Economic Engineering & Financial Management

• The presentation discusses economic engineering and financial management
• The presentation was created by Yovany Arley Erazo Cifuentes, and their email address provided

Key Economic Concepts

• Economic growth and development
• Unemployment
• Inflation
• Interest rates
• Exchange rate

Economic Growth vs. Development

• Economic growth is defined as the increase in the value of final goods and services or income produced by an economy over a period of time, focused on a region or country
• The goal of economic growth is to improve the quality of life for nations

Economic Growth

• GDP or Gross Domestic Product: An aggregate measure of production equal to the sum of gross values added from resident and institutional units engaged in production and services plus taxes and minus subsidies on products not included in the value of their products
• Colombia's GDP growth (Var%) for 2022 was 7.5

Economic Growth - Outlook

• Economic growth perspectives for several countries in 2022, 2023 (estimated), 2024 (forecasted), and 2025 (forecasted)

Economic Growth - GDP Per Capita

• A panorama of income per person(income per capita) in the region is given, as well as the countries of highest and lowest income in the world.
• Data from 2018 by the World Bank is presented

Economic Growth vs Development

• Access to natural and energy resources
• Technological resources
• Available workforce
• Purchasing power
• Communication and transportation networks
• Educational level
• Capital accumulation
• Type of government
• Political stability
• Public investment administration
• Type of market
• Corruption
• Economic Development: The ability of a country or region to create wealth in order to promote or maintain the economic and social well-being of its inhabitants

Economic Development - National Level

• Economic growth: A country's capacity to generate wealth
• Economic Development: Involves prosperity, social progress, technological or personal development
• Fair and equitable wealth distribution and popular participation in the political and economic life of the country

Economic Development - National Level - Inequality

• Colombia is among the most unequal countries in the world
• Inequality is related to the "Gini coefficient"

Economic Development - Equity

• The "Gini Coefficient" is closer to zero and is better

Economic Development - National Level

• Bogotá, Antioquia, Cundinamarca, Valle del Cauca and Santander, where 48.6% of the population resides accounts for about 63.3% of the country’s domestic income
• Caquetá, Cauca, Chocó, Córdoba, La Guajira and Sucre, where 13% of Colombians live, get 7% of the national income

Economic Development - HDI

• The HDI (Human Development Index) is a summary measure of long-term progress evaluation in three basic dimensions of human development
• Capacity to have a long and healthy life, measured by life expectancy at birth
• Capacity to acquire knowledge (education), analyzed through average years of schooling and expected years of schooling
• Capacity to achieve a decent standard of living, quantified by Gross National Income (GNI) per capita
• The HDI ranges from 0 to 1; the closer to 1, the higher the level of human development

Economic Development - HDI

• It reports the countries with the best and worst Human Development Index

Economic Development

• Includes info on Sustainable Development Goals of the UN

Unemployment

• Includes info on unemployment data at a national level in Colombia

Unemployment - National Level

• Global participation rate: the percentage relationship between the economically active population and the working-age population
• Economically active population (EAP): is composed of the employed population plus the unemployed population
• Working-age population: it consists of people aged 12 and over in the urban area, and 10 years and over in the rural area.
• Occupancy rate (OR): is the percentage relationship between the employed population (OE) and the number of people in the working-age population (PET)
• Unemployment Rate (UR): it is the percentage relationship between the number of people who are looking for work (DS), and the number of people who are part of the economically active population or labor force (PEA).

Inflation and Interest Rates

• Includes information on the inflation rate at National Level in Colombia.

Inflation - Real Wage

Inflation - National Level

• Inflation is defined as the weighted average of the changes in prices of the set of goods and services that make up the CPI basket.
• Consumer Price Index (CPI): is a measure of the change (variation) in the price of representative goods and services for the consumption of households in the country, known as the family basket.
• This basket is defined based on the National Household Budget Survey (ENPH), which DANE conducts every 10 years; the latest was conducted between July 2016 and July 2017
• Each month, the DANE records the price of the 443 items in the basket
• Includes: neighborhood stores, supermarkets, supply markets, large surfaces, specialized establishments in the sale of articles and in the provision of services
• It records whether changes in price go up or down for each item in the basket of goods and services.

Inflation National Level

• Inflation continues to decline and reaches 11.78% in July 2023, according to information from DANE

Inflation

• The targeted inflation rate in Columbia managed by the Bank of the Republic is between 2% and 4% with 3% being the objective.

Inflation - Relationship of Interest Rates

• An explanation of how inflation is related to decreases and increases in interest rates

Inflation

• Discusses the Banco de la Republica's strategy related to the minimal interest rate they may charge to financial institutions

Market Rates - DTF

• Lists the average weekly interest rates collected for 90-day CDT's

Inflation

• Presents Colombia's rate of intervention vs annual inflation

Inflation

• Promotes the efficient use of productive resources
• Reduces uncertainty and provides greater certainty about the future return on investment
• Incentivizes investment which fosters economic growth
• Prevents arbitrary income and wealth redistributions, especially against the poorest population

Rate of Trade

• Includes info related to Market Exchange on Exports and Imports

Presentation on economic engineering and financial management. Key concepts include economic growth, unemployment, inflation, interest rates, and exchange rates. Economic growth focuses on improving the quality of life for nations, measured by GDP.