the last four years is as follows: 2013 at 2.0%, 2012 at 3.2%, 5.3% in 2011 and 4.5% in 2010. This shows a drastic decrease in the inflation rates as reflected within the last four years. Mexico’s balance of trade has been experiencing both surplus and deficit in its economy. As of December 2012, it recorded a surplus of 163 million dollars for the first time after 15 years. Mexico always experiences big margins of deficits each year. This is attributed to the unbalancing of the exports to imports of the country. The country tends to import more than it exports, hence bringing in the deficits. Mexico’s main exports include crude oil at 13%, cars at 8.9%, vehicle parts and accessories at 5.0%, computers and video displays at 5.4% as compared to the high costs of things it imports like broadcasting accessories and equipment at 3.4%, 2.6% in cars, computers at 3.3% and 2.8% in telephones. Mexico's economic strength is attributed to a developed market, competitive intermediaries, good infrastructure and efficient financial system in the banking sector. This has resulted in high rates of employment, favorable lending rates by the Mexican central bank and good health services provided by the government to its citizens, increasing productivity. The rate at which the GDP has increased in the past few years has shown how the economy is growing at a positive rate. The decrease in inflation rates has also influenced the growth of the economy. The balance of trade, though not in a stable condition, helps the country to improve its export to imports. The country has also shown much effort in creating employment as shown in the decrease in unemployment rate in the country. Some of the challenges faced in the economy include high rates of corruption in the political environment, high level of population growth, high levels of poverty, high crime rate as a result of drug wars and the unbalancing of the exchange rates to other currencies.

India is a large country in the Asian continent. It is known to be the fourth largest worldwide in economic growth in light of Purchasing Power Parity basis. It is also known to be a business destination for investors with a diversified base of natural resources, a powerful macroeconomic economy and is large population of manpower provision. Many companies have set up their firms in India to enjoy these advantages and increasing their output and profit margins. Production costs in India are much cheaper and affordable as compared to other countries like the United States of America. It had a population of 1.252 billion people as at 2013 equivalent to about 17.5% of the world's population. Its unemployment rate annually for the last ten years is at 2013 at 3.6%, 2012 at 3.6%, 2011 at 3.5%, 2010 at 3.5%, 3.9% in 2009, 2008 at 4.1%, 3.7% in 2007, 2006 at 4.3%, 4.4% in 2005, 2004 at 3.9% and 3.9% in 2003 depicting the low level of unemployment rate. It has recorded a good increase in its GDP. The country’s GDP for the last ten years is as follows, 2013 at 1,875,141,481,990.8 dollars, 2012 at 1,835,818,207,215.0 dollars, 1,843,016,600,064.7 dollars in 2011, 2010 at 1,708,458,876,829.9 dollars, 1,365,372,433,341.3 dollars in 2009, 2008 at 1,224,097,069,459.7 dollars, 1,238,700,195,645.1 dollars in 2007, 2006 at 949,116,769,619.6 dollars, 834,215,013,605.9 dollars 2005, 2004 at 721,585,608,183.5 dollars and 618,356,467,437.0 dollars 2003. Its GDP growth rate also has a positive influence on the growth of its economy. India’s GDP growth rate for the last ten years are as follows, 2013 at 6.9%, 2012 at 5.1%, 6.6% 2011, 2010 at 10.3%, 8.5% in 2009, 2008 at 3.9%, 9.8% 2007, 2006 at 9.3%, 2005 at 9.3%, 7.9% in 2004 and 2003 at 7.9%. Its balance of trade varies in surplus and deficit. The economy tends to vary in export to import ratios. It has recorded a high balance of trade of 258.90 million dollars in March 1,977 and a lower balance of trade of -20,210.90 million dollars in October 2012. India’s currency is the rupee. For the past years, the exchange rate of the rupee to other world currencies like the dollar has always been an imbalance owing to the shaking of the world economy and the inflation rates that have occurred in the county. Its exchange rate is still strong as compared to other world currencies. Challenges faced by the Indian economy include inadequate infrastructures like poor roads, climate change, reducing productivity in the agricultural sector, the inequality in wealth and income of the people, high corruption rates influenced politically, inefficient and ineffective government bureaucracy, policy instability, high levels of inflation, hindrance in access to finance, restrictive labor laws and regulations and an insufficient educated workforce.

Conclusion

The macroeconomics of Mexico and India differ in many different ways including the GDP growth rate, unemployment rate, inflation rate and the balance in trade experienced between the two countries. It is clearly seen that both countries experience a drastic improvement in these variables that have improved their economies in the past ten years. Though some challenges are faced in both countries, the level of improvement in their economies is very high.

 

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