Diagrammatic Comparison between Iraq and Egypt
Table 1: GDP in Iran and Egypt (GDP Billion dollars)
2005
2006▲
2007▲
2008▲
2009
Iran
644
704
781
816
839
Saudi Arabia
491
523
549
584
591
Turkey
781
895
976
1,064
1,022
Pakistan
340
373
406
421
441
Egypt
333
368
405
444
480
Source: WDI, the World Bank Group, 2011
Table 2: The ratio between Government spending and GDP
2005 2006 2007 2008 2009
Iran 1 13.0 14.2 11.2 ... ..
Turkey
11.8
12.3
12.8
12.8
14.7
Pakistan
7.8
10.8
9.2
12.5
8.1
Egypt
12.7
12.3
11.3
10.9
11.4
Source: WDI, the World Bank Group, 2011
Table 3: liquidity Growth
2005 2006 2007 2008 2009
Iran 1 22.8 29.0 30.6 7.9 27.7
Saudi Arabia 13.2 20.4 20.1 18.0 10.8
Turkey 35.8 22.2 15.2 24.9 12.7
Pakistan 17.2 14.5 19.7 5.7 14.8
Egypt 11.5 15.0 19.1 10.5 9.5
Source: WDI, the World Bank Group, 2011
Comparison of Economic Indicator between Iran and Egypt
It is an argumentative essay that seeks for arguments for the different level of economic performance between the two countries. There are a lot of economic indicators used to compare Iran, Egypt and other countries in the region. This includes GDP, GDP Growth, the relationship between the government expenditure and the gross domestic product, the rate of inflation, liquidity growth among other variables of the respective country. Both countries had a progressive growth between 2005 and 2009 although the GDP growth for Iran declined in the year 2008 and 2009. However, Egypt had a lower GDP and GDP growth when compared to Iran. Iran’s GDP is highly influenced by fuel sector, industries, service sector and to some extent Agriculture. Iran boasts of a lot of minerals which fetches a lot of revenues for the country. Egypt’s economy is driven by; Farming, broadcasting, Natural gas and tourism.
Egypt’s low GDP is attributed to the nature of the economy. The country is semi-arid. It depends on River Nile for its agricultural production. Due to the inadequate water supply and a very high population the country incurs a lot of expenses in ensuring that they protect their citizens from drought. I order to diversify its economy and to make the country an industrial nation, the government has invested a lot of resources in clean energy. To increase the export for energy and to lower the cost of production and thus increase foreign investment.
Government expenditure which consists of payment for possessions and services, salaries, Defense and other recurrent and development expenditure is slightly higher in Iran as compared to Egypt This is attributed to the nature of the economy where there is a free market economy in Egypt while in Iran the market is restricted and there is a lot of inefficiencies in the public sector thus increasing the level of government expenditure to GDP ratio. The lowest expenditure to GDP ratio for Iran was 11.2% in 2007. Additionally, Iran has a very inconsistent liquidity growth. Liquidity growth is the level at which the money circulating in a county increases. The liquidity growth is highly fluctuating in Iran as compared to the relatively consistent level of growth in Egypt. This can be attributed to the fluctuations in the oil industry. This has led to the increase in the price of food substances, health, transport, and housing among other sectors in Iran lead to a higher aggregate rate of inflation.
In conclusion, Iran and as any other country should diversify the sources of revenues to avoid overreliance to one source of revenue. The government should also strengthen their regulatory institutions like the Central Bank to ensure there is a consistent growth of liquidity in the country. The government of Iran should also consider privatization of several parastatals to facilitate efficiency in the public sector and as this will attract foreign investments and consequently increase the GDP of the country.
Works Cited
Dollar, David. ""Outward-oriented developing economies really do grow more rapidly: evidence from 95 LDCs, 1976-1985."" Economic development and cultural change 40.3 (1992): 523-544.
Engle, Robert F. ""Autoregressive conditional heteroscedasticity with estimates of the variance of United Kingdom inflation."" Econometrica: Journal of the Econometric Society (1982): 987-1007.
Mahdavy, Hossein. ""The patterns and problems of economic development in rentier states: The case of Iran."" life 1000.1 (1970).
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