Gross Domestic Product Statistic for Kenyan Economy - Case Study Example

Research Plan Low-income country The World Bank defines a low-income country as nation with less than $400 per capita income and is lacking infrastructure as well as industrial base. The population is normally high with low living standard consequential from low income and high poverty rate. How to describe change in a country over time The country’s change in economic growth can be measured using the per capital real income since, this is a key factor in a measuring a country’s economic development as well as the GDP. The GDP depict the worth of a final goods and service that is generated in an economy for a given period. The life expectancy and the level of education is also a key indicator of the economic development this can be measured using the human development index, which provide a summary of the growth in the living standards, the level of, life expectancy, as well as the extent to which education is improved (Ansley Johnson Coale, 2012). The effectiveness of the human development index implies that an economy is improved and effective since, there is long life expectancy ratio, highly skilled labor force, as well as improved living standards consequential from better healthcare. The economic reasons for this change The change is brought about by decline in the rate of unemployment due to improved and increased level of literacy as well as reduction in the level of inflation caused by economic crisis. A country that sustains the adverse effect of global financial crisis would lead steady economic growth. The improvement in terms of trade and balance of payment would lead to effective exchange rate and consequently the currency of the country will be strong which will attract foreign direct investors into the country. The net effect is that a country economy will grow leading to improved living standards due to high per capital income. The Data gathered from world bank on Kenya as a developing country Gross domestic product (GDP) statistic for Kenyan economy The world bank report provides that Kenya is one of the low income country as per the GDP and human development index this is because, Kenya economy has been incompatible from 1963.The Kenyan economy as depicted by the GDP and the general economic growth rate has been declining from 65 to 4% in the earlier 1990s and 2007.This is due to the effect of global crisis as well as the effect of post election violence experienced by that country. The higher inflation rate, low level of education together with low life expectancy rate has lead to poor living standards by the Kenyan economy. Human development index (HDI Index) This is a rundown assessment of human development. it appraise the average accomplishment of a country in three key measurement of human development based on life expectancy, the education level as well as the state of the living standards. The human development index is the geometric mean of normalized indices appraising accomplishment in every measurement indices as well as symbolizes inadequate substitutability across entire human development index. Report on low-income country and its economic development; A case study of Kenya economy Introduction Economic development in a country is a wider concept, covers other the social and economic progression, and commands economic growth. Growth is a key necessity for development but not adequate condition since it cannot guarantee development. Per capital real income is a key factor in a measuring, a country is economic development as well as the GDP. The GDP depict the worth of a final goods and service that is generated in an economy for a given period. The life expectancy and the level of education is also a key indicator of the economic development. Politics play a key role in developing a country’s economy. Good governance with stable political environment will encourage investors into the country and with clear law put in place, will discourage corrupt leaders hence the country will encourage global investment which will as a result improves the country’s economy. Culture is also a factor that affects economic progression since, culture resist change and change is inevitable in any economic growth. The country must therefore encourage foreign direct investment as well as encourage change by ensuiring that their culture is not too static and resistant to economic changes. Aim and objective of the study The study aims at understanding the effect of stunted economic growth in less developed countries as well as the factors that contribute to poor GDP and income. The study aims at using the Growth rate in GDP and countries average growth from 1980 to data using the World Bank data as well as making a comparison with developed state in order to gain a comprehensive understanding of the different state of economy given the economic factors that triggers the country is economic progression. Key economics and qualitative statistic for Kenyan economy The world bank report provides that Kenya is one of the low income country as per the GDP and human development index this is because, Kenya economy has been incompatible from 1963.The Kenyan economy as depicted by the GDP and the general economic growth rate has been declining from 65 to 4% in the earlier 1990s and 2007 (Douglas McTaggart, 2026).This is due to the effect of global crisis as well as the effect of post election violence experienced by that country. The higher inflation rate, low level of education together with low life expectancy rate has lead to poor living standards by the Kenyan economy. The following data relating to Kenyan economy was extracted from the World Bank. A comparison between the economic growth in terms of GDP for Kenya and United state The above graph depict the economic progression in terms of gross domestic product (GDP) between Kenya (a low developed state) and united state (which a developed state).The graph analysis depict that the united state economy has been increase much higher every unlike Kenyan economy which is having a stunted economic growth. This growth in Kenyan economy is brought by factors such as poor living standards consequential from lack of education and level of real income. Kenya is associated with high population income and majority of the population are less educated which as a result implies that the per cap it income will be low. As observed from the above data analysis, the per capita income of the Kenyan economy is below $400, which therefore implies that Kenya is a developing country. The economy of united state is enhanced which implies that the living standard and per capita income is improved which is as a result of improved level of education and high income that leads to enhanced living standards, this attributed will; lead to better economy with steady state in economic development as depicted by the above graph. Comparison of average growth rate The graph below provides an increasing trend in average growth rate for the two state but with Kenya having a low level of growth rate as compared to the united state. This is because, the level of economy and per capita income is low and consequently, the Kenyan economy is not constituent in terms of average economic growth rate due to low per capita income, unstable political factors as well as strong social cultural factors that is resistant to change. Where a country is having low-income level, the growth rate will be stunted and consequently external factors such as the effect of inflation can significantly affect its progression. This tendency is depicted by the unstable trend in average growth rate since 1980 to date. Factors that has contributed to the stunted economic growth rate in Kenyan economy Since 1980, the Kenyan economy as per the World Bank has been growing slowly and has put Kenya into a developing country. Some of the factors can be explained with the following economy factors. The Gross domestic product. The GDP for Kenyan economy is small implying that the net income generated from the Kenyan economy is small. This is due to the effect of less educated citizen combined with high growth rate. This two factors will make the economy stunted since. a country is lacking skillful personnel who will lead to innovational and creation and thus the country will be experience high dependency ratio. as a result, the high level of illiteracy will lead to poor living standards consequential from low per capita income. as a result, the generation economic progression of a country will be low hence pushing the country to poverty state. Human development index This is a rundown assessment of human development. it appraise the average accomplishment of a country in three key measurement of human development based on life expectancy, the education level as well as the state of the living standards. The human development index is the geometric mean of normalized indices appraising accomplishment in every measurement indices as well as symbolizes inadequate substitutability across entire human development index. From the above graph, it can be observed that the HDI Index for U.S is much as higher as compared to the HDI index for Kenya. The life expectancy in Kenya is 57 years wit50.9 HDI Index. This therefore implies that the Kenyan economy is far much below since, the level of education and life is expectancy is short. This in regards implies that the level of education is not effective as well as the living standards is poor since, many citizen die at an early age as depicted by the life expectancy of 57 years. The net effect of short life expectancy with high level of illiteracy will lead to high dependency ratio and thus the economic growth is stunted leading to unfavorable balance of payment and terms of trade. This will consequently lead to weaker exchange rate and currency hence discourages foreign direct investment who will boost the economy of the country. Unlike united state, the life expectancy ratio is 80 years as well as the level of education is much higher as depicted by 86.3% in human development? This implies therefore that the living standard is enhanced due to high level of literacy as well as improved health standards consequential from the long life expectancy ratio (Nafziger, 2006). This indicators signifies that united state is having an improved economy while the Kenyan economy is stunted pushing it to the state of a developing nation. In order to improve the economy, Kenya must strive to ensure that the three key element of human development index such as the life expectancy, the living standards as well as the level of education must be improved since this will minimize the imbalance terms of trade as well as the balance of payment hence leading to effective exchange rate and strong currency and consequently encouraging foreign direct investment who will in turn boost the economy. Economic development attained by Kenya since 1980 The above economic trend analysis as per the GDP and human development index on Kenyan economy, it can be observed that Kenya is depicting a rising tendency in economic progression from the year 2008, this is due to increase in infrastructure progression into the modern urban roads as well as the stability of politics that leads to good corporate governance with clear laws and guiding principles that is favorable to external investors. The inflation rate that renders Kenyan currency week is gaining strength against US Dollars hence, there is an improve terms of trade and balance of payment. The net effect of this is that, Kenya experience foreign direct investment and thus boosts the economy by 7% as observed from the worlds bank and trend performance of Kenya’s economy. The education in Kenyan is at present revolutinilizing and consequently, there is an increase for force. The economic growth for Kenyan economy has seen a drastic change and improvement in their energy sector is vital to economic progression hence there is sustainable source of energy. The graph analysis depicts a declining trend in the level of population due to effective family planning and improved exposure to education, which in turn reduces the level of education. Reference list Ansley Johnson Coale, ‎.M.H., 2012. Population Growth and Economic Development in Low Incom. Douglas McTaggart, ‎.F.‎.P., 2026. Economics - Page 420. Marc Fleurbaey, ‎.-, 2013. Beyond GDP: Measuring Welfare and Assessing Sustainability. Nafziger, E.W., 2006. Economic Development - Page 190. Sheku Bangura, ‎.N.K.‎.P., 2000. External Debt Management in Low-Income Countries. Yujiro Hayami, ‎.G., 2005. Development Economics: From the Poverty to the Wealth. Read More