Jamaica and United States: An Analysis of Essay

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Jamaica and United States: An Analysis of GDP

Comparison of Jamaica and U.S. GDP

In 2009 U.S. dollars Jamaica's Gross Domestic Product (GDP) based on purchasing power parity registered at 23.76 billion (CIA Factbook- Jamaica). In contrast the United States of America produced a Gross Domestic Product of 14.12 trillion dollars in 2009 dollars (CIA Factbook- U.S.). Respectively these figures translate to a per capita GDP of $8,400.00 dollars for Jamaica (CIA Factbook- Jamaica) and $46,000.00 for the United States (CIA Factbook- U.S.). Given the distinct disparities in GDP, an analysis of the components comprising the GDP calculation provides useful insight into the similarities and differences inherent in the two nations.

GDP is comprised of four components: consumption expenditures, investment expenditures, government purchases, and net exports. Taken in aggregate these components detail "the market value of all final goods and services produced within a country in a given period of time" (Mankiw, G.). One of the striking similarities between the two countries is the reliance on a service economy to fuel economic growth. In 2009, Jamaica's service economy accounted for 63.9% of GDP (CIA Factbook-Jamaica), while for the U.S.; services totaled 76.9% of the economy (CIA Factbook-U.S.).

Consumer Expenditure

Consumption expenditures, "spending by households on goods and services" (Mankiw, G.) represents an enormous percentage of both the Jamaican and U.S. economies. For Jamaica the consumption figure is 81.6% of GDP (Trading Economics- Jamaica), while the U.S. value is 71% of GDP (Trading Economics- U.

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S.). The reliance on consumption to drive economic growth for both countries overlooks the U.S. consumer who has requisite levels of disposable and discretionary income for purchases. Jamaica's consumption however, is heavily dependent on tourism, "accounting for 20% of GDP" (CIA Factbook- Jamaica). The reliance on tourism as a key driver of growth presents the potential for vicissitudes in GDP values, reflective in changes to customer tastes or larger global economic conditions. The presence of such a large percentage of consumption can also be indicative of an export-import imbalance.

Net Exports

"Net exports equal the purchases of domestically produced goods by foreigners

(exports) minus the domestic purchases of foreign goods (imports)" (Mankiw, G). A country with a positive net exports figure will have an addition to their GDP, while a negative value will result in a subtraction from GDP. Again, with Jamaica and the U.S. there is a noticeable similarity. Jamaica has a negative net export value of 3.318 billion (CIA Factbook- Jamaica), consistent with a 25.5% reduction in GDP (H.S. Dent). The U.S. runs a negative net export value of 506 billion (CIA Factbook-U.S.) however, representative of a five percent reduction in total GDP. (H.S. Dent). The long run implications of such trade deficits are lagging economic growth and increased government debt.

Government Expenditures

The mention of increased government….....

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