Misplaced Pages

#899100

134-666: In 2020, the value of government debt worldwide was $ 87.4 US trillion, or 99% measured as a share of gross domestic product (GDP). Government debt accounted for almost 40% of all debt (which includes corporate and household debt), the highest share since the 1960s. The rise in government debt since 2007 is largely attributable to stimulus measures during the Great Recession , and the COVID-19 recession . The ability of government to issue debt has been central to state formation and to state building . Public debt has been linked to

268-537: A "debt brake" in Germany and Switzerland ; and the European Union 's Stability and Growth Pact agreement to maintain a general government gross debt of no more than 60% of GDP. The ability of government to issue debt has been central to state formation and to state building . Public debt has been linked to the rise of democracy , private financial markets , and modern economic growth . For example, in

402-496: A constitution , while other uses of "democracy" may encompass direct democracy , in which citizens vote on issues directly. According to the United Nations , democracy "provides an environment that respects human rights and fundamental freedoms, and in which the freely expressed will of people is exercised." One theory holds that democracy requires three fundamental principles: upward control (sovereignty residing at

536-913: A lawspeaker . These deliberative bodies were responsible for settling political questions, and variants included the Althing in Iceland and the Løgting in the Faeroe Islands . The veche , found in Eastern Europe , was a similar body to the Scandinavian thing. In the Roman Catholic Church , the pope has been elected by a papal conclave composed of cardinals since 1059. The first documented parliamentary body in Europe

670-428: A parliamentary or presidential democracy . Most democracies apply in most cases majority rule , but in some cases plurality rule , supermajority rule or consensus rule are applied. They serve the crucial purpose of inclusiveness and broader legitimacy on sensitive issues—counterbalancing majoritarianism —and therefore mostly take precedence on a constitutional level. In the common variant of liberal democracy ,

804-431: A representative democracy , the people choose governing officials through elections to do so. Who is considered part of "the people" and how authority is shared among or delegated by the people has changed over time and at different rates in different countries. Features of democracy oftentimes include freedom of assembly , association , personal property , freedom of religion and speech , citizenship , consent of

938-662: A republic , although it didn't have much of a democracy. The Roman model of governance inspired many political thinkers over the centuries. Vaishali , capital city of the Vajjika League (Vrijji mahajanapada ) of India , is considered one of the first examples of a republic around the 6th century BC. Other cultures, such as the Iroquois in the Americas also developed a form of democratic society between 1450 and 1660 (and possibly in 1142 ), well before contact with

1072-509: A base year. The result would be that the GDP in 2000 equals $ 300 million × 1 ⁄ 2 = $ 150 million , in 1990 monetary terms. We would see that the country's GDP had realistically increased 50 percent over that period, not 200 percent, as it might appear from the raw GDP data. The GDP adjusted for changes in money value in this way is called the real GDP . The factor used to convert GDP from current to constant values in this way

1206-480: A constitution modelled on Pennsylvania's citizenship and democratic suffrage for males with or without property. The United States Constitution of 1787 is the oldest surviving, still active, governmental codified constitution . The Constitution provided for an elected government and protected civil rights and liberties, but did not end slavery nor extend voting rights in the United States , instead leaving

1340-518: A country becomes increasingly in debt, and spends large amounts of income servicing this debt this will be reflected in a decreased GNI but not a decreased GDP. Similarly, if a country sells off its resources to entities outside their country this will also be reflected over time in decreased GNI, but not decreased GDP. This would make the use of GDP more attractive for politicians in countries with increasing national debt and decreasing assets. Gross national income (GNI) equals GDP plus income receipts from

1474-521: A country's borders, but by an enterprise owned by somebody outside the country, counts as part of its GDP but not its GNI; on the other hand, production by an enterprise located outside the country, but owned by one of its citizens, counts as part of its GNI but not its GDP. For example, the GNI of the US is the value of output produced by American-owned firms, regardless of where the firms are located. Similarly, if

SECTION 10

#1732769397900

1608-587: A country's citizens at home and abroad rather than its "resident institutional units" (see OECD definition above). The switch from GNP to GDP in the United States occurred in 1991. The role that measurements of GDP played in World War II was crucial to the subsequent political acceptance of GDP values as indicators of national development and progress. A crucial role was played here by the U.S. Department of Commerce under Milton Gilbert where ideas from Kuznets were embedded into institutions . The history of

1742-406: A country's production has increased (or decreased, if the growth rate is negative) compared to the previous year, typically expressed as percentage change . The economic growth can be expressed as real GDP growth rate or real GDP per capita growth rate . GDP can be adjusted for population growth, also called Per-capita GDP or GDP per person . This measures the average production of a person in

1876-675: A foreign government, being bankrupt, employed as a servant, or having "notoriety for ill deeds". Full universal suffrage was achieved in 1934. In 1893, the self-governing colony New Zealand became the first country in the world (except for the short-lived 18th-century Corsican Republic) to establish active universal suffrage by recognizing women as having the right to vote. 20th-century transitions to liberal democracy have come in successive " waves of democracy ", variously resulting from wars, revolutions, decolonisation , and religious and economic circumstances. Global waves of "democratic regression" reversing democratization, have also occurred in

2010-469: A form of political collectivism because it is defined as a form of government in which all eligible citizens have an equal say in lawmaking . Republics , though often popularly associated with democracy because of the shared principle of rule by consent of the governed , are not necessarily democracies, as republicanism does not specify how the people are to rule. Classically the term " republic " encompassed both democracies and aristocracies . In

2144-494: A general rule, the GFSM says debt should be valued at market value , the value at which the asset could be exchanged for cash. However, the nominal value is useful for a debt-issuing government, as it is the amount that the debtor owes to the creditor. If market and nominal values are not available, face value (the undiscounted amount of principal to be repaid at maturity) is used. A country's general government debt-to-GDP ratio

2278-474: A government would need to raise taxes or reduce spending, which would exacerbate the negative event. While government borrowing may be desirable at times, a "deficits bias" can arise when there is disagreement among groups in society over government spending. To counter deficit bias, many countries have adopted balanced budget rules or restrictions on government debt. Examples include the "debt anchor" in Sweden;

2412-400: A government's balance sheet , but they are not included in government debt because they are not contractual obligations. Indeed, it is not uncommon for governments to change unilaterally the benefit structure of social security schemes, for example (e.g., by changing the circumstances under which the benefits become payable, or the amount of the benefit). In the U.S. and in many countries, there

2546-591: A minority of Romans were citizens with votes in elections for representatives. The votes of the powerful were given more weight through a system of weighted voting , so most high officials, including members of the Senate , came from a few wealthy and noble families. In addition, the overthrow of the Roman Kingdom was the first case in the Western world of a polity being formed with the explicit purpose of being

2680-542: A modern sense the republican form of government is a form of government without a monarch . Because of this, democracies can be republics or constitutional monarchies , such as the United Kingdom. Democratic assemblies are as old as the human species and are found throughout human history, but up until the nineteenth century, major political figures have largely opposed democracy. Republican theorists linked democracy to small size: as political units grew in size,

2814-564: A per-capita basis, the highest-debt countries were New Zealand (£58 12s. per person), the Australian colonies (£52 13s.) and Portugal (£35). In 2018, global government debt reached the equivalent of $ 66 trillion, or about 80% of global GDP, and by 2020, global government debt reached $ 87US trillion, or 99% of global GDP. The COVID-19 pandemic caused public debt to soar in 2020, particularly in advanced economies that put in place sweeping fiscal measures. Government debt accumulation may lead to

SECTION 20

#1732769397900

2948-598: A rising interest rate, which can crowd out private investment as governments compete with private firms for limited investment funds. Some evidence suggests growth rates are lower for countries with government debt greater than around 80 percent of GDP. A World Bank Group report that analyzed debt levels of 100 developed and developing countries from 1980 to 2008 found that debt-to-GDP ratios above 77% for developed countries (64% for developing countries) reduced future annual economic growth by 0.017 (0.02 for developing countries) percentage points for each percentage point of debt above

3082-467: A safe and liquid investment, it could be used as collateral for private loans. This created a complementarity between the development of public debt markets and private financial markets. Government borrowing to finance public goods, such as urban infrastructure, has been associated with modern economic growth . Written records point to public borrowing as long as two thousand years ago when Greek city-states such as Syracuse borrowed from their citizens. But

3216-495: A state for the purposes of defending their rights. Particularly important for Locke were property rights, whose protection Locke deemed to be a government's primary purpose. Furthermore, Locke asserted that governments were legitimate only if they held the consent of the governed . For Locke, citizens had the right to revolt against a government that acted against their interest or became tyrannical. Although they were not widely read during his lifetime, Locke's works are considered

3350-492: A strong, authoritarian power. In other words, Hobbes advocated for an absolute monarchy which, in his opinion, was the best form of government. Later, philosopher and physician John Locke would posit a different interpretation of social contract theory. Writing in his Two Treatises of Government (1689), Locke posited that all individuals possessed the inalienable rights to life, liberty and estate (property). According to Locke, individuals would voluntarily come together to form

3484-508: A time of debates over constitutional issues in Athens. Aeschylus also strongly alludes to the word in his play The Suppliants , staged in c.463 BC, where he mentions "the demos's ruling hand" [ demou kratousa cheir ]. Before that time, the word used to define the new political system of Cleisthenes was probably isonomia , meaning political equality. Athenian democracy took the form of direct democracy, and it had two distinguishing features:

3618-467: Is US$ 5,040,107.75 (in a million). Predictably, as a developed country, Japan has a higher GNI (by 182,779.46, in millions of USD), which is indicative that the production level in the country is higher than that of national production. On the other hand, the case with Armenia is the opposite, with GDP being lower than GNI by US$ 196.12 (in million). This demonstrates that countries receive investments and foreign aid from abroad. The Total income divided by

3752-540: Is a monetary measure of the market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic health of a country or region. Several national and international economic organizations maintain definitions of GDP, such as the OECD and the International Monetary Fund . The ratio of GDP to

3886-464: Is a system of government in which state power is vested in the people or the general population of a state. Under a minimalist definition of democracy, rulers are elected through competitive elections while more expansive definitions link democracy to guarantees of civil liberties and human rights in addition to competitive elections. In a direct democracy , the people have the direct authority to deliberate and decide legislation. In

4020-425: Is also sometimes expressed as: The third way to estimate GDP is to calculate the sum of the final uses of goods and services (all uses except intermediate consumption) measured in purchasers' prices. Market goods that are produced are purchased by someone. In the case where a good is produced and unsold, the standard accounting convention is that the producer has bought the good from themselves. Therefore, measuring

4154-413: Is an indicator of its debt burden since GDP measures the value of goods and services produced by an economy during a period (usually a year). As well, debt measured as a percentage of GDP facilitates comparisons across countries of different size. The OECD views the general government debt-to-GDP ratio as a key indicator of the sustainability of government finance. An important reason governments borrow

Government debt - Misplaced Pages Continue

4288-497: Is available for almost every country in the world, allowing inter-country comparisons. It is measured consistently in that the technical definition of GDP is relatively consistent among countries. GDP does not include several factors that influence the standard of living. In particular, it fails to account for: Democracy List of forms of government Democracy (from Ancient Greek : δημοκρατία , romanized :  dēmokratía , dēmos 'people' and kratos 'rule')

4422-463: Is because the beneficiaries of the government's expenditure on goods and services when the debt is created typically differ from the individuals responsible for repaying the debt in the future. An alternative view of government debt, sometimes called the Ricardian equivalence proposition, is that government debt has no impact on the economy if individuals are altruistic and internalize the impact of

4556-838: Is calculated this way it is sometimes called gross domestic income (GDI), or GDP (I). GDI should provide the same amount as the expenditure method described later. By definition, GDI is equal to GDP. In practice, however, measurement errors will make the two figures slightly off when reported by national statistical agencies. This method measures GDP by adding incomes that firms pay households for factors of production they hire – wages for labour, interest for capital, rent for land and profits for entrepreneurship. The US "National Income and Product Accounts" divide incomes into five categories: These five income components sum to net domestic income at factor cost. Two adjustments must be made to get GDP: Total income can be subdivided according to various schemes, leading to various formulae for GDP measured by

4690-474: Is called the GDP deflator . Unlike consumer price index , which measures inflation or deflation in the price of household consumer goods, the GDP deflator measures changes in the prices of all domestically produced goods and services in an economy including investment goods and government services, as well as household consumption goods. Real GDP can be used to calculate the GDP growth rate, which indicates how much

4824-423: Is contributed at each stage of production. This approach mirrors the OECD (Organisation for Economic Co-operation and Development) definition given above. Gross value added = gross value of output – value of intermediate consumption. Value of output = value of the total sales of goods and services plus the value of changes in the inventory. The sum of the gross value added in the various economic activities

4958-454: Is generally held as the first example of a type of democracy in 508–507 BC was established in Athens. Cleisthenes is referred to as "the father of Athenian democracy ". The first attested use of the word democracy is found in prose works of the 430s BC, such as Herodotus ' Histories , but its usage was older by several decades, as two Athenians born in the 470s were named Democrates, a new political name—likely in support of democracy—given at

5092-462: Is issued in a country's own fiat money , it is sometimes considered risk free because the debt and interest can be repaid by money creation . However, not all governments issue their own currency. Examples include sub-national governments, like municipal, provincial, and state governments; and countries in the eurozone . In the Greek government-debt crisis , one proposed solution was for Greece to leave

5226-404: Is known as "GDP at factor cost". GDP at factor cost plus indirect taxes less subsidies on products = "GDP at producer price". For measuring the output of domestic product, economic activities (i.e. industries) are classified into various sectors. After classifying economic activities, the output of each sector is calculated by any of the following two methods: The value of output of all sectors

5360-431: Is no money earmarked for future social insurance payments — the system is called a pay-as-you-go scheme. According to the 2018 annual reports from the trustees for the U.S. Social Security and Medicare trust funds, Medicare is facing a $ 37 trillion unfunded liability over the next 75 years, and Social Security is facing a $ 13 trillion unfunded liability over the same time frame. Neither of these amounts are included in

5494-587: Is that GDP defines its scope according to location, while GNI defines its scope according to ownership. In a global context, world GDP and world GNI are, therefore, equivalent terms. GDP is a product produced within a country's borders; GNI is product produced by enterprises owned by a country's citizens. The two would be the same if all of the productive enterprises in a country were owned by its own citizens and those citizens did not own productive enterprises in any other countries. In practice, however, foreign ownership makes GDP and GNI non-identical. Production within

Government debt - Misplaced Pages Continue

5628-485: Is the dominant form. Without compensation, like legal protections of individual or group rights, political minorities can be oppressed by the " tyranny of the majority ". Majority rule involves a competitive approach, opposed to consensus democracy , creating the need that elections , and generally deliberation , be substantively and procedurally "fair" ," i.e. just and equitable . In some countries, freedom of political expression , freedom of speech , and freedom of

5762-453: Is then added to get the gross value of output at factor cost. Subtracting each sector's intermediate consumption from gross output value gives the GVA (=GDP) at factor cost. Adding indirect tax minus subsidies to GVA (GDP) at factor cost gives the "GVA (GDP) at producer prices". The second way of estimating GDP is to use "the sum of primary incomes distributed by resident producer units". If GDP

5896-529: Is then decided on how loudly the crowd shouts). Aristotle called this "childish", as compared with the stone voting ballots used by the Athenian citizenry. Sparta adopted it because of its simplicity, and to prevent any biased voting, buying, or cheating that was predominant in the early democratic elections. Even though the Roman Republic contributed significantly to many aspects of democracy, only

6030-407: Is to act as an economic "shock absorber". For example, deficit financing can be used to maintain government services during a recession when tax revenues fall and expenses rise for say unemployment benefits. Government debt created to cover costs from major shock events can be particularly beneficial. Such events would include In the absence of debt financing, when revenues decline during a downturn,

6164-642: The Baltics , the Balkans , Brazil , Cuba , China , and Japan , among others. World War II brought a definitive reversal of this trend in Western Europe. The democratisation of the American, British, and French sectors of occupied Germany (disputed ), Austria, Italy, and the occupied Japan served as a model for the later theory of government change . However, most of Eastern Europe , including

6298-620: The European Union or candidate states . In 1986, after the toppling of the most prominent Asian dictatorship, the only democratic state of its kind at the time emerged in the Philippines with the rise of Corazon Aquino , who would later be known as the mother of Asian democracy . The liberal trend spread to some states in Africa in the 1990s, most prominently in South Africa. Some recent examples of attempts of liberalisation include

6432-617: The Human Development Index or Better Life Index , as better approaches to measuring the effect of the economy on human development and well being . William Petty came up with a concept of GDP, to calculate the tax burden , and argue landlords were unfairly taxed during warfare between the Dutch and the English between 1652 and 1674. Charles Davenant developed the method further in 1695. The modern concept of GDP

6566-1262: The Indonesian Revolution of 1998 , the Bulldozer Revolution in Yugoslavia , the Rose Revolution in Georgia , the Orange Revolution in Ukraine, the Cedar Revolution in Lebanon, the Tulip Revolution in Kyrgyzstan , and the Jasmine Revolution in Tunisia . According to Freedom House , in 2007 there were 123 electoral democracies (up from 40 in 1972). According to World Forum on Democracy , electoral democracies now represent 120 of

6700-796: The Kingdom of Scotland under the Acts of Union . Two key documents of the UK's uncodified constitution , the English Declaration of Right, 1689 (restated in the Bill of Rights 1689 ) and the Scottish Claim of Right 1689 , had both cemented Parliament's position as the supreme law-making body and said that the "election of members of Parliament ought to be free". However, Parliament was only elected by male property owners, which amounted to 3% of

6834-505: The Latin American debt crisis of the early 1980s, and Argentina's debt crisis in 2001 . To help avoid a crisis, governments may want to maintain a "fiscal breathing space". Historical experience shows that room to double the level of government debt when needed is an approximate guide. Government debt is built up by borrowing when expenditure exceeds revenue, so government debt generally creates an intergenerational transfer. This

SECTION 50

#1732769397900

6968-580: The Law and Justice Party ) to the Philippines (under Rodrigo Duterte ). In a Freedom House report released in 2018, Democracy Scores for most countries declined for the 12th consecutive year. The Christian Science Monitor reported that nationalist and populist political ideologies were gaining ground, at the expense of rule of law , in countries like Poland, Turkey and Hungary. For example, in Poland,

7102-635: The Republic of Florence , established in 1115, was led by the Signoria whose members were chosen by sortition . In the 10th–15th century Frisia , a distinctly non-feudal society, the right to vote on local matters and on county officials was based on land size. The Kouroukan Fouga divided the Mali Empire into ruling clans (lineages) that were represented at a great assembly called the Gbara . However,

7236-588: The Soviet sector of Germany fell into the non-democratic Soviet-dominated bloc . The war was followed by decolonisation , and again most of the new independent states had nominally democratic constitutions. India emerged as the world's largest democracy and continues to be so. Countries that were once part of the British Empire often adopted the British Westminster system . In 1948,

7370-747: The United Kingdom (which originated the Westminster system ), the dominant principle is that of parliamentary sovereignty , while maintaining judicial independence . In India , parliamentary sovereignty is subject to the Constitution of India which includes judicial review . Though the term "democracy" is typically used in the context of a political state , the principles also are potentially applicable to private organisations, such as clubs, societies and firms . Democracies may use many different decision-making methods, but majority rule

7504-490: The Universal Declaration of Human Rights mandated democracy: 3. The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures. By 1960, the vast majority of country-states were nominally democracies, although most of

7638-469: The V-Dem Democracy indices and The Economist Democracy Index , less than half the world's population lives in a democracy as of 2022 . Although democracy is generally understood to be defined by voting, no consensus exists on a precise definition of democracy. Karl Popper says that the "classical" view of democracy is, "in brief, the theory that democracy is the rule of the people and that

7772-509: The random selection of ordinary citizens to fill the few existing government administrative and judicial offices, and a legislative assembly consisting of all Athenian citizens. All eligible citizens were allowed to speak and vote in the assembly, which set the laws of the city-state. However, Athenian citizenship excluded women, slaves, foreigners (μέτοικοι / métoikoi ), and youths below the age of military service. Effectively, only 1 in 4 residents in Athens qualified as citizens. Owning land

7906-489: The 17th and 18th centuries England established a parliament that included creditors, as part of a larger coalition, whose authorization had to be secured for the country to borrow or raise taxes. This institution improved England's ability to borrow because lenders were more willing to hold the debt of a state with democratic institutions that would support debt repayment, versus a state where the monarch could not be compelled to repay debt. As public debt came to be recognized as

8040-510: The 192 existing countries and constitute 58.2 per cent of the world's population. At the same time liberal democracies i.e. countries Freedom House regards as free and respectful of basic human rights and the rule of law are 85 in number and represent 38 per cent of the global population. Also in 2007 the United Nations declared 15 September the International Day of Democracy . Many countries reduced their voting age to 18 years;

8174-486: The 1920s Weimar Germany suffered from hyperinflation when the government used money creation to pay off the national debt following World War I . While U.S. Treasury bonds denominated in U.S. dollars may be considered risk-free to an American purchaser, a foreign investor bears the risk of a fall in the value of the U.S. dollar relative to their home currency. A government can issue debt in foreign currency to eliminate exchange rate risk for foreign lenders, but that means

SECTION 60

#1732769397900

8308-804: The 1920s and 30s, in the 1960s and 1970s, and in the 2010s. World War I and the dissolution of the autocratic Ottoman and Austro-Hungarian empires resulted in the creation of new nation-states in Europe, most of them at least nominally democratic. In the 1920s democratic movements flourished and women's suffrage advanced, but the Great Depression brought disenchantment and most of the countries of Europe, Latin America, and Asia turned to strong-man rule or dictatorships. Fascism and dictatorships flourished in Nazi Germany , Italy , Spain and Portugal , as well as non-democratic governments in

8442-502: The 1970s , a bailout came from New York State and the United States national government. U.S. state and local government debt is substantial — in 2016 their debt amounted to $ 3 trillion, plus another $ 5 trillion in unfunded liabilities. A country that issues its own currency may be at low risk of default in local currency, but if a central bank provides finance by buying government bonds (sometimes referred to as debt monetization ), this can lead to price inflation . In an extreme case, in

8576-663: The 1970s and 1980s. This was followed by countries in East and South Asia by the mid-to-late 1980s. Economic malaise in the 1980s, along with resentment of Soviet oppression, contributed to the collapse of the Soviet Union , the associated end of the Cold War , and the democratisation and liberalisation of the former Eastern bloc countries. The most successful of the new democracies were those geographically and culturally closest to western Europe, and they are now either part of

8710-543: The 20th century). In the 1860 United States census , the slave population had grown to four million, and in Reconstruction after the Civil War, three constitutional amendments were passed: the 13th Amendment (1865) that ended slavery; the 14th Amendment (1869) that gave black people citizenship, and the 15th Amendment (1870) that gave black males a nominal right to vote. Full enfranchisement of citizens

8844-592: The Europeans. This democracy continues to the present day and is the world's oldest standing representative democracy. While most regions in Europe during the Middle Ages were ruled by clergy or feudal lords , there existed various systems involving elections or assemblies, although often only involving a small part of the population. In Scandinavia , bodies known as things consisted of freemen presided by

8978-490: The Roman Empire collapsed: Roman territory was conquered by small fragmented groups of Germanic tribes, thus leading to the creation of small political units where rulers were relatively weak and needed the consent of the governed to ward off foreign threats. In Poland , noble democracy was characterized by an increase in the activity of the middle nobility , which wanted to increase their share in exercising power at

9112-567: The U.S. gross general government debt , which in 2024 was $ 34 trillion. In 2010 the European Commission required EU Member Countries to publish their debt information in standardized methodology, explicitly including debts that were previously hidden in a number of ways to satisfy minimum requirements on local (national) and European ( Stability and Growth Pact ) level. Government finance: Specific: General: Gross domestic product Gross domestic product ( GDP )

9246-427: The accounting year. ) So for example if a car manufacturer buys auto parts , assembles the car and sells it, only the final car sold is counted towards the GDP. Meanwhile, if a person buys replacement auto parts to install them on their car, those are counted towards the GDP. According to the U.S. Bureau of Economic Analysis, which is responsible for calculating the national accounts in the United States, "In general,

9380-411: The borrowing government then bears the exchange rate risk. Also, by issuing debt in foreign currency, a country cannot erode the value of the debt by means of inflation. Almost 70% of all debt in a sample of developing countries from 1979 through 2006 was denominated in U.S. dollars. Most governments have contingent liabilities , which are obligations that do not arise unless a particular event occurs in

9514-475: The charter made Mali more similar to a constitutional monarchy than a democratic republic . The Parliament of England had its roots in the restrictions on the power of kings written into Magna Carta (1215), which explicitly protected certain rights of the King's subjects and implicitly supported what became the English writ of habeas corpus , safeguarding individual freedom against unlawful imprisonment with

9648-540: The concept of GDP should be distinguished from the history of changes in many ways of estimating it. The value added by firms is relatively easy to calculate from their accounts, but the value added by the public sector , by financial industries, and by intangible asset creation is more complex. These activities are increasingly important in developed economies, and the international conventions governing their estimation and their inclusion or exclusion in GDP regularly change in an attempt to keep up with industrial advances. In

9782-530: The convention that forbade detention lacking sufficient cause or evidence. After the Glorious Revolution of 1688, the Bill of Rights was enacted in 1689 which codified certain rights and liberties and is still in effect. The Bill set out the requirement for regular elections, rules for freedom of speech in Parliament and limited the power of the monarch, ensuring that, unlike much of Europe at

9916-401: The country. GDP per capita is often used as an indicator of living standards. The major advantage of GDP per capita as an indicator of the standard of living is that it is measured frequently, widely, and consistently. It is measured frequently in that most countries provide information on GDP every quarter, allowing trends to be seen quickly. It is measured widely in that some measure of GDP

10050-668: The courts for the first 130 years after ratification. In 1789, Revolutionary France adopted the Declaration of the Rights of Man and of the Citizen and, although short-lived, the National Convention was elected by all men in 1792. The Polish-Lithuanian Constitution of 3 May 1791 sought to implement a more effective constitutional monarchy , introduced political equality between townspeople and nobility, and placed

10184-457: The debt on future generations. According to this proposition, while the quantity of government purchases affects the economy, debt financing will have the same impact as tax financing because with debt financing individuals will anticipate the future taxes needed to repay the debt, and so increase their saving and bequests by the amount of government debt. Such higher individual saving means, for example, that private consumption falls one-for-one with

10318-697: The elected members of the Provincial Administrative Councils would elect members to the first Parliament . Later that year, a new constitution was promulgated, which provided for a bicameral Parliament with a Senate appointed by the Sultan and a popularly elected Chamber of Deputies . Only men above the age of 30 who were competent in Turkish and had full civil rights were allowed to stand for election. Reasons for disqualification included holding dual citizenship, being employed by

10452-500: The end of the Napoleonic Wars , British government debt reached a peak of more than 200% of GDP, nearly 887 million pounds sterling. The debt was paid off over 90 years by running primary budget surpluses (that is, revenues were greater than spending after payment of interest). In 1900, the country with the most total debt was France (£1,086,215,525), followed by Russia (£656,000,000) then the United Kingdom (£628,978,782); on

10586-452: The eurozone and go back to issuing the drachma (although this would have addressed only future debt issuance, leaving substantial existing debt denominated in what would then be a foreign currency). Debt of a sub-national government is generally viewed as less risky for a lender if it is explicitly or implicitly guaranteed by a regional or national level of government. When New York City declined into what would have been bankrupt status during

10720-456: The expense of the magnates. Magnates dominated the most important offices in the state (secular and ecclesiastical) and sat on the royal council, later the senate. The growing importance of the middle nobility had an impact on the establishment of the institution of the land sejmik (local assembly), which subsequently obtained more rights. During the fifteenth and first half of the sixteenth century, sejmiks received more and more power and became

10854-667: The founding documents of liberal thought and profoundly influenced the leaders of the American Revolution and later the French Revolution . His liberal democratic framework of governance remains the preeminent form of democracy in the world. In the Cossack republics of Ukraine in the 16th and 17th centuries, the Cossack Hetmanate and Zaporizhian Sich , the holder of the highest post of Hetman

10988-688: The founding of the Bank of England in 1694 revolutionised public finance and put an end to defaults such as the Great Stop of the Exchequer of 1672, when Charles II had suspended payments on his bills. From then on, the British Government would never fail to repay its creditors. In the following centuries, other countries in Europe and later around the world adopted similar financial institutions to manage their government debt. In 1815, at

11122-535: The future. An example of an explicit contingent liability is a public sector loan guarantee, where the government is required to make payments only if the debtor defaults. Examples of implicit contingent liabilities include ensuring the payment of future social security pension benefits, covering the obligations of subnational governments in the event of a default, and spending for natural disaster relief. Explicit contingent liabilities and net implicit social security obligations should be included as memorandum items to

11256-406: The general government sector is the total liabilities that are debt instruments. An alternative debt measure is net debt , which is gross debt minus financial assets in the form of debt instruments. Net debt estimates are not always available since some government assets may be difficult to value, such as loans made at concessional rates. Debt can be measured at market value or nominal value . As

11390-481: The governed , voting rights , freedom from unwarranted governmental deprivation of the right to life and liberty , and minority rights . The notion of democracy has evolved considerably over time. Throughout history, one can find evidence of direct democracy, in which communities make decisions through popular assembly . Today, the dominant form of democracy is representative democracy, where citizens elect government officials to govern on their behalf such as in

11524-499: The government but by living in a city that was not subject to another power and by not being subjects themselves to the rule of another person. Range voting appeared in Sparta as early as 700 BC. The Spartan ecclesia was an assembly of the people, held once a month, in which every male citizen of at least 20 years of age could participate. In the assembly, Spartans elected leaders and cast votes by range voting and shouting (the vote

11658-606: The growth of political philosophy on the British Isles. Thomas Hobbes was the first philosopher to articulate a detailed social contract theory . Writing in the Leviathan (1651), Hobbes theorized that individuals living in the state of nature led lives that were "solitary, poor, nasty, brutish and short" and constantly waged a war of all against all . In order to prevent the occurrence of an anarchic state of nature, Hobbes reasoned that individuals ceded their rights to

11792-553: The income approach. A common one is: The sum of COE , GOS and GMI is called total factor income; it is the income of all of the factors of production in society. It measures the value of GDP at factor (basic) prices. The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the government has levied or paid on that production. So adding taxes less subsidies on production and imports converts GDP(I) at factor cost to GDP(I) at final prices. Total factor income

11926-443: The information required (especially information on expenditure and production by governments). The raw GDP figure as given by the equations above is called the nominal, historical, or current GDP. When one compares GDP figures from one year to another, it is desirable to compensate for changes in the value of money—for the effects of inflation or deflation. To make it more meaningful for year-to-year comparisons, it may be multiplied by

12060-684: The international market. Total GDP can also be broken down into the contribution of each industry or sector of the economy. GDP is often used as a metric for international comparisons as well as a broad measure of economic progress . It is often considered to be the world's most powerful statistical indicator of national development and progress. However, critics of the growth imperative often argue that GDP measures were never intended to measure progress, and leave out key other externalities , such as resource extraction , environmental impact and unpaid domestic work . Alternative economic indicators such as doughnut economics use other measures, such as

12194-440: The issue of suffrage to the individual states. Generally, states limited suffrage to white male property owners and taxpayers. At the time of the first Presidential election in 1789 , about 6% of the population was eligible to vote. The Naturalization Act of 1790 limited U.S. citizenship to whites only. The Bill of Rights in 1791 set limits on government power to protect personal freedoms but had little impact on judgements by

12328-602: The level of government responsible for programs (for example, health care) differs across countries and the general government comprises central, state, provincial, regional, local governments, and social security funds. The debt of public corporations (such as post offices that provide goods or services on a market basis) is not included in general government debt, following the International Monetary Fund 's Government Finance Statistics Manual 2014 ( GFSM ), which describes recommended methodologies for compiling debt statistics to ensure international comparability. The gross debt of

12462-449: The likelihood increased that the government would turn despotic. At the same time, small political units were vulnerable to conquest. Montesquieu wrote, "If a republic be small, it is destroyed by a foreign force; if it is large, it is ruined by an internal imperfection." According to Johns Hopkins University political scientist Daniel Deudney , the creation of the United States, with its large size and its system of checks and balances,

12596-413: The lowest levels of authority), political equality , and social norms by which individuals and institutions only consider acceptable acts that reflect the first two principles of upward control and political equality. Legal equality , political freedom and rule of law are often identified by commentators as foundational characteristics for a well-functioning democracy. In some countries, notably in

12730-401: The major democracies began to do so in the 1970s starting in Western Europe and North America. Most electoral democracies continue to exclude those younger than 18 from voting. The voting age has been lowered to 16 for national elections in a number of countries, including Brazil, Austria, Cuba, and Nicaragua. In California, a 2004 proposal to permit a quarter vote at 14 and a half vote at 16

12864-401: The medieval period to urban agglomeration and the creation of new classes, such as artisans, as well as the presence of nobility and religious elites. Scholars have also linked the emergence of representative government to Europe's relative political fragmentation. Political scientist David Stasavage links the fragmentation of Europe, and its subsequent democratization, to the manner in which

12998-660: The most important institutions of local power. In 1454, Casimir IV Jagiellon granted the sejmiks the right to decide on taxes and to convene a mass mobilization in the Nieszawa Statutes . He also pledged not to create new laws without their consent. In 17th century England, there was renewed interest in Magna Carta . The Parliament of England passed the Petition of Right in 1628 which established certain liberties for subjects. The English Civil War (1642–1651)

13132-466: The peasants under the protection of the government, mitigating the worst abuses of serfdom . In force for less than 19 months, it was declared null and void by the Grodno Sejm that met in 1793. Nonetheless, the 1791 Constitution helped keep alive Polish aspirations for the eventual restoration of the country's sovereignty over a century later. In the United States, the 1828 presidential election

13266-472: The people have a right to rule". One study identified 2,234 adjectives used to describe democracy in the English language. Democratic principles are reflected in all eligible citizens being equal before the law and having equal access to legislative processes. For example, in a representative democracy , every vote has (in theory) equal weight, and the freedom of eligible citizens is secured by legitimised rights and liberties which are typically enshrined in

13400-554: The people", in contrast to aristocracy ( ἀριστοκρατία , aristokratía ), meaning "rule of an elite". Western democracy , as distinct from that which existed in antiquity, is generally considered to have originated in city-states such as those in Classical Athens and the Roman Republic , where various degrees of enfranchisement of the free male population were observed. In virtually all democratic governments throughout ancient and modern history, democratic citizenship

13534-416: The period before 1776 the abundance and availability of land meant that large numbers of colonists met such requirements with at least 60 per cent of adult white males able to vote. The great majority of white men were farmers who met the property ownership or taxpaying requirements. With few exceptions, no blacks or women could vote. Vermont , which, on declaring independence of Great Britain in 1777, adopted

13668-488: The population in 1780. The first known British person of African heritage to vote in a general election, Ignatius Sancho , voted in 1774 and 1780. During the Age of Liberty in Sweden (1718–1772), civil rights were expanded and power shifted from the monarch to parliament. The taxed peasantry was represented in parliament, although with little influence, but commoners without taxed property had no suffrage. The creation of

13802-463: The population is the Per capita income . The international standard for measuring GDP is contained in the book System of National Accounts (2008), which was prepared by representatives of the International Monetary Fund , European Union , Organisation for Economic Co-operation and Development , United Nations and World Bank . The publication is normally referred to as SNA2008 to distinguish it from

13936-419: The powers of the majority are exercised within the framework of a representative democracy, but a constitution and supreme court limit the majority and protect the minority—usually through securing the enjoyment by all of certain individual rights, such as freedom of speech or freedom of association. The term appeared in the 5th century BC in Greek city-states , notably Classical Athens , to mean "rule of

14070-436: The press are considered important to ensure that voters are well informed, enabling them to vote according to their own interests and beliefs. It has also been suggested that a basic feature of democracy is the capacity of all voters to participate freely and fully in the life of their society. With its emphasis on notions of social contract and the collective will of all the voters, democracy can also be characterised as

14204-430: The previous edition published in 1993 (SNA93) or 1968 (called SNA68) SNA2008 provides a set of rules and procedures for the measurement of national accounts. The standards are designed to be flexible, to allow for differences in local statistical needs and conditions. Within each country GDP is normally measured by a national government statistical agency, as private sector organizations normally do not have access to

14338-512: The products must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers", colloquially) must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes. Also known as the Value Added Approach, it calculates how much value

14472-445: The ratio between the value of money in the year the GDP was measured and the value of money in a base year. For example, suppose a country's GDP in 1990 was $ 100 million and its GDP in 2000 was $ 300 million . Suppose also that inflation had halved the value of its currency over that period. To meaningfully compare its GDP in 2000 to its GDP in 1990, we could multiply the GDP in 2000 by one-half, to make it relative to 1990 as

14606-587: The rest of the world minus income payments to the rest of the world. In 1991, the United States switched from using GNP to using GDP as its primary measure of production. The relationship between United States GDP and GNP is shown in table 1.7.5 of the National Income and Product Accounts . Another example that amplifies the difference between GDP and GNI is the comparison of developed and developing country indicators. The GDP of Japan for 2020

14740-497: The right to appeal. The first representative national assembly in England was Simon de Montfort's Parliament in 1265. The emergence of petitioning is some of the earliest evidence of parliament being used as a forum to address the general grievances of ordinary people. However, the power to call parliament remained at the pleasure of the monarch. Studies have linked the emergence of parliamentary institutions in Europe during

14874-668: The rise in government debt, so the interest rate would not rise and private investment is not crowded out. Historically, there have been many cases where governments have defaulted on their debts, including Spain in the 16th and 17th centuries, which nullified its government debt several times; the Confederate States of America , whose debt was not repaid after the American Civil War ; and revolutionary Russia after 1917, which refused to accept responsibility for Imperial Russia's foreign debt. If government debt

15008-570: The rise of democracy , private financial markets , and modern economic growth . Government debt is typically measured as the gross debt of the general government sector that is in the form of liabilities that are debt instruments. A debt instrument is a financial claim that requires payment of interest and/or principal by the debtor to the creditor in the future. Examples include debt securities (such as bonds and bills), loans, and government employee pension obligations. International comparisons usually focus on general government debt because

15142-408: The same result. They are the production (or output or value added) approach, the income approach, and the speculated expenditure approach. It is representative of the total output and income within an economy. The most direct of the three is the production approach, which sums up the outputs of every class of enterprise to arrive at the total. The expenditure approach works on the principle that all of

15276-432: The sense that the people through the assembly, boule and courts of law controlled the entire political process and a large proportion of citizens were involved constantly in the public business. Even though the rights of the individual were not secured by the Athenian constitution in the modern sense (the ancient Greeks had no word for "rights" ), those who were citizens of Athens enjoyed their liberties not in opposition to

15410-419: The short-lived Corsican Republic in 1755 was an early attempt to adopt a democratic constitution (all men and women above age of 25 could vote). This Corsican Constitution was the first based on Enlightenment principles and included female suffrage , something that was not included in most other democracies until the 20th century. Colonial America had similar property qualifications as Britain, and in

15544-401: The source data for the expenditures components are considered more reliable than those for the income components [see income method, above]." Encyclopedia Britannica records an alternate way of measuring exports minus imports: notating it as the single variable NX. GDP can be contrasted with gross national product (GNP) or, as it is now known, gross national income (GNI). The difference

15678-548: The threshold. Excessive debt levels may make governments more vulnerable to a debt crisis , where a country is unable to make payments on its debt, and it cannot borrow more. Crises can be costly, particularly if a debt crisis is combined with a financial/banking crisis which leads to economy-wide deleveraging . As firms sell assets to pay off debt, asset prices fall which risks an even greater fall in incomes, further depressing tax revenue and requiring governments to drastically cut government services. Examples of debt crises include

15812-549: The time, royal absolutism would not prevail. Economic historians Douglass North and Barry Weingast have characterized the institutions implemented in the Glorious Revolution as a resounding success in terms of restraining the government and ensuring protection for property rights. Renewed interest in the Magna Carta, the English Civil War, and the Glorious Revolution in the 17th century prompted

15946-536: The total expenditure used to buy things is a way of measuring production. This is known as the expenditure method of calculating GDP. GDP (Y) is the sum of consumption (C) , investment (I) , government expenditures (G) and net exports (X − M) . Here is a description of each GDP component: C , I , and G are expenditures on final goods and services; expenditures on intermediate goods and services do not count. (Intermediate goods and services are those used by businesses to produce other goods and services within

16080-439: The total population of the region is the GDP per capita and can approximate a concept of a standard of living . Nominal GDP does not reflect differences in the cost of living and the inflation rates of the countries; therefore, using a basis of GDP per capita at purchasing power parity (PPP) may be more useful when comparing living standards between nations, while nominal GDP is more useful comparing national economies on

16214-528: The ultimate authority was held by the Crown and the English Parliament. The Puritans ( Pilgrim Fathers ), Baptists , and Quakers who founded these colonies applied the democratic organisation of their congregations also to the administration of their communities in worldly matters. The first Parliament of Great Britain was established in 1707, after the merger of the Kingdom of England and

16348-473: The words of one academic economist, "The actual number for GDP is, therefore, the product of a vast patchwork of statistics and a complicated set of processes carried out on the raw data to fit them to the conceptual framework." China officially adopted GDP in 1993 as its indicator of economic performance. Previously, China had relied on a Marxist-inspired national accounting system. GDP can be determined in three ways, all of which should, theoretically, give

16482-493: The world's populations lived in nominal democracies that experienced sham elections, and other forms of subterfuge (particularly in "Communist" states and the former colonies). A subsequent wave of democratisation brought substantial gains toward true liberal democracy for many states, dubbed "third wave of democracy". Portugal, Spain, and several of the military dictatorships in South America returned to civilian rule in

16616-409: Was a solution to the dual problems of size. Forms of democracy occurred organically in societies around the world that had no contact with each other. The term democracy first appeared in ancient Greek political and philosophical thought in the city-state of Athens during classical antiquity . The word comes from dêmos '(common) people' and krátos 'force/might'. Under Cleisthenes , what

16750-680: Was elected by the representatives from the country's districts. In North America, representative government began in Jamestown, Virginia , with the election of the House of Burgesses (forerunner of the Virginia General Assembly ) in 1619. English Puritans who migrated from 1620 established colonies in New England whose local governance was democratic; although these local assemblies had some small amounts of devolved power,

16884-667: Was established in France in March 1848 in the wake of the French Revolution of 1848 . During that year, several revolutions broke out in Europe as rulers were confronted with popular demands for liberal constitutions and more democratic government. In 1876, the Ottoman Empire transitioned from an absolute monarchy to a constitutional one, and held two elections the next year to elect members to her newly formed parliament. Provisional Electoral Regulations were issued, stating that

17018-493: Was first developed by Simon Kuznets for a 1934 U.S. Congress report, where he warned against its use as a measure of welfare (see below under limitations and criticisms ). After the Bretton Woods Conference in 1944, GDP became the main tool for measuring a country's economy. At that time gross national product (GNP) was the preferred estimate, which differed from GDP in that it measured production by

17152-668: Was fought between the King and an oligarchic but elected Parliament, during which the idea of a political party took form with groups debating rights to political representation during the Putney Debates of 1647. Subsequently, the Protectorate (1653–59) and the English Restoration (1660) restored more autocratic rule, although Parliament passed the Habeas Corpus Act in 1679 which strengthened

17286-433: Was initially restricted to an elite class, which was later extended to all adult citizens. In most modern democracies, this was achieved through the suffrage movements of the 19th and 20th centuries. Democracy contrasts with forms of government where power is not vested in the general population of a state, such as authoritarian systems. World public opinion strongly favors democratic systems of government. According to

17420-408: Was not a requirement for citizenship. The exclusion of large parts of the population from the citizen body is closely related to the ancient understanding of citizenship. In most of antiquity the benefit of citizenship was tied to the obligation to fight war campaigns. Athenian democracy was not only direct in the sense that decisions were made by the assembled people, but also the most direct in

17554-802: Was not secured until after the civil rights movement gained passage by the US Congress of the Voting Rights Act of 1965 . The voting franchise in the United Kingdom was expanded and made more uniform in a series of reforms that began with the Reform Act 1832 and continued into the 20th century, notably with the Representation of the People Act 1918 and the Equal Franchise Act 1928 . Universal male suffrage

17688-555: Was the Cortes of León . Established by Alfonso IX in 1188, the Cortes had authority over setting taxation, foreign affairs and legislating, though the exact nature of its role remains disputed. The Republic of Ragusa , established in 1358 and centered around the city of Dubrovnik , provided representation and voting rights to its male aristocracy only. Various Italian city-states and polities had republic forms of government. For instance,

17822-471: Was the first in which non-property-holding white males could vote in the vast majority of states. Voter turnout soared during the 1830s, reaching about 80% of the adult white male population in the 1840 presidential election . North Carolina was the last state to abolish property qualification in 1856 resulting in a close approximation to universal white male suffrage (however tax-paying requirements remained in five states in 1860 and survived in two states until

17956-548: Was ultimately defeated. In 2008, the German parliament proposed but shelved a bill that would grant the vote to each citizen at birth, to be used by a parent until the child claims it for themselves. According to Freedom House, starting in 2005, there have been 17 consecutive years in which declines in political rights and civil liberties throughout the world have outnumbered improvements, as populist and nationalist political forces have gained ground everywhere from Poland (under

#899100