09. Administering the Economy in Novel Ways - Part 1

This article tries to capture the functions of an efficient imaginary government starting from how its performance is tracked globally

Generally, for quick categorization, the countries of the world are divided into 3 segments – Developed (Developed Economies), Emerging (Economies in Transition) and Frontier (Developing Economies).

My overall point-of-view of economy is as follws:

https://www.mayoan.com/economy/01.-an-alternate-view-on-economics

Please refer to the below links for a quick refresher:

https://www.investopedia.com/updates/top-developing-countries/

Excerpts:

A wealthy nation isn't synonymous with a developed one.

The International Monetary Fund (IMF), on the other hand, takes several different factors into account

when determining whether a nation is an advanced economy, an emerging market and developing

economy, or a low-income developing country.

The World Bank uses gross national income (GNI) per capita for its measurements, and it has four

different categories: high-income economies, upper-middle-income economies, lower-middle-income

economies, and low-income economies.

Developed countries typically share several other characteristics:

Their birth and death rates are stable. They do not have very high birth rates because, thanks to quality medical care and high living standards, infant mortality rates are low. Families do not feel the need to have large numbers of children in expectation that some will not survive.7
They have more women working. These career-oriented women may have chosen to have smaller families or eschew having children altogether.8
They use a disproportionate amount of the world's resources. In developed countries, more people drive cars, fly on airplanes, and power their homes with electricity and gas. Inhabitants of developing countries often do not have access to technologies that require the use of these resources.
They have higher levels of debt. Nations with developing economies cannot obtain the kind of seemingly bottomless financing that more developed nations can.

https://www.investopedia.com/terms/d/developed-economy.asp

Excerpts:

Countries with relatively high levels of economic growth and security are considered to have developed economies.
Common criteria for evaluation include income per capita or per capita gross domestic product.
If per capita gross domestic product is high but a country has poor infrastructure and income inequality, it would not be considered a developed economy.
Noneconomic factors, such as the human development index, may also be used as criteria.
Developing economies are often helped by globalization to reach improved levels of income and increased standards of living.

The classification is based on complex indicators which are primarily the below:

1. Per Capita GDP (Gross Domestic Product)

From the 2nd link above, we could see that,

The most common metric used to determine if an economy is developed or developing is per capita gross domestic product (GDP), although no strict level exists for an economy to be considered either developing or developed. Some economists consider $12,000 to $15,000 per capita GDP to be sufficient for developed status while others do not consider a country developed unless its per capita GDP is above $25,000 or $30,000. The U.S. per capita GDP in 2019 was $65,111.

2. HDI – Human Development Index

Please refer to the below link to know the full list of indicators of HDI:

https://hdr.undp.org/sites/default/files/2023-24_HDR/hdr2023-24_technical_notes.pdf

I could extract the following indicators of HDI from the above link:

Life expectancy at birth, Expected years of schooling, GNI per capita (PPP $), (HDI- Human Development Index from the previous 3 indicators), (Inequality-adjusted HDI from the previous 3 indicators)), (GDI or Gender Development Index from the previous 3 indicators), Maternal mortality ratio, Adolescent birth rate, Female and male population with at least secondary education, Female and male shares of parliamentary seats, Female and male labour force participation rates, (GII or Gender Inequality Index from the previous 5 indicators), Nutrition, Child Mortality, Years of Schooling, School Attendance, Cooking fuel, Sanitation, Drinking Water, Electricity, Housing Assets, (MPI – Multidimensional Poverty Index from the previous 9 indicators), Carbon-di-oxide emissions per capita (production) and Material foot print per capita.

Please refer to - https://worldpopulationreview.com/country-rankings/hdi-by-country for visual display of HDI state.

Excerpts:

A country's Human Development Index value is determined by aggregating the country's scores in a vast assortment of indicators including life expectancy, literacy rate, rural populations' access to electricity, GDP per capita, exports and imports, homicide rate, multidimensional poverty index, income inequality, internet availability, and many more. These indicators are compiled into a single number between 0 and 1.0, with 1.0 being the highest possible human development. HDI is divided into four tiers: very high human development (0.8-1.0), high human development (0.7-0.79), medium human development (0.55-.70), and low human development (below 0.55).

3. GII - Global Infrastructure Index

One way of measuring infrastructure index, the Ipsos study is based on surveys which has a Likert scale to collect responses.

This considers the ranking/rating of infrastructure of countries such as Airports, Motorways/Major Road Networks, Local Road Networks, Rail Infrastructure, New Housing Supply, Flood Defences, Digital Infrastructure, Water Supply/Sewage, Renewable Energy Infrastructure, Electric Vehicle Charging Infrastructure, Solar Energy Infrastructure, Wind Energy, Pavements-Footpaths & Pedestrian Areas, Cycle Routes/Lanes/Facilities & Nuclear Energy

Source: Ipsos/GIIA Base: 19,514 adults (online), July-August 2021

The top 4 priorities as per 2023 study were:

1. Solar Energy Infrastructure

2. Water Supply and Sewage

3. Flood Defences

4. New Housing Supply

4. Levels of Industrialization:

One way of measuring levels of industrialization, the MVA per capita is an indicator of a country's level of industrialization, adjusted to the size of its economy. It is widely used to classify country groups according to the stage of industrial development

Indicator 9.2.1 - UN Statistics Division

More information at:

https://www.unido.org/resources-publications/industrial-statistics-guidelines-and-methodology

Though there may be many more complex indicators to categorize a large economy, the above 4 are comprehensive.

Now let us analyse how the governing entities like the government of a country can build some processes to administer ways to organize the economy with an intent to improve upon the above indicators.

To be effective, I think a global body like the UN should publish a data collection and management framework and prescribe it to member countries to source high quality data on the above 4 complex indicators. If necessary, the indicators should be designed to enable the member nations to collect data without ambiguity and the possible presence of derived indicators should also be acknowledged here.

A nation can have some possible meta-structures based on the idea proposed in my other blog -

https://www.mayoan.com/grc/06.-more-on-the-fictional-iron-clad-constitution

Let the major governmental departments (as per the mappings suggested in the above link) that are primarily responsible to collect the data pertaining to the above 4 complex indicators be assumed to be the below ones:

Central Planning Commission (CPO)
Central Statistical Organization (CSO)
Central Bank (CB)
Ministry of Environment and Sustainability (MES)
Ministry of Finance (MoF)
Ministry of Infrastructure and Industrialization (MII)
Ministry of Human Welfare (MHW)
Ministry of Education (MoE)
Ministry of Water Resources (MWR)
Ministry of Power (MoP)
Ministry of Governance, Risk, Compliance, Audit, Quality and Training (MGRCAQT)
Ministry of Land, Agriculture, Husbandry and Forestry (MLAHF)
Ministry of Marine and Blue Economy (MMBE)
Ministry of Information Technology (MIT)

Here I envision that there will be a close match of the above central/federal departments to the state/provincial departments and that their operations will be synchronized, optimized and fully integrated for maximum efficiency and effectiveness. (Mostly, because of the party affiliations and local concerns this integration may remain as a pipe dream in a lot of countries leading to suboptimal use of economic resources that is detrimental to the nation’s population as a whole).

Part -2 of this article is located at -

https://www.mayoan.com/economy/10.-administering-the-economy-in-novel-ways---part-2

S-T-F

09. Administering the Economy in Novel Ways - Part 1