FACETS OF ECONOMIC ENVIRONMENT

1. FACETS OF
ECONOMIC
ENVIRONMENT
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2. FACETS OF ECONOMIC
ENVIRONMENT
ECONOMIC ENVIRONMENT
ECONOMIC
OPPORTUNI
TY
&
THREATS
ECONOMIC
STABILITY
AND
INSTABILITY
ECONOMIC
POLICY
STURCTURE
OF
ECONOMY
NATURE OF
ECONOMY
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3. NATURE OF ECONOMY
The degree on which the economic activities are
performed will result in the generation of income
from resources, this determine the standard of
living and the development of an economy.
Economy can be classified on the basics of :
• Income
• GDP
• Adjusted GNP
• Industrialization 3

4. STRUCTURE OF ECONOMY
 Economic structure is a term that describes the changing
balance of output, trade, incomes and employment drawn
from different economic sectors – ranging from primary
(farming, fishing, mining etc) to secondary (manufacturing
and construction industries) to tertiary and quaternary
sectors (tourism, banking, software industries).
Types of change
Incremental Structural Change
It results from the extension or
integration of markets or an
increase in the possession of
various factors of production
Innovative structural Change
It is achieved through the
establishment or organization
of a new exchange relationship
and through the exercise of
entrepreneurship quality
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5. Where do STRUCTURAL CHANGE occur ?
 Sectoral Composition
 Occupation
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Sector 2013 2014
Agriculture 17.97 17.01
Industry 30.73 30.02
Tertiary 51.31 52.97
Source: www.cia.gov/cia/publication/factbook

6. ECONOMIC POLICIES
 Economic policy refers to the actions that
governments take in the economic field. It covers
the systems for setting levels of taxation,
government budgets, the money supply and
interest rates as well as the labour market,
national ownership, and many other areas of
government interventions into the
economy.policies have a twofold objective
 First at macro level
 Second to control unwanted expansion
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7. Example:
 New Industrial Policy 1991
 The industries have been freed to a large
extent from the licenses and other controls
 Effort to encourage foreign investment
 Policies for correcting regional imbalance
 Policies to regulate monopolistic tendencies
 Policies for balanced industrial structure
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8. ECONOMIC STABILITY AND
INSTABILITY
 Economic stability refers to an absence of excessive
fluctuations in the macroeconomy. An economy with
fairly constant output growth and low
and stable inflation would be considered
economically stable.
 For the success of business, it is essential to
understand the phase of business cycle:
 Recession or depression
Financial crises in Thailand – 1990
Devaluation of Yuan
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9. Cont…
 Level of stability
Syrian economy coming to a standstill due to political
turmoil.
 Recovery and boom
Prise rise
Employment
Interest rate
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10. ECONOMIC OPPORTUNITIES AND THREATS
 These are related to domestic economic conditions,
policies and the economic health of the rest of the
world sector.
 Threats
Arise from micro and macro environment that
determines the existence of the business.
Eg : Brain drain affect IT sector, BPO sector moving
from India
 Opportunities
Make in India, Design in India, Digital India
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