BUSI 1695: Comparative Analysis of Economic Power: G7 vs E7 Countries

This report, prepared for BUSI 1695, examines the evolving landscape of global economic power, focusing on the shift from the G7 to the E7 countries. It begins with an introduction outlining the report's scope, which includes an analysis of GDP, economic influences, and the roles of key countries ...Read More

BUSI – 1695

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
A. Role of state along with the 3 different countries .................................................................3
B The power of Countries in G7.................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
.........................................................................................................................................................1

INTRODUCTION
The report discusses in the below paragraphs will include the projection of economic
power which would transfer from the countries included in G7 to the E7. This would be
performed by doing an analyses of the GDP of countries and the degree of influences of specific
countries upon the global economy. These influential countries may include China. USA. Russia
and etc. This report also includes the various kinds of economies, power which these G7
countries possess, the criteria taken as indicators that are used to measure the growth of the
global economy, the essence of emerging countries that could be considered as a fastest moving
economies.
TASK
A. Role of state along with the 3 different countries
This particular section would talk about the various kinds of economic system which
includes the capitalism driven economies and transition driven economies. It should be noted that
the US country has the greatest influence upon the global economies. The growth and stability of
US country is so strong and influential, specially in 20th century, that this century now is referred
as American Century (Gulyaeva and et al., 2018). Its activities and policies do affect the
operational and business activities of other countries. It should be also noted that a country
growth does get affect by the businesses present there. There are some relationships which exist
between these two factors. Apart from this. The country China is also playing an important
character in BRCIS, emerging and Asian countries which has contributed in the growth of global
economies.
A.1 Market economies of Capitalism and state driven
Capitalism driven economies are those in which the private businesses and individuals
are the owner of capital goods. Here the production of the products totally depends upon the
phenomena of demand and supply, which is called as Market economy. In such markets the
companies and organisations operates in the free market. Free market is the state where there is
no such regulations or control upon the organisational working (Ragulina, 2019). The businesses
run free in the market place. Here the prices are according to the wish of companies and the there
is a heavy degree of competition in such markets.

According to Ragulina, (2019), China's as a capitalist economy has adopted the capitalist
economic system. As per the Chinese transition it is observed that the growth and the profit of
China's per capita income as been increased by 4 times in last couple of decades. Also, as per the
report predicted by PwC, the economy of China would keep on increasing in the near future also.
Apart from this, Maddison has also stated that the country China has around more than half of
the sum total of all transition economies GDP's from the calculations presented by the
organisation (.Shvaiba, 2018.).
A.2 Transition economies
An economy are the economies which are planning to take a major shift from state
controlled economy to the free market. That economy comes under the category of transition
economies. These countries come under the head of developing economies. For example, The
country, China had made a decision about shifting its current economic system to a mixed
economy in such a way that the growth of market driven economy was sustainable. To
implement such changes the country has to made the necessary changes in their operational
boundaries for businesses. To perform the same, the government has to remove majority of their
policies and regulations regarding the operations of businesses so that the businesses can operate
in the free market. The permission needs to get granted from the state government with regard to
bring such a major change the country's economic system.
A.3 Indicators
To analyse that whether an economy is performing good or not, it is very much important
to analyse its growth and profits which it is making. GDP is taken as a measure or method to
analyse the growth in an economy. GDP is the sum total of the value or price of total number of
good and services which are produced in an economy during a particular period of time, say one
year. GDP of an economy is used as a tool or method since 1940. From the GDP the economy
can analyse or examines whether they have grow in the terms of profits and developments. If the
GDP of an economy come higher as compared with the its previous 3 months GDP then it can be
said that the economy is growing and developing in this operations (Sibirskaya and et al., 2019).
But if the GDP of an economy gets decrease when compared with its previous data then it can
conclude that the growth has stopped due to some factors. Reasons need to get found out for such
a decrease in the GDP factor. There are two ways to calculating the GDP of any economy and
they are GDP through PPP and GDP through market exchange rate. Among these two the GDP

through PPP is consider as an effective approach for calculation of relative cost of living.
Whereas as in the case with GDP through market exchange rate one can examines the value in
the last of the period or at on average of the period.
Figure (1) Source: From Statista, (2019)

Figure (2) Source: International monetary Fund, (2006)
According to the figure 1, Burgernomics, which is been presented above, is about the big mac
index. This statistics was found by economist to help us understanding the PPP which are going
around the globe. The price value of of a burger set in various countries has been used in
evaluation of PPP. The PPP stands as purchasing power parity is used as a method by World
Bank to calculate the number of total poor people resiting on this globe and also the total number
of rich people living. The history related with greatest poverty and rise in human history can also
get examined by World Bank. The price of raw material used for the manufacturing of a burger
is different in UK as compared with the prices set in UK and China (Gashenko and et al., 2016).
In the second picture, in the terms of market exchange rate, the contribution of United
States in the growth of global market is the highest among the lot. When when taking PPP
method under consideration, China still holds the first position in the market. The GDP of China

is more than half in the total market. The major reason can be that the labours get available in the
China at a low cost.
In the picture shown just above, it can be noted that the GDP of India is much higher then the
GDP of France. India GDP is 3 times higher than the GDP of France. According to the report
published by World Bank about GDP in the terms of Market Exchange rate, India's GDP (which
is considered as E7) has surmount the GDP of France ( considered in G7).
sources: Purdie, 2018

From the picture presented above, it can be analysed that the basket of food or products and
services is comparatively cheaper in India. And the same basket of products or services is very
costly in UK and France. For example, from the 10$ in India, an individual can purchase around
4 baskets of that products and services, but in the UK for $10 only a single basket can get
purchased.
Source: M. Marmolejo, 2012
B The power of Countries in G7
From the table present above, the countries which has the largest GDP rate in the catefory
of G's and E's has been mentioned. According to the above data in table, the GDP of UK in the
category of G7s country is $2, 173 which is at forth position in the name of countries. In the
same category the first and foremost position is acquired by U.S with the GDP of $14,000, which
is followed by japan at second position with the GDP of 4,310. At the third position Germany
has its stand with a GDP of $2,940. In the another table in which the GDP of E7s countries has
been mentioned, China tops the list with the GDP of $10,090 with India at its second position
with the total GDP of $4060.

Source: (World Bank,2018)
For calculating the growth rate of UK (G7) country, it is very much essential to analyse its GDP
and the growth which it has taken from last decades. From the table presented just above, the
GDP of UK economy has be analysed. It can examined that the GDP of the economy is
increasing with the time (Sukhodolov, Popkova and Kuzlaeva, 2018). When calculating through
PPP the GDP of UK is equal to about 226 percentage of world's average.
CONCLUSION
From the report presented above, the it can be observed that the businesses can bring the
growth in any economy. More number of industry establishment in an economy would help it in
bringing more revenues, increase in production, increase in disposable income and also the its
growth. The report also includes the GDP's of both E7 and G7 economies.

REFERENCES
Books and Journals
Gulyaeva, T. I., and et al., 2018. Modern organizational and economic aspects and staffing issues
in breeding and seed production. Journal of Environmental Management & Tourism.
9(8 (32)). pp.1789-1798.
Ragulina, Y. V., 2019. Priorities of development of industry 4.0 in modern economic systems
with different progress in formation of knowledge economy. In Industry 4.0: Industrial
Revolution of the 21st Century (pp. 167-174). Springer, Cham.
Shvaiba, D., 2018. Socio-economic security of the hierarchical system. Bulletin of Science and
Practice. 4(6).
Sibirskaya, E., and et al., 2019. Remote education vs traditional education based on effectiveness
at the micro level and its connection to the level of development of macro-economic
systems. International journal of educational management.
Sukhodolov, A .P., Popkova, E. G. and Kuzlaeva, I. M., 2018. Production and economic
relations on the internet: Another level of development of economic science. In Internet
Economy vs Classic Economy: Struggle of Contradictions (pp. 1-10). Springer, Cham.
V Gashenko, I.V., and et al., 2016. Theoretical and methodological aspects of innovation
development in modern economic systems. Contemporary economics. 10(4). pp.363-
372.

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