Question 2 : What is the level of economic development of the country?

[Use
GDP per capita]* How has it changed over time? [Analyse the change during
the 10-year interval].

Answer :According to the analyzed by us using World Bank Indicators and the
graphs which we got in the excel sheets our conclusions are as below:
The Gross Domestic Product per capita in Australia was last recorded at
56919.40 US dollars in 2018. The GDP per Capita in Australia is equivalent to
451 percent of the world's average

Economic growth within Australia has varied in recent times with the trends
over the years being caused by different factors. Australia has had very volatile
growth in the past which was unsustainable and was very unpredictable.
Interpreting Graph from Excel :
As from the diagram we got from excel sheet economic growth reached a low
of -3.40% and a high of around 9.00% in the period between the 1970 and
1980. However, with more recent trends, the growth rate has been more
stable and sustainable with growth following the 1990’s always above 0% per
annum.The probable reason for that would be Australia was able to improve
its exports and Terms of Trade (ToT) meaning that over the long term,
economic growth would not only increase but would remain stable.
During the recession in early 1990s , GDP fell by 1.7%, employment by 3.4%
and the unemployment rate rose to 10.8%. However, this recession did assist
in reducing long-term inflation rate expectations and Australia has maintained
a low inflation environment since the 1990s to the present day.The GDP
growth was however brilliant after 1990s and there was only a slight fall and
then rising graph in this region . In 2012 the Gross Domestic Product (GDP) in
Australia accounted for 2.45% of the world economy at 1520.60 billion US
dollars. Since 2008 its economy has grown by 14.3%.

Australia has exhibited very strong and persistent economic growth, even in
the face of major international upheavals, such as the 1970s Oil Crises, the
1990 Asia Crisis and the 2008 Global Financial Crisis. But it has not always been
thus.
If we take a look at Australia’s GDP per capita, the biggest rally is in 2009 if you
measure it in US dollars. Where growth since 2007 is 42% compared to 24%
using nominal Australian dollars. If we take inflation into account and look at
Real GDP, which is a more realistic view as it’s used to define the standard of
living; Australia has increased by 5% since 2007.
Over all the Australian economy has performed very well since 2008.  In 2012
the Gross Domestic Product (GDP) in Australia accounted for 2.45% of the
world economy at 1520.60 billion US dollars. Since 2008 its economy has
grown by 14.3%.

References used to interpret the data :

1) Data Extacted from world Bank Indicators for Australia (GDP per capita)
2) Measuring Australia’s Economic performance
 https://www.oup.com.au/__data/assets/pdf_file/0025/58255/Chapter-18-
Measuring-Australias-economic-performance.pdf
3)Australian Economic Growth, Unemployment and External Stability:An
Essay by School of Economics, University of Queensland.
4) Reserve Bank of Australia, 2015, Australian GDP Growth and
Inflation,viewed 25th of April 2015,<http://www.rba.gov.au/chart-pack/au-
gdp-growth.html>

7) What can you say about the expenditure on education and health with the
indicators on education and health? *

Answer :
Australia spent A$111.8 billion on education in 2018, the most recent year for
which the full dataset for all levels of education spending is available. A report
from the Australian Council for Educational Research (ACER) shows this was an
increase of nearly 80% from 2000 spending.

The federal government contributed A$47.2 billion (42%) of the overall funding.
State, territory and local governments spent A$39.1 billion (35%). A further
A$25.5 billion (23%) came from private sector.

The analysis separates funding into three sources: federal government; state,
territory and local governments; and private sources (the latter includes
contributions by students in the form of fees, as well as contributions by private
businesses and non-profit organisations).

Spending By Education Level :

For instance, the federal government transferred A$14 billion of its initial
education funding to private sources in 2018, mainly in the form of student loans.
It transferred a further A$17.7 billion to state, territory and local governments
which then fund schools and other areas of education.The final distribution of
national education spending, after the transfers, was A$15.5 billion (14%) from
the federal government, A$55.4 billion (49%) from state, territory and local
governments and A$40.9 billion (37%) from private sources.

The bulk of Australia’s education spending is directed to three levels of education:

primary schools (27%), secondary schools (28%) and higher education (26%).
The remaining 19% is spread between early childhood education, preschool,
vocational education and training (VET) certificates, diplomas and advanced
diplomas.

Graph obtained from WorldBank Data Showing the Exoenditure in Education for Australia

Expenditure by GDP (percentage)

In 2018, Australia spent A$102.4 billion on primary school and above. In real
terms this spending has grown substantially since the beginning of the century
and faster than student numbers.While spending on education increased by 79%
between 2000 and 2018, the number of students in the Australian education
system increased by only 22%. As a result, education spending per student
(primary and above) increased by 46% over this period. Australia’s spending on
education as a proportion of GDP has also increased, from 5.1% in 2000 to 5.9% in
2015.This increase has largely been driven by private sources of funding, rather
than government funds, indicating an increasing willingness by people to invest in
their own (or their children’s) education.

Comparisons with other countries:

Australia’s government spends a relatively large proportion of its budget on

education compared to other OECD countries. In total, government spending on
education is 13.5%, which ranks Australia ninth of the 39 countries in the OECD
reporting.But Australia’s total government spending for all services (including
health, education, social protection, defence, public order and safety) is relatively
low.

Australia:Health spending as percent of GDP

In 1999, the  Government introduced the private health insurance

rebate scheme, under which the government contributed up to 30% of the
private health insurance premium of people covered by Medicare. Including
these rebates, Medicare is the major component of the total Commonwealth
health budget, taking up about 43% of the total. The program was estimated to
cost $18.3 billion in 2007–08. In 2009 before means testing was introduced,
the private health insurance rebate was estimated to cost $4 billion, around
20% of the total budget. The overall figure was projected to rise by almost 4%
annually in real terms in 2007. In 2013–14 Medicare expenditure was $19
billion and expected to reach $23.6 billion in 2016/7. In 2017–18, total health
spending was $185.4 billion, equating to $7,485 per person, an increase of
1.2%, which was lower than the decade average of 3.9%. The majority of
health spending went on hospitals (40%) and primary health care (34%). Health
spending accounted for 10% of overall economic activity.
In the 2017–18 financial year, Australia spent an estimated $185.4 billion on
health. In real terms, this represented a 1.2% growth in spending from the
previous year—equating to an additional $2.2 billion. The main areas in which
spending increased were:
• Hospitals, increased by $3.2 billion
• Primary health care, increased by $1.5 billion
• Referred medical services, increased by $0.8 billion .
Spending on capital declined by $3.6 billion.
Real growth in expenditure in 2017–18 was slower than the average over the
decade from 2007–08 (1.2% compared with 3.9%, respectively). It was also the
lowest real growth over the decade. This was largely due to changes in capital
expenditure, which decreased by 28.2% in 2017–18 because of a one-off
capital injection in South Australia the previous year. Recurrent spending
showed a growth of 3.5%, and although this was slower than the average
annual change over the decade (3.9%), it was not as low as when spending on
capital is included.

From 2016–17 to 2017–18, nominal GDP increased at a greater rate than the
increase in nominal health expenditure: 4.7% compared with 2.9% . Together
with the fact that the GDP deflator was only slightly higher than health
inflation in the same period, this indicates that the increase in the volume of
goods and services produced in the broader economy was larger than the
increase in the amount of health goods and services purchased. Over the
decade to 2017–18, annual real growth in health expenditure generally
remained higher than GDP growth. In the first 5 years of the decade the
growth in health expenditure was on average 2.4 percentage points greater
than GDP growth.
Source and Refrences:
 1) Australian Institute of Health and Welfare
https://www.aihw.gov.au/reports/health-welfare-expenditure/health-
expenditure-australia-2017-18/formats
2) The Conversation Article on Education in Australia and its three charts
3) World Bank Data on Australian Expenditure on Health and Education
4) OECD Data from year 2000 to 2018
https://data.oecd.org/eduresource/spending-on-tertiary-education.html

Question 8 : How do the human development and human capital compare vis-
à-vis economic development? [also use your answers to questions 2, 3, and 6.
The purpose of this question is to improve your understanding about
association between economic development and human development/capital]

Answer:

The HDI is a summary measure for assessing long-term progress in three basic
dimensions of human development: a long and healthy life, access to
knowledge and a decent standard of living through economic development . A
long and healthy life is measured by life expectancy. Knowledge level is
measured by mean years of education among the adult population, which is
the average number of years of education received in a life-time by people
aged 25 years and older; and access to learning and knowledge by expected
years of schooling for children of school-entry age, which is the total number
of years of schooling a child of school-entry age can expect to receive if
prevailing patterns of age-specific enrolment rates stay the same throughout
the child's life. Standard of living is measured by Gross National Income (GNI)
per capita expressed in constant 2011 international dollars converted using
purchasing power parity (PPP) conversion rates.
Comparing the answers from question 2,3 and 6 there could be derived a
direct relationship between economic development and human development
While human development is very much focused on the wellbeing of people,
economic development covers a wide spectrum of social and economic
factors.Human Development, described as the ultimate goal of the
development process, with economic growth, described as an imperfect proxy
for more general welfare, or as a means toward enhanced human
development. Human development, in turn, has important effects on
economic growth.
Income growth clearly strikes one as the main contributor to directly increasing
the capabilities of individuals and consequently the human development of a
nation since it encapsulates the economy’s command over resources (Sen,
2000). For example, Considering year 2000 while the Australia have life
expectancies and literacy rates comparable to those of many developed
countries, the fact that they can enjoy many of the benefits of citizens of such
countries (such as better housing, transportation, or entertainment)
demonstrates the importance of GDP as an instrument for achieving a wide
range of capabilities. However, GDP also has a strong effect on literacy and
health outcomes, both through private expenditures and government
programs. Thus, insofar as higher incomes facilitate the achievement of other
crucial human development objectives, it also has an indirect effect on human
development.
If a central element of economic growth is allowing agents to discover and
develop their comparative advantage, an increase in the capabilities and
functionings available to individuals should allow more of them to pursue
occupations in which they are most productive. In this sense human
development can be seen as the relaxing of constraints which may have
interfered with profit maximization. Furthermore, although human
development represents a broader concept, many of its elements overlap
significantly with the more traditional notion of human capital. Thus, to the
extent that human 6 development is necessarily correlated with human capital
and human capital affects the economic growth of a nation, human
development is bound to have an impact on economic growth. More
specifically, each of the various components of human development is likely to
have a distinct impact on economic growth. Education, for instance, has a
strong effect on labour productivity.
This could be proved by the data from question 7 and question 2 in which
more education expenditure was infact strenghthening the economy of
Australia . At a macro level, the distribution of the increased income from
economic growth will also have a strong impact on human development. Since
poorer households spend a higher proportion of their income on goods which
directly promote better health and education, economic growth whose
benefits are directed more towards the poor will have a greater impact on
human development, via increased food expenditure as well as on
education.
Education and health may also have strong indirect impacts on economic
growth through their effect on the distribution of income, and education even
more so through its impact on health . Australia’s HDI value for 2017 is 0.939—
which put the country in the very high human development category—
positioning it at 3 out of 189 countries and territories. Between 1990 and 2017,
Australia’s HDI value increased from 0.866 to 0.939, an increase of 8.4 percent.
Table A reviews Australia’s progress in each of the HDI indicators. Between
1990 and 2017, Australia’s life expectancy at birth increased by 6.2 years,
mean years of schooling increased by 1.2 years and expected years of
schooling increased by 5.5 years. Australia’s GNI per capita increased by about
56.7 percent between 1990 and 2017.

Australia’s 2017 HDI of 0.939 is above the average of 0.894 for countries in the
very high human development group and above the average of 0.895 for
countries in OECD. From OECD, countries which are close to Australia in 2017
HDI rank and to some extent in population size are Canada and New Zealand,
which have HDIs ranked 12 and 16 respectively.
References :
1) World Bank Data :Australia Economic ,Health and Education Expenditure
2) Human Development Indices and Indicators: 2018 Statistical
Update:Australia

3) HUMAN DEVELOPMENT AND ECONOMIC GROWTH:Yale University ,May-

2017

4) https://www.aihw.gov.au/reports/health-welfare-expenditure/health-expenditure-
australia-2017-18/formats