Project – 1056146 Table of Contents Introduction 3 Economic System of India 3 Economic System of US 6 Comparison of Indian and US economy 7 Conclusion 8 Reference 9 Introduction The world of the 21st century is progressing rapidly on the lines of fast change and continuous development. The high level of technological penetration and development in multiple continents across the world has tremendously boosted the levels and means of communication and information exchange, thereby making the Earth a well connected single entity. In the modern day world, it is important to highlight that the enhanced power of connectivity has strongly altered the market dynamics, with growing competition in the marketplace along with rise of well informed consumers.
Companies around the world are increasingly looking forward and trying their best to tap the demand that is evolving for better value based products and services from masses located in various developing and developed markets. While the entry of companies into new markets are sparking global trade and inter country cooperation, the business markets are also getting actively influenced by multiple economic variables like growth rate of the major economies around the world, the industrial production rates, flow of money in the economy, employment rate, purchasing power parity of the masses, and inflation. In this particular assignment, the focus is on evaluating the economic system of a foreign country and that of the United States.
To be more specific, the focus of this paper is turned towards evaluating the economic system of India and that of the United States. Economic System of India India, the largest democracy in the world has a very interesting economic system. In the year 1991, the economic system of India witnessed a major change and became an open economy.
With the opening of the Indian economy, a series of positive developments like deregulation of industries, privatization of state level organizations, lower controls in the domains of foreign trade and investments started taking place. Because of the opening of the Indian economy towards foreign investments and businesses, the services sector became the largest contributor to the factor of economic growth (Theodora. com, 2014). Along with a high availability of English speaking workforce and the rise of IT and ITES industry in the country, the economy of the country has growth at a envious rate since the beginning of the current century.
Highlighting the statistics of the Indian economy, it needs to be stated that as of the year 2013, the GDP in terms of purchasing power parity stood at $4.962 trillion. The per capita GDP for the year 2013 was pegged at $ 4,000. The real growth of the GDP in the year 2013 was 4.7%, while unemployment rate stood at around 8.8% for the same year (cia. gov-1, 2014).
Economic experts monitoring the economic performance of the world’s largest democracy have predicted that the GDP is expected to touch a growth rate of 5.6% in the year 2014 (IANS, 2014). An analysis over the events of the last two years points out that a number of changes have taken place on the economic front. It is to be noted that the year 2013 started on a negative note, with the Indian economy slowing down because of a negative market reputation in regards to policy paralysis and scam tainted image of Indian policy makers.
High inflation rates along with along continuous weakening of the Indian currency with regards to the US dollars further crippled the growth rate of the economy. A series of economic measures initiated by the Indian policy makers helped in regaining the economic performance of the nation. By the end of the year 2013, the growth of the GDP was pegged at 4.8% along with significant improvement of the current account deficit (The Economist, 2013). Currently the rising retail and wholesale inflation rate might seem to be posing a threat towards the growth march of the economy (Economic Times, 2014).
But, as of the year 2014, the experts have predicted that there will be an overall growth of the GDP along with rising flow of FDI. Source: Accenture, 2014, p. 6 Source: Accenture, 2014, p. 6 Economic System of US The economic system of the US is the largest and the most powerful economy in the world. The economy of the US is market oriented in nature, which means the consumers and the producers are responsible for determining the productions of various goods and services and their related prices (Theusaonline. com, 2014).
It is important to highlight that because of this particular nature of the US economy, the masses play multiple roles in the economy ranging from consumers, workers, investors as well as savers. In the US economy, it is important to highlight that the private firms and business are engaged to a great extent in the process of decision making and that the state as well as the federal governments avails products and services from the extensive private marketplace.
While the US economy is highly receptive to foreign products and services, the private entities face significant challenges when looking forward to pitch their product and services in other foreign markets. In the recent past, the US economy suffered a serious body blow in connection to the subprime mortgage crisis, which triggered a phase of recession in the second half of 2008. In order to revive and stabilize the economy, the policy makers rolled out a $700 billion Troubled Asset Relief Program. With the stabilizing of the economy along with positive outlook on various key economic indicators like purchasing managers index, industrial production index and employment rate, the federal government focused on reducing the spending thereby reducing the Federal budget deficit to 7.6% of the GDP.
From the statistical angle, the GDP in terms of purchasing power parity is pegged at 16.72 trillion as of the year 2013. The per capita GDP for the same year is pegged at $ 52,800 along with a real GDP growth rate of 1.6% (cia. gov-2, 2014). Market experts who are studying the movements of the US economy in the recent times have focused on slashing the estimate for the fourth quarter economic growth, in the wake of loss of momentum of the economy.
However, for the year 2014, the experts the growth for the US economy will be on the rise (Mutikani, 2014). Comparison of Indian and US economy While directly comparing the economies of both the countries, it has to be highlighted that the economy of India is an open market one, while that of the US is market oriented one.
It is also important to bring into focus that while the Indian economy managed to get back on track because of policy based changes introduced by the Indian government, the US economy witnessed a temporary loss of economic pace because of a hard winter, which led to worse than expected outcomes on key economic monitoring parameters of the US economy like retail sales, home sales, industrial production as well as residential construction. While comparing both the economies of India and that of the US on the lines of annual projections for the year 2014, it has to be publicized that both of them are expected to grow with regards to their own pace, thereby creating jobs, increasing flow of money in the economy, thereby promoting economic prosperity. Conclusion On a concluding note, it can be said that the economies of India and the US are of different nature.
While Indian economy is an open market one, the US economy is market oriented one. The most important relation between the two economies is that, since the Indian economy is a representative of the Emerging World and the US economy is a leader of the Developed World, a smooth synchronization between the two economies will create a lot of scope for overall growth and positive development in the world. Reference Theodora. com.
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(2014) North America: United States. Retrieved from: https: //www. cia. gov/library/publications/the-world-factbook/geos/us. html Theusaonline. com (2014) Economy. Retrieved from: http: //www. theusaonline. com/economy/economic-system. htm Mutikani, L. (2014) U. S. GDP revised down, but hints of economic thaw emerge. Retrieved from: http: //www. reuters. com/article/2014/02/28/us-usa-economy-idUSBREA1Q16020140228