Assess the extent to which such economic data implies that the standard of living for the average person in both countries had worsened.
In 2009, Singapore experienced a negative growth of 1.3% and a current account surplus of US$32 billion while the United States had a negative growth of 2.6% and a current account deficit of US$378 billion.
Assess the extent to which such economic data implies that the standard of living for the average person in both countries had worsened. [25m]
SOL refers to the level of comfort and material goods available to people in a certain geographic area or of a certain socio-economic status. It includes both material and non-material aspects of life.
1. Fall in economic growth in both countries would suggest that national incomes have fallen and purchasing power could have fallen, resulting in a fall in the material SOL since people would be less able to consume goods and services with a fall in income.
· It is not stated however whether the growth was real growth or nominal growth. If there was a fall in nominal growth but inflation (prices) fell by a greater extent, than real incomes could have increased, leading to an increase in ability to consume goods and services, leading to a rise in material SOL.
· The growth is not in per capita terms, meaning that changes in population have not been taken into account. If population growth has fallen more than economic growth, then income per capita could have increased, similarly implying an increase in ability to purchase and goods and services.
· The data also does not give any indication of levels of income inequality.
2. Current account deficit could be due to an increase in import expenditure, in that case standard of living could have increased despite the negative growth.
· However, current account balances changes could also be due to changes in export revenue and not just import expenditure.
1. Such economic data would be very limited in providing information on non-material SOL.
· If the negative growth is correlated to a fall in number of working hours, then non-material SOL could have improved.
2. Other indicators
· education / health / social amenities / etc.
· Number of leisure hours
· Stress levels
· Pollution levels
Based on the statistics given, it would be reasonable to conclude that material SOL would have worsened for the average person in both countries. However, we simply do not have enough statistics to have a full picture of the changes in material and non-material SOL.