English Business for Economics

ECONOMICS · 2ND YEAR

English for Business and

Economics

Course notes, academic year 2025/26

Alessio Marchiol Alessio Marchiol | English for Business and Economics

Contents

CHAPTERS AND TOPICS

Measuring growth and well-being ............................................................. 2

C H A P T E R 1

1.1 GDP ........................................................................................................................................... 2

1.2 OECD ........................................................................................................................................ 3

1.3 The wealth of nations ............................................................................................................... 4

1.4 Charts ....................................................................................................................................... 6

1.5 Power of informal economy ..................................................................................................... 7

China and the emerging giants ................................................................... 9

C H A P T E R 2

2.1 China ........................................................................................................................................ 9

2.2 Growth of the economic giants – China and India (chasing the dragon and the tiger) ............ 10

2.3 China’s labour tests its muscle ................................................................................................ 12

2.4 Multinationals ........................................................................................................................ 14

2.5 Will China become the centre of the world economy ............................................................. 15

2.6 Is China a colonial power? ...................................................................................................... 17

2.7 Is China slowing? .................................................................................................................... 19

Aid, finance and development in Africa ................................................... 21

C H A P T E R 3

3.1 Dead Aid (Chinese are our friends) ......................................................................................... 21

3.2 Dead Aid, a capital solution .................................................................................................... 23

3.3 Dead Aid conditionalities ....................................................................................................... 24

3.4 How to get electricity in Malawi ............................................................................................. 25

3.5 The power of mobile money ................................................................................................... 27

3.6 M-PESA India .......................................................................................................................... 29

3.7 Mobile money progress .......................................................................................................... 30

3.8 First African Summit .............................................................................................................. 31

Technology, work and the digital economy ............................................. 33

C H A P T E R 4

4.1 Winner take all ....................................................................................................................... 33

4.2 Robot and job displacement ................................................................................................... 34

4.3 The Shady World of Surveillance Pricing ............................................................................... 35

4.4 The lump of labour fallacy...................................................................................................... 36

4.5 Think you are discreet online? Think again ............................................................................ 38

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Alessio Marchiol | English for Business and Economics

CHAPTER 1

Measuring growth and well-being

1.1 GDP

The Origin and Limitations of GDP

In 1934, economist Simon Kuznets delivered a report to the U.S. Congress called "National

Income, 1929-1932" which laid the foundation for Gross Domestic Product (GDP). This report

fulfilled a critical lack of data, during the economic devastation of the Great Depression. The

economy was plummeting into a slump. It provided reliable year by year statistics of national

production, becoming the main tool for the government to act in the economy.

While GDP became the global benchmark for judging a country's success, Kuznets himself

included a warning on page seven, stating that the welfare of a nation can scarcely be inferred

from a measure of national income.

However, modern societies have largely ignored this warning, turning GDP into our primary

guide for decision-making. However, GDP is a highly flawed metric: it ignores the environment,

counts negative developments like bombs and prisons as progress, and fails to measure happiness,

community, justice, or fairness. Historical events like the 2008 financial crisis and the Arab Spring

have demonstrated that economic growth does not automatically prevent widespread social

discontent, proving that the world is ready for a "measurement revolution".

The Social Progress Index (SPI)

To measure what truly matters to people, Michael Green introduces the Social Progress Index

(SPI), which measures the well-being of societies entirely independently of GDP. The SPI defines

a good society based on three dimensions, which are further divided into twelve components:

– Basic Human Needs: Focuses on survival essentials, including food, water, shelter, and

safety.

– Foundations of Wellbeing: Evaluates the building blocks of progress, such as education,

information, health, and a sustainable environment.

– Opportunity: Assesses personal freedoms, including individual rights, freedom of choice,

freedom from discrimination, and access to advanced knowledge.

Crucially, the SPI is based on actual achievements rather than efforts or intentions. Instead of

tracking how much a government spends on healthcare, it measures actual life expectancy and quality of

life; instead of counting anti-discrimination laws, it measures whether citizens actually experience

discrimination. 2

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SPI vs. GDP: "GDP is Not Destiny"

When plotting countries on a chart comparing social progress (vertical axis) and GDP per capita

(horizontal axis), several key insights emerge:

– New Zealand ranks first in social progress, while Chad ranks the lowest.

– The United States is considerably richer than New Zealand but achieves a lower level of

social progress.

– Senegal reaches a higher level of social progress than Chad despite having the exact same

GDP per capita.

– Costa Rica functions as a "social progress superpower," matching the well-being of

Western European countries despite having a much lower GDP.

– Brazil outperforms other BRICS nations but faces the challenge of pursuing inclusive

growth rather than GDP growth alone.

The regression line on this chart proves empirically that GDP is not destiny. At the lower end

of the income scale, the curve is very steep, meaning that poor countries can achieve "a lot of

social progress bang for their GDP buck" by reinvesting small economic gains into basic needs

like water, sanitation, and healthcare. However, as GDP per capita rises, the curve flattens out,

and each extra dollar buys less social progress, making GDP increasingly less useful as a

development guide.

1.2 OECD

Introduction

Launched in 2011, the OECD Better Life Initiative was developed to understand what drives

human well-being and identify the specific areas where countries must improve to achieve

progress for all. The initiative represents a major shift in focus from traditional macroeconomic

metrics like GDP to the actual, lived experiences of individuals and households.

The well-being framework: current vs future

The well-being framework is divided into two areas: current well-being and well-being over time.

– Current well-being; is measured through real outcomes achieved in people’s daily lives. It

is divided into two broad domains:

– Material living conditions (3 dimensions); includes income and wealth (the economic

resources people use to satisfy needs and protect against risk), jobs and earnings

(availability and quality of work to fulfil ambitions and build self-esteem) and housing

conditions (quality of shelter and access to public services). 3

Alessio Marchiol | English for Business and Economics

– Quality of life (8 dimensions); this covers non-material dimensions such as health status

(both physical and mental), work-life balance (time for leisure and personal time),

education and skills (learning as a basic human aspiration), social connections (social

support systems), civic engagement and governance (having a political voice),

environmental quality (clean surroundings), personal security (safety from crime), and

subjective well-being (how people feel about their own lives)

– Future well-being; sustainability over time depends on maintaining these indicators:

– Natural capital; environment and natural resources

– Economic capital; infrastructure, finances, and productivity

– Human capital; knowledge, skills, and health of people

– Social capital; trust, relationships, and cooperation

Three distinctive features of the framework

Focus on people; evaluates the lived experience of individuals and households rather than

1. macro-level economic performance.

Focus on outcomes instead of inputs/outputs; the index measures direct outcomes rather

2. than financial efforts. For example, instead of tracking how much money a government spends

on water infrastructure, it measures people’s actual satisfaction with their water quality

Focus on distribution and inequalities; framework tracks how well-being is spread across

3. different groups.

Flexibility and global adaptation

The 11 dimensions of the Better Life Initiative are considered universal across all human

societies. However, the framework is not designed to be a rigid "straitjacket". Countries have

different histories, cultures, and challenges, meaning they can adjust the framework and choose

different monitoring indicators to reflect their local priorities.

A prime example is Italy, which adjusted the framework to create its own national well-being

indicator, BES (Benessere Equo e Sostenibile), adding "culture" as a 12th dimension to better reflect

its national identity and priorities

1.3 The wealth of nations

The professor of Economics Partha Dasgupta (University of Cambridge) talks about the Inclusive

Wealth Report 2012 of which he was a key contributor. The report is a joint initiative of United

Nations Environment Program (UNEP) and the International Human Dimensions Programme on

Global Environmental Change (IHDP). It is the first actual attempt to measure the total wealth of

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nations, including forms of wealth not generally accounted for, such as natural and human

capital.

The Flaws of GDP as a Measure of Success

Traditional economic measurements heavily rely on GDP to determine a country's prosperity.

However, GDP only measures income—the short-term flow of goods and services—rather than a

country's actual wealth, which is the total accumulated stock of its physical, human, and natural

assets.

The Three Capitals of "Inclusive Wealth"

To provide a more accurate evaluation of global prosperity, a United Nations report overseen

by Sir Partha Dasgupta introduced comprehensive balance sheets for 20 nations. This framework

tracks three essential forms of capital:

– Manufactured or physical Capital: Human-made physical assets, including machinery,

buildings, and infrastructure.

– Human Capital: The total economic value of a population's education, skills, and health.

The UN calculates this based on average years of schooling, the wages workers can

command, and their expected remaining working years before retirement or death.

– Natural Capital: Raw environmental resources, such as land, forests, fossil fuels, and

minerals.

Key Insights and Country Comparisons

Applying this framework reveals that for almost every nation, people are their single greatest

asset. Japanese citizens possess more human capital than anyone else.

Furthermore, these balance sheets dramatically alter how we rank global economic power:

– In 2008, America's total wealth reached nearly $118 trillion (more than ten times its GDP

that year).

– While China’s GDP is larger than Japan's, the UN report reveals that Japan was nearly 2.8

times wealthier than China in 2008 and topped the world in wealth per capita.

– Between 1990 and 2008, nearly all surveyed countries (except Russia) successfully

increased their overall wealth. They did so by accumulating physical and human capital

to offset the steady depletion of their natural assets.

The "Asset-Management" Framework and Its Tensions

By assigning a monetary value to bauxite, brainpower, and infrastructure, the UN report makes

these three forms of capital comparable and theoretically replaceable. This framework

effectively redefines economic policymaking as an "asset-management problem". Under this

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view, a country is not poorer if it loses $100 billion of pastureland but gains $100 billion in skills. For

example, Saudi Arabia depleted its fossil fuels by $37 billion but added nearly $1 trillion to its human

capital.

However, this idea of replaceability creates tension:

– Environmentalists argue that clean air and water are irreplaceable necessities.

– In wealthier nations, investments in human capital (like education) appear to be hitting

diminishing returns. The report suggests that these governments might achieve better

value by redirecting funds to restock natural capital (like forests) instead of building more

libraries.

The Challenge of Pricing the Priceless

A major limitation of the current model is that many crucial environmental assets cannot be

owned, bought, or sold. As a result, the UN report excludes vital resources like clean air,

confining itself to priced commodities like gas, nickel, and timber. Furthermore, market prices

rarely reflect "social value". For instance, the market prices honey but fails to price the

invaluable crop pollination services provided by bees.

Although the current calculations are crude and illustrative, they prove that comprehensive

wealth can be measured. Sir Partha hopes that as pricing models improve, economists will

eventually drop adjectives like "inclusive" or "comprehensive" and simply call this complete

balance sheet "wealth"

1.4 Charts

Upward movement: to increase/rise up/go up/to grow/expand/to rocket/boom (7)

Downward movements: to decrease/fall/drop/decline/go down/to contract/to slump/collapse 6

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Maintain, hold and keep.

Degree of change: slightly, dramatically, moderately, significantly.

Speed of change: rapidly, quickly, gradually, slowly.

1.5 Power of informal economy

Redefining the Informal Economy: "System D"

Economists and governments traditionally refer to unregulated trade as the "informal

economy," the "underground economy," or the "black market". However, Robert Neuwirth rejects

these negative labels, framing this system as a vibrant, open, highly visible and high potential

network

He adopts the term "System D", which comes from the French word débrouillardise (self-reliance).

System D is essentially the economy of self-reliance, characterized by decentralized, highly

adaptable business activities, such as open air markets and mobile fish smokers operating in the

shantytowns of Lagos, Nigeria (global trade: fish from the North Sea smoked in Lagos)

The Massive Scale of the "Pickle Economy"

Neuwirth argues that global economic discussions suffer from a "pickle problem". It is an

analogy describing how global economic discussions ignore the majority of the world's

workforce, just like a worker in a pickle factory who discards imperfect cucumbers into a

separate bin. In fact, most economic analyses focus exclusively on the luxury economy, which is

valued at $1.5 trillion annually (three times the GDP of Switzerland) and excludes two-thirds of

the global workforce. Worldwide, 1.8 billion people work in unregulated, informal jobs.

Neuwirth highlights the immense power of this collective workforce:

– If united into a single nation—which he jokingly calls the "United Street Sellers Republic"

(U.S.S.R.) or "Bazaaristan"—it would be worth $10 trillion annually.

– This would make System D the second-largest economy in the world after the United

States.

– Most importantly, this sector is a major engine for egalitarian wealth distribution 7

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How Global Corporations Leverage System D

Far from being an isolated, fringe economy, major multinational corporations rely on System D

as a primary business plan to distribute products and secure profits:

– UAC Foods: unregistered street hawkers

– Procter & Gamble (P&G): "high frequency stores"

– MTN: selling pay-as-you-go airtime cards

The Dynamics of Piracy and Brand Clones

System D is also characterized by the distribution of cloned tech devices to fake designer

products.

While formal businesses complain about intellectual property theft, Neuwirth notes that some

major brands secretly view piracy in a different light:

– A major sneaker manufacturer confessed that they use piracy as a form of unfiltered

market research. If their sneakers are being pirated, they know their brand is highly

desirable.

– The consumers of pirated goods are generally not the brand's target customers anyway,

meaning piracy does not