Highest Growth in Latin America????

principe · #1 01-24-2006, 06:00 PM

How believeable or unbelievable do you think Albizu and his "figures" are??

mondongo · #2 01-24-2006, 09:12 PM

The press release at the Central Bank website shows that national income (GDP) per person increased from US$2102 to $US3247.

So congratulations to all Dominican residents.....the PLD has just informed you that in 2005 you could afford to buy 54% more foreign made goods than you could in 2004.....

...so instead of settling for a Mistubishi SUV....you were able to move up to a Toyota or Lexus....instead of being able to afford just one slab of Philadelphia cream cheese....you could get 3 for the price of 2...

I just wish that I could get a 54% increase in purchasing power. What are y'all doing with this extra 54%?

Mr_DR · #3 01-25-2006, 05:13 AM

Quote:

Originally Posted by mondongo

The press release at the Central Bank website shows that national income (GDP) per person increased from US$2102 to $US3247.

So congratulations to all Dominican residents.....the PLD has just informed you that in 2005 you could afford to buy 54% more foreign made goods than you could in 2004.....

...so instead of settling for a Mistubishi SUV....you were able to move up to a Toyota or Lexus....instead of being able to afford just one slab of Philadelphia cream cheese....you could get 3 for the price of 2...

I just wish that I could get a 54% increase in purchasing power. What are y'all doing with this extra 54%?

It sounds more like a fabrication to me.

Most of this per capita that they are talking about they forget to mention the fact that it is generated by many foreign owned companies which money's does not stay in the country.

So, I don't know how much value this reasearch have.

aegap · #4 01-25-2006, 09:56 AM

Quote:

Originally Posted by Mr_DR

[..]generated by many foreign owned companies which money's does not stay in the country.

If it ever reaches it....

NALs · #5 01-25-2006, 10:16 AM

In general,

The GDP of a country is comprised of that country's production from all firms that are detected or "within the radar" of the government. However, GDP growth is determined by the country's largest enterprises.

In other words, the government (and this is true of all governments worldwide when computing GDP growth or decline) consult with the largest businesses within the country with regard to production increase or decrease.

If, collectively, the large businesses had an increase in production during the year, that percentage is used to denote GDP growth for that particular year.

When you hear or read that "all sectors of the economy grew, except xyz", it usually means the largest and most influential businesses within each sector grew or declined in production.

The businesses used as benchmarks (and usually they do pick a few from each industry) are businesses that might or do have market power in pricing, consumption levels, production, etc.

With the case of what Mr DR proposed, meaning that this production was done by foreign businesses, it does not appear to be so. All sectors of the Dominican economy (except for all inclusive tourism, telecommunications, and a few others) are dominated by Dominican firms, with usually a few Dominican firms being of substancial size for the national economy. While its true that those foreign businesses function within the country export some of their profits, keep in mind that profits are also used for re-investing within the businesses themselves and expansion within the country (ie. job creation) in addition to supporting events and the such within the community.

So yes, some of the money is exported by foreign companies, but a good deal is given back to the Dominican people via wages, job creation, training, events, perhaps even help an organization that takes care of homeless children and the sort.

As for why is this done to denote GDP growth or decline? Usually, if the big businesses in a particular sector are doing well, that is a sign the small businesses are also doing well.

-NAL

Hillbilly · #6 01-25-2006, 10:25 AM

All of todays press carrys articles about economists that are doubting the Central Bank's methodology on this.. We'll see where it goes.

I agree that it sounds fishy ...

Stinks in fact..

HB

principe · #7 01-25-2006, 12:41 PM

My thing is what is the GPD calculation methodology used by the DR Central Bank vs. Commonly Used International GDP Calculations? Could anyone bring some knowledge to the table. Mondongo? Nals? Please enlighten thee

mondongo · #8 01-25-2006, 02:08 PM

principe, I would approach your question from a practical and quantitative standpoint. Let's use the USA as a comparison. The real GDP growth must be approximately equal to money supply growth minus inflation. You can confirm this by looking at the USA federal reserve data. This approximation makes sense because we measure GDP with money, and thus in order to increase your GDP you have to increase your money supply.

I will look at these similar figures for the DR Central Bank and see if they make as much sense as those in the USA....

rellosk · #9 01-25-2006, 05:05 PM

Quote:

Originally Posted by principe

How believeable or unbelievable do you think Albizu and his "figures" are??

Evidently, you are not the only one to question the accuracy of the figures. This appeared in today's DR1 news:

Quote:

Big questions about the GDP numbers

Former Central Bank governor, Luis Toral said that the Central Bank numbers were twisted to achieve a political objective in the May elections. The former official said that the numbers given out by the Bank are an "insult and a mockery" to the people. Toral said that if the country had experienced a GDP growth such as was reported by Central Bank governor Hector Valdez Albizu, it should have repercussion at every level of the society, and this did not occur.
Toral coincided with economist Miguel Ceara Hatton and others who asked that the methodology used by the Central Bank to arrive as such envious numbers be explained in a transparent manner.
Toral, talking to reporters from the Listin Diario, said that the 9.6% increase in the Gross Domestic Product and an increase of US$1,144 of income per person, along with a reduction in unemployment, was just not reasonable to believe.
The former Central Bank governor said, "The general population perceives something just the opposite from the situation presented by Valdez Albizu". He said that the situation among merchants and industrialists supports the generalized opinion of the populace, and that the numbers have been "distorted." He invited Governor Valdez to visit the barrios of Santo Domingo to see if the population has enjoyed such a bonanza.
Economist Ceara Hatton, the economic consultant for the United Nations Development Program (UNDP) in the Dominican Republic and Henry Hebrard, a research economist at the Center for Tax Studies (CENIT) agreed that the higher than normal GDP growth rate could be based on an incorrect methodology. Ceara Hatton based his opinion on the fact that surveys carried out by well known companies show that most Dominicans feel that the country is in a crisis and that the situation has not gotten any better. Hebrard said that he was critical of the fact that the government used the huge growth in the communications sector to bolster the GDP growth rate. Telecommunications grew by 26% in 2005. He added that without the telecommunications added in, the GDP growth would still be between 5% and 6%, "something that, no matter what, we would consider extraordinary."

NALs · #10 01-25-2006, 05:28 PM

The DR1 news report also includes the following:

"Hebrard said that he was critical of the fact that the government used the huge growth in the communications sector to bolster the GDP growth rate. Telecommunications grew by 26% in 2005. He added that without the telecommunications added in, the GDP growth would still be between 5% and 6%, "something that, no matter what, we would consider extraordinary."

If, in fact, the telecommunications sector is highly responsible for the higher than expected economic growth figures, why would this be much of a debate among the other economists?

There is no reason why the central bank should exclude the figures from any sector of the economy. Each sector of the economy contributes to the GDP of the country and if one sector grows large enough to push the economic growth rate to near 10%, then that is how much the economy grew. The report also states that without the inclusion of the telecommunications sector, the growth rate would be around 6%, which is on target of what was expected during that latter part of 2005, although in the beginning of 2005 IMF estimates were around 1 to 2%, extremely below the actual growth in either case.

This is similar to the inflation rate, often times the culprit for much of the inflation is due to petroleum prices. Very often, if the petroleum effect is excluded, inflation rates are very low, but the fact of the matter remains that petroleum is an important part of the economy and the livelyhoods of people and I don't see the reason for exclusion.

It's always good to be a healthy skeptic with statistical data.

-NALs