Thuyt trnh SSCI

Topic: Economy and everyday life

I. Vocabulary
- GDP per capita : a measure of the total output of a country that takes gross
domestic product (GDP) and divides it by the number of people in the country.
- GDP growth rate : The GDP growth rate measures how fast the economy is
growing. It does this by comparing one quarter of the country's economic output
(Gross Domestic Product) to the last.
- Lobbyist (n): one who attempt to convince public officials to favor a certain cause
or take a certain action. TV l :ngi vn ng hnh lang ( a ra hoc thng qua
mt o lut ngh vin)
- Levy (n) act or process of collecting of conscripting
- Exemption (n) the circumstances of a taxpayer that allow him to make a certain
deduction from taxable income
- Jurisdiction(n) the right, power to administer justice by hearing and etermining
controversies

II. Background
1.Economy
a.Definition
An economy is an area of the production, distribution, or trade,
and consumption of goods and services by different agents in a given geographical
location.
b.Impacts of economic growth
The concept of economic growth is one which has attracted the interest and focus of
researchers worldwide.There have been a number of models aimed at studying
economic growth, factors that lead to economic growth, and the reasons behind the
differing rates of economic growth among nations. Economic growth has also
attracted attention because of the positive impact it has on society, as it has been
associated with benefits such as increased wealth and standards of living among
others. However,on the other sides economic growth has also had negative impacts on
society. My presentation below shall discuss both the positive and negative impacts
economic growth has had, using practical examples to illustrate these.
-Possitive impacts of Economic Growth
+Improved living standard
When rich countries today are compared to their own history, there is a vast
difference in the standards of living. As Weil, an economist observes, there has been
an unprecedented increase in living standards in most parts of the world over the last
half century.
Example:
.Life expectancy of a person born in Japan
+In 1880: 35 years old
+Today: 83 years old
+Reduction in poverty
Studies in 1999 and 2008 have shown that there is a positive relationship between
economic growth and the rate of poverty reduction in developing countries.
According to a report in 2004,there has been a significant increase in the global per
capita GDP from 1970 to 2000 with the average person clearly getting richer over
time.

THE WORLD DISTRIBUTION OF INCOME IN

1970
 THE WORLD DISTRIBUTION OF INCOME IN
2000
From the information about the world distribution of income in the Figure 1 and
Figure 2, we can see that people are able to afford more and can improve their quality
of life.
+Education
The higher the level of economic development, the higher the demand for higher
education.As the economy grows and GDP per capita increases, the government
and/or people will, on average, have more to spend on education, in terms of
increasing the number of people who have access to education at all levels, as well as
improving the quality of education by hiring more teachers, a wider access to
educational materials, books etc.
+Improved technology and infrastructure
As economies continue to experience growth, the amount that is spent on
infrastructure such as transportation networks, communication, electricity, gas, water
supply as well as various technologies has also increased.
+Health
Improvements in living standards and education due to economic growth have also
led to improvements in the health of the population in general, as they have more of
things such as food, shelter and clothing than can enable them to live longer.This
beacause that with increased incomes brought about by economic growth,
governments as well as individuals are able to spend more on health in terms of
health facilities and infrastructure, improved nutrition and sanitation, research on
diseases, innovations in medical technologies etc.
 Example: In 1950, 280 out of every 1000 children in the developing world died
before the age of five. However, by 2008, this number fell to 118 per 1000 in low
income countries, and 57 out of every 1000 children in middle income countries.
-Negative impacts of Economic Growth
+Creative destruction
Generally, economic growth is good for the welfare of an economy. However, it tends
to create both winners and losers.Economic growth also leads to a shift in the
structure of production, with a move from agricultural and manufacturing to services.
+Health challenge
There are newer health challenges arising with increases in economic growth such as
ageing populations, an increase in the occurrence of chronic illnesses, and an
intensive use of health technologies which, while essential, are also expensive.
+Increase in income inequality
Income inequality is a major issue because it leads to a number of other adverse
effects: Economic inefficiency, undetermining of social stability and solidarity and its
unfairness to some sections of the society in general. When low income individuals
are unable to borrow money, they may also be unable to afford education for their
children, start businesses, and save, thus consequently leading to a lower overall rate
of saving in the society.
+Increased pollution
-Increased pollution has also been cited as a downside of economic growth.while
many people have benefited from an improved quality of life due to economic
growth, these gains have not been even, and economic growth usually has negative
environmental consequences. According to The World Bank (2014), the rate at which
natural resources, i.e. land, water and air, are being degraded in many countries is
alarming.
- The health of many is also threatened by factors such as air pollution, waterborne
disease and exposure to harmful chemicals. This is particularly so in developing
countries due to their high levels of dependence on natural resources, a limited
capacity for adaptation to the changing climate, and limited resources to remedy the
effects of these changes. Furthermore, with changes in the climate globally, there is
also an increased risk of natural disasters and other environmental risks.
-In a study of the relationship between energy consumption and economic growth
using time series evidence from Asian developing countries, Asafu-Adjaye (2000)
reported that high levels of economic growth lead to higher energy demand levels..

III. The achievement of the USs economy

1. GDP

Gross domestic product (GDP) is a monetary measure of the market value of all final goods and
services produced in a period
According to The World Bank Statistics, The Gross Domestic Product (GDP) in the United
States was worth 17,947 billion US dollars in 2015.

The United States, the largest economy in the world accounting for 28.95 percent of the global
GDP which is 73,170.986 billion US dollars.
This image compares the states of the US to other countries by approximately GDP in 2012,
based on data from0- Bureau of Economic Analysis websites.
GDP Growth Rate

United States economy expanded an annualized 1.4 percent in the second quarter of 2016, more
than 1.1 percent reported in the second estimate and much better than 0.8 percent reported in the
first three months of 2016. With the third estimate, the general picture of economic growth
remains the same. The most notable change from the second to third estimate is that
nonresidential fixed investment increased in the second quarter; in the previous estimate,
nonresidential fixed investment decreased. The increase in real GDP in the second quarter
reflected positive contributions from personal consumption expenditures (PCE), exports, and
nonresidential fixed investment. These were partly offset by negative contributions from private
inventory investment, residential fixed investment, and state and local government spending.
Imports, which are a subtraction in the calculation of GDP, increased. GDP Growth Rate in the
United States averaged 3.22 percent from 1947 until 2016, reaching an all time high of 16.90
percent in the first quarter of 1950 and a record low of -10 percent in the first quarter of 1958.
GDP Growth Rate in the United States is reported by the U.S. Bureau of Economic Analysis.
GDP Per Capita

International Monetary Fund (2015)

(based on estimates of projected data) :

Top 16 sorted by their gross domestic product per capita at nominal values. This is the value of
all final goods and services produced within a nation in a given year, converted at market
exchange rates to current U.S. dollars, divided by the average population for the same year.
 2. Economy structure:
- Agriculture and the industrial sector made up 1.2 percent and 19.1 percent of USs GDP
in 2012 respectively. This percentage can be relatively deceiving. The US is not only the
third largest agricultural producer in the world behind China and India, but is also the
leading industrial power in the world. Agriculture is a vital part of US economy and
society. According to the last census of agriculture in 2007, there were 2.2 million farms
in the US - covering an area of 922 million acres. Farmers are also one of the major
political lobbyists in the US as they are primarily responsible for the countrys food
demands. Among US agricultural products include wheat, corn, other grains, fruits,
vegetables, cotton; beef, pork, poultry, dairy products; fish; and forest products.
- manufacture: The industrial sector on the other hand is highly diversified and
technologically advanced; comprising of industries such as petroleum, steel, motor
vehicles, aerospace, telecommunications, chemicals, electronics, food processing,
consumer goods, lumber and mining. As of 2010, the country remains the world's largest
 manufacturer, representing a fifth of the global manufacturing output. Due in part to the
shale boom in recent year, the U.S. is also the world's third-largest producer of oil and
second-largest producer of natural gas.
- Services: Services constituted 79.7 percent of the US GDP. The US is home to the largest
and most influential financial markets in the world including major stock and
commodities exchanges like NASDAQ, NYSE, AMEX, CME, and PHLX. The NYSE
alone is more than three times larger than any other stock market in the world.

3. Employment

There are more job openings available in America today than at any point since the
Bureau of Labor Statistics first started tracking vacancy data back in December 2000. Yet
the percentage of adult Americans working or actively looking for a job stands at 62.6
percent, the lowest level in nearly four decades.

The U.S. economy has created 11.5 million new jobs during the last 57 consecutive
months of domestic labor force expansion. And there were nearly 5.4 million open jobs at
the end of May more than twice as many vacancies as there were six years ago.

Unemployed individuals who haven't actively looked for a job in the last four weeks, for
any number of reasons, actually slip away from the Labor Department's unemployment
calculations. So although the unemployment rate ticked down to a seven-year low of 5.3
percent in June, that number didn't do justice to the 640,000 individuals who exited the
labor market last month and the nearly 94 million people who were neither employed nor
looking for work.

4. Taxation:
4.1. Types of taxes
- Income tax: Taxes are imposed on net income of individuals and corporations by the
federal, most state, and some local governments. Citizens and residents are taxed on
worldwide income and allowed a credit for foreign taxes. Income subject to tax is
determined under tax accounting rules, not financial accounting principles, and includes
almost all income from whatever source. Most business expenses reduce taxable income,
though limits apply to a few expenses. Individuals are permitted to reduce taxable income
by personal allowances and certain nonbusiness expenses, including home mortgage
interest, state and local taxes, charitable contributions, and medical and certain other
expenses incurred above certain percentages of income. State rules for determining
taxable income often differ from federal rules. Federal tax rates vary from 10% to 39.6%
of taxable income. State and local tax rates vary widely by jurisdiction, from 0% to
13.30% of income,[4] and many are graduated. State taxes are generally treated as a
 deductible expense for federal tax computation. In 2013, the top marginal income tax rate
for a high-income California resident would be 52.9%.[5]
The United States is one of two countries in the world that taxes its nonresident
citizens on worldwide income, in the same manner and rates as residents; the other
is Eritrea. The Supreme Court upheld the constitutionality of the payment of such tax in
the case of Cook v. Tait, 265 U.S. 47 (1924).

- Payroll taxes are imposed by the federal and all state governments. These include Social
Security and Medicare taxes imposed on both employers and employees, at a combined
rate of 15.3% (13.3% for 2011 and 2012). Social Security tax applies only to the first
$106,800 of wages in 2009 through 2011.[2] However, benefits are only accrued on the
first $106,800 of wages. Employers must withhold income taxes on wages. An
unemployment tax and certain other levies apply to employers. Payroll taxes have
dramatically increased as a share of federal revenue since the 1950s, while corporate
income taxes have fallen as a share of revenue. (Corporate profits have not fallen as a
share of GDP).[2]
- Property taxes are imposed by most local governments and many special purpose
authorities based on the fair market value of property. School and other authorities are
often separately governed, and impose separate taxes. Property tax is generally imposed
only on realty, though some jurisdictions tax some forms of business property. Property
tax rules and rates vary widely with annual median rates ranging from 0.2% to 1.9% of a
property's value depending on the state.[6]
- Sales taxes are imposed by most states and some localities on the price at retail sale of
many goods and some services. Sales tax rates vary widely among jurisdictions, from 0%
to 16%, and may vary within a jurisdiction based on the particular goods or services
taxed. Sales tax is collected by the seller at the time of sale, or remitted as use tax by
buyers of taxable items who did not pay sales tax.
- The United States imposes tariffs or customs duties on the import of many types of goods
from many jurisdictions. These tariffs or duties must be paid before the goods can be
legally imported. Rates of duty vary from 0% to more than 20%, based on the particular
goods and country of origin.
- Estate and gift taxes are imposed by the federal and some state governments on the
transfer of property inheritance, by will, or by life time donation. Similar to federal
income taxes, federal estate and gift taxes are imposed on worldwide property of citizens
and residents and allow a credit for foreign taxes.

4.2. Tax administration

 Taxes in the United States are administered by literally hundreds of tax authorities. At the
federal level there are three tax administrations. Most domestic federal taxes are
administered by the Internal Revenue Service, which is part of theDepartment of the
Treasury. Alcohol, tobacco, and firearms taxes are administered by the Alcohol and
Tobacco Tax and Trade Bureau (TTB). Taxes on imports (customs duties) are
administered by U.S. Customs and Border Protection. TTB is also part of the Department
of the Treasury and CBP belongs to the Department of Homeland Security.[90]
Organization of state and local tax administrations varies widely. Every state maintains a
tax administration. A few states administer some local taxes in whole or part. Most
localities also maintain a tax administration or share one with neighboring localities.

4.3. Benefits:

taxes pay for schools, roads, bridges and dams, preserving natural resources, and various
elements of safety: police, firemen, food, medicines and weather reports. They also fund our
diplomacy with other countries.
 iv. Why US economy is called the biggest one?

- GDP per capita sits in the top 5% in the world

Of 227 countries and territories ranked by the CIA World Factbook, U.S. GDP per capita
remains in the top 5%, behind natural resource heavyweights like Qatar and the U.A.E. GDP per
capita currently stands at $47,200. This rate has increased steadily since the 1960s, even after
major recessions took some bite from it. Already in 2010 and 2011, GDP per capita has re-
accelerated as the overall economy returned to growth.
- An inventive and daring population
The U.S. is home to wildly inventive entrepreneurs who have shaped industry in nearly every
form. Take e-commerce site Gilt Group, founded in 2007. In less than four years it has become a
$500 million business with millions of members. The U.S. Patent and Trademark Office has had
difficulty keeping up with all the new ideas sprouting from citizen minds. Last year a record
241,977 domestic patents were filed, nearly four times as many as in 1963.
- Tame inflation throughout the crisis
Inflation has remained relatively tame, even as the Federal Reserve aggressively targets
monetary policy to stimulate job growth. The change in the consumer price index stays under 5%
for years. Last month's personal consumption expenditures of 1.6% fell below government
targets of a 1.7% to 2.0% increase, good news for consumers.
- Even with rhetoric, political stability keeps markets functioning
While the debt ceiling crisis seemed to have pushed the country to the brink, the U.S. remains a
safe haven compared to other nations where ruling parties have been toppled and federal
governments head towards delinquency. Even in the European Union, the smallest member
nations have the capacity to hold the whole region hostage.
- A people of diversity

The U.S. has a large and growing labor force, even as the baby boom begins to filter out in
retirement. Compare that to rapidly growing countries like China, which has a quickly aging
population, causing shortages in labor and strains on pension funds. The U.N predicts that the
proportion of China's population over 60 will rise from 12.3% in 2010, to 17.4% in 2030.
- Stable population growth in the U.S.

Countries in Europe and Asia are facing serious concerns on projections that their populations
will begin declining over the next few decades. The United Nations estimates that between 2015
and 2020, Germany, Japan and Russia will all see populations contract. The picture is rosier in
the U.S., where immigration will offset a relatively slow birth rate. The CIA forecasts 13.8 births
per 1,000 people in the U.S., placing it 148 out of 221 countries and territories.

v. Lesson for VietNam

The most important role s belong to the government.

+ Builds the strategy, human resources.

Defining the content of sustainable development and the priority areas of sustainable
development plans Because, Sustainable development has a very large content. Sustainable
development requires appropriate strategy for implementation in stages of economic
development. In the early stages of sustainable development, economic development goals
can be more focused, but should adhere to the following basic principles:

- People are the center and purposes of sustainable development.

- Applying industrial distribution, which ensures for the stable, long-term development

- Do not exploit, use natural resources effectively.

-Applying modern technology in all three sectors of the economy

+ Policies :

Effective Tax Structure and Tax Collection

One of the challenges developing economies often face is to effectively tax and collect what
they are supposed to. If the government is unable to collect sufficient tax from the richest aspect
of the economy (e.g. production of natural resources) there will be little funds to finance
necessary public sector investment in services with a high social benefit.

For example, the average tax rate in Sub-Saharan Africa is only 15% of GDP compared to
an average of 40% of GDP in developed world.

Investment in Public Services

In areas such as education, health care and transport, there is often market failure the free
market doesnt provide sufficient levels of education. A key factor in improving economic
development is to increase levels of literacy and numeracy. Without basic levels of education
and training, it is very difficult for economy to develop into higher value added industries.
 Evidence on returns from investing in education are mixed. Often investment takes a long
time to feed through into directly higher rates of economic growth But, on its literacy is an aim
of development.

Diversification away from agriculture

A constraint developing economies may face is that their current comparative advantage
is in the production of primary products. However, these limit economic development due to
volatile prices, low income elasticity of demand and finite nature. Therefore, economic
development may require government encouragement of new industries in different sectors, such
as manufacturing..

Attempts to diversify away from agriculture can have mixed results. Sometimes,
countries with a poor basic level of infrastructure struggle to make effective use of capital
investment in manufacturing. Some argue government attempts to encourage manufacturing
industry is misplaced because they tend to have poor information about best kinds of industries
to promote. It is better to allow free market to decide to which industries to invest in.