Have you ever seen a 100 trillion dollar bill? It may seem impossible, but in the early 2009, Zimbabwe’s government made it possible. The hyperinflation that struck Zimbabwe in 2004 till 2009 produced “starving billionaires.” It was at its peak in 2008 at a rate of 231 million percent. Although the world faced a number of uncontrollable inflation, Zimbabwe is the only country that experienced hyperinflationary episodes in the 21st century. According to the New York Times, the hyperinflation increased in such a frightening manner that “If you need something and have cash, you buy it. If you have cash you spend it today, because tomorrow it’s going to be worth 5 percent less” (Wines). Mostly, inflation is preceded by an increase in the money supply to fulfill the cost of wars, ending empires, or creating new ones. Likewise, Zimbabwe entered the hyperinflation stage when the government policies forced the RBZ (Reserve Bank of Zimbabwe) to print money that helped them to pay of certain debts but in return made the currency worthless. Debates went on and steps were taken to pull Zimbabwe out of this critical situation. Thus, in the late 2008, Zimbabwe’s hyperinflation was controlled after the adoption of U.S. monetary policy.
In 1980, when Zimbabwe emerged as an independent country on the world map, the annual inflation was 5.4 percent. This number increased monthly by 0.5 percent. At that time, a $20 Zimbabwean dollar was the largest currency domination and it was used in 95% of all Zimbabwean transactions. The weakening of Zimbabwe’s economy began in 1999 when the economic activities started to decline and public debt started to rise. During the year 2000 and 2001, as a result of land reallocation, agricultural tracks got redistri...
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... lines for hours for food that was not even guaranteed. However, dollarization was the right solution to replace the Zimbabwean currency which became worthless. Although, the economy faced many challenges such as infrastructure deficiencies, large burden of external debt, and limited formal employment after dollarization, Zimbabwe’s GDP started increasing. According to the Confederation of Zimbabwe Industries, GDP grew by 5% in 2013 after a slow decrease in the rate of GDP in 2012. Also, according to the Ministry of Finance and RBZ, there is continuity in the increase in government revenues, banking deposits, agriculture output, and mining production. To conclude, people are the essential part of an economy’s growth. Thus, to continue this growth, people must have to confidence that hyperinflation will not return and the bad times are there to fight against.
The author explains this with an example of the World Bank which targets Lesotho for issuing loans and shows an unrealistic image of this country to justify its loans. The World Bank introduces Lesotho as a subsistence farming society and isolated from the market. Also, notes that the decline in agricultural surplus is due to migration of many from Basotho to South Africa to find jobs. The declarations by the World Bank prove to be wrong, scholars say. First, Lesotho is not a subsistence country but a producer in the twentieth country for the South African market.
“Future of Zimbabwe's Economy Remains Uncertain.” COMTEX News Network. Xinhua News Agency 18 May. 2001. p1008138h5434. Gale. Web. 3 Nov. 2009.
For a country like Sierra Leone that is heavily reliant on importation and exportation of goods, having these systems backed up can be detrimental to the economy. As I mentioned in the first section of this essay, Sierra Leone’s exports and imports compose of 59.2% of the nations GDP. When 59.2% of a country’s economic income is wiped out over night it becomes difficult for the country to rebuild without external help. Thankfully help is being provided by organizations like the UNDP, however, it is not coming fast enough and the people of Sierra Leone are still struggling.
Money is of fundamental importance to the activity of the economy. Money plays an important role in the daily life of a person whether he or she is a consumer, a producer, a businessman, a student, or a politician. An individual need not be an economist to be aware that money plays an important role in economics; an individual need think only of his or her own experience. In a modern economy, money should be used solely as an international medium of exchange. However, with money comes difficulties; and with difficulties such as inequality and financial crises, government regulation is inevitable and preferable. Government regulation of money should expand economic growth, as well as reduce the corruption caused by the growth of money.
The standard crisis developing countries face is, a high demand for goods and services, with high money growth, high government spending, high wages, and high inflation. All while exports are low and imports are high. The standard solution is slow money growth and low government spending. Unfortunately these cures take time and during the transition the country may borrow from the IMF to finance the trade imbalance.
There is a close relationship between Gross Domestic Product (GDP) and the unemployment rate as it will relate to the decrease or increase of inflation rate. The inflation rate will increase when GDP and unemployment decreases, because it will affect the purchasing power of the people of a particular country.
Second largest country in Africa, tenth largest country in the world, diverse culture extending from the Mediterranean coast to the dunes of the Sahara Desert...Algeria. Even with its massive size the current status of Algeria’s economy is quivering in the lofty winds of the Tell Atlas Mountains. The economy tends to remain dominated by the state, which is accordingly a legacy of the country’s socialist post-independence development model. Hydrocarbons are the backbone for Algeria, accounting for 60% of budget revenues, 30% GDP, and 95% of export earnings. Reviewing the last five years we see the government halting privatization of state-owned industries, and increasing the restrictions of imports and foreign involvement. Algeria’s economy, however, continues to grow in 2012 it grew 2.5%, up vaguely from 2011 at 2.4%. Then excluding hydrocarbons the growth has been 5.8%, 0.1% from 2011. Inflation is increasing, currently at 3.9% which varies yearly; 8.9% in 2012, 4.5% in 2011. From 2004 to 2008 the real GDP stay fairly consist from 5-7%, however in 2009 it dropped immensely, and since then every other year the numbers fluctuate. The highest was in 2012 at almost 10%, and the lowest was 2011 at 0%. Looking at the past decade it is perplexing to understand the pattern the GDP follows. The gross national savings in 2013 was 45.5% of the GDP, fluctuating like real GDP; 44.4% (2012), 47.7% (2011). The labor force was at 11.15 million in 2013 which is ranked 48th in the world, however with the high unemployment rate (10.3%-2013) it brings the country to 109th in the world. With the current account balances at $6.7 billion, which is half the amount from 2012 ($12.3 billion), which coincides with the exports amounts of $68.25 billion in 2...
(SAHO, 2011) Hyperinflation contributed to money becoming worthless, even though many citizens were starving to death on the streets. To buy a single loaf of bread sometimes required a wheelbarrow load of marks. “Inflation crept up slowly at first, before accelerating rapidly in late 1922. The exchange rate ballooned from 2,000 marks per dollar to 20,000 to a million and beyond in just a few months, riding on a growing wave of economic panic and mistrust.”
Kenya relies on many different jobs in order to keep their economy afloat. “Kenya’s economy suffers from a high population growth rate and rampant corruption” (Content). Kenya’s GDP reflects the ups and downs the country’s economy has been through, since the gaining of its independence. At the beginning of the country’s independence their GDP was roughly 6%, but it has continued to decrease from there. The drop in the GDP has come from different variables such as high growth rates, corruption and violence. The country has been able to redeem itself with having a GDP of more than 5% as of 2011. Kenya’s currency is called shillings. One US dollar is equivalent to $102.24 in shillings. The GDP per capita is around $77705.82. Inflation has been a problem Kenya has been facing for years. Its continuance to rise has caused it to know be 12%; but, measures have been taken by the government to decrease its inflation value
MONEY SUPPLY GROWTH AND MACROECONOMIC CONVERGENCE IN ECOWAS by WEST AFRICAN MONETARY AGENCY (WAMA) is a writes up similar to this topic. Where the relationship between money supply major macroeconomic indicator where investigated for countries in West Africa includi...
In order for any country to survive in comparison to another developed country they must be able to grow and sustain a healthy and flourishing economy. This paper is designed to give a detailed insight of economic growth and the sectors that influence economic growth. Economic growth in a country is essential to the reduction of poverty, without such reduction; poverty would continue to increase therefore economic growth is inevitable. Through economic growth, it is also an aid in the reduction of the unemployment rate and it also helps to reduce the budget deficit of the government. Economic growth can also encourage better living standards for all it is citizens because with economic growth there are improvements in the public sectors, educational and healthcare facilities. Through economic growth social spending can also be increased without an increase of taxes.
... could become a rage when the inflation rises to a very high level or when the demand of money cannot be met by the central bank of each and every country.
Ghana is a country located on the west coast of Africa; Africa is a resource rich continent that supplies much of the world with diamonds, oils, petroleum and more through trade. The country of Ghana has undergone revision in their labor forces in the past twenty years, Ghana has moved more from the traditional labor sector like agriculture to more modern sectors. One of the more modern sectors of Ghana today is the industrial sector which is relatively small and is mainly operated by the Ghanaian government. The industrial sector was expanded by the government and president to employ the unemployed and promote investment in the private sector. After the 1990’s Ghana has seen consistent economic growth but their economic growth from the last eight years has increased tremendously. In the most recent of years ( after 2004) the growth rate of Ghana started to accelerate and it increased to over six percent between a five year span from 2005-2010, with the average being above seven percent in 2000 and 2009. The increase in sectors has taken Ghana from a poverty rate of more than half 51.7% to 28.5% by the year 2005. Before Ghana’s independence on March 6, 1957 most of the country’s gdp was contributed to agriculture and the industry sector was less of a contributor. Recently, between the years of 2001-2010 the roles of whom or what contributes to the gdp has switched. Most of the contribution to the gdp is that of the service sector. Even though, the service sector has risen to the top of the economy, agriculture is slowly but surely is rising back to the top of Ghana’s highest gdp contributor by the way of nontraditional exports like automobiles and cocoa. The service sector of Ghana provides many residents w...
Today, couple of monetary forms are completely upheld by gold or silver. Subsequent to most world monetary standards are fiat cash, the cash supply could increment quickly for political reasons, bringing about inflation. The
Also, the current irregular financial growth tendency has widened the breach between the rich and poor such as, South Africa and other further developed nations. According to financial forecasts if the existing blueprint of uneven monetary growth persists, one of the poorest nation of the world such as, South Africa will raises to be even poorer will a power plant or not. The second question has made social scientists, policy creators, and worldwide institutions to reorganize ideas about the impact of globalization on nations such as, the above.