1. BOP (Balance Of Payment)

In economics, the balance of payments, (or BOP) measures the payments that flow between any individual country and all other countries. It is used to summarize all international economic transactions for that country during a specific time period, usually a year. The BOP is determined by the country's exports and imports of goods, services, and financial capital, as well as financial transfers. It reflects all payments and liabilities to foreigners (debits) and all payments and obligations received from foreigners (credits). Balance of payments is one of the major indicators of a country's status in international trade, with net capital outflow.[citation needed]
The balance, like other accounting statements, is prepared in a single currency, usually the domestic. Foreign assets and flows are valued at the exchange rate of the time of transaction.

IMF definition
The IMF definition: "Balance of Payments is a statistical statement that summarizes transactions between residents and nonresidents during a period."[1] The balance of payments comprises the current account, the capital account, and the financial account. "Together, these accounts balance in the sense that the sum of the entries is conceptually zero."[1] * The current account consists of the goods and services account, the primary income account and the secondary income account. * The financial account records transactions that involve financial assets and liabilities and that take place between residents and nonresidents. * The capital account in the international accounts shows (1) capital transfers receivable and payable; and (2) the acquisition and disposal of nonproduced nonfinancial assets.
In economic literature, "capital account" is often used to refer to what is now called the financial account and remaining capital account in the IMF manual and in the System of National Accounts. The use of the term capital account in the IMF manual is designed to be consistent with the System of National Accounts, which distinguishes between capital transactions and financial transactions.[2]
[edit] Components

2006 account balance[3]
The Balance of Payments for a country is the sum of the current account, the capital account, the financial account.
[edit] Current account
Main article: Current account
The current account is the net change in current assets from trade in goods and services (balance of trade), net factor income (such as dividends and interest payments from abroad), and net current transfers from abroad (such as foreign aid, grants, gifts, etc).

[edit] Income Account
The income account accounts mostly for investment income from dividends and interest on credit and payments on foreign taxes.
[edit] Unilateral Transfers
Unilateral transfers are usually conducted between private parties. For example, Mexico has a large surplus of remittances from the United States sent by emigrant workers to loved ones back home.
India has the world's largest surplus of remittances.[4]
[edit] Capital account (IMF/economics)
Capital accounts are reversible and are different from current accounts because they are investments over longer periods of time. Capital accounts involve the exchange of migrant assets, foreign aid capital and homeowner's property.
According to the IMF's definition, the capital account "records the national flows of transfer payments relating to capital items". It therefore records a country's inflows and outflows of debts and transfer of ownership of nonproduced nonfinancial assets such as leases and licenses.
In economics, the term saver's account usually refers to what the IMF calls the financial account and capital account, combined.
[edit] Financial account (IMF) / Capital account (economics)
Main article: Capital account
According to the IMF's definition, the financial account is the net change in foreign ownership of investment assets. In economics, the term capital account has historically been used to refer to the IMF's definition of the capital and financial accounts.

The accounting entries in the financial account record the purchase and sale of domestic and foreign investment assets. These assets are divided into categories such as foreign direct investment (FDI), portfolio investment (which includes trade in stocks and bonds), and other investment (which includes transactions in currency and bank deposits).
If foreign ownership of domestic financial assets has increased more quickly than domestic ownership of foreign assets in a given year, then the domestic country has a financial account surplus. On the other hand, if domestic ownership of foreign financial assets has increased more quickly than foreign ownership of domestic assets, then the domestic country has a financial account deficit.
The United States persistently has the largest capital (and financial) surplus in the world.[5]
[edit] Official international reserves
The official international reserve account records the change in stock of official international reserve assets (also known as foreign exchange reserves) at the country's monetary authority . Frequently, this is the responsibility of a government established central bank. Although usually negligible, official international reserve assets held at private institutions are included as well. Official international reserves include official gold reserves, foreign currencies and foreign currency denominated bonds (called foreign exchange reserves), IMF Special Drawing Rights (SDRs) and other foreign assets. Changes in official international reserves equal the differences between current account (plus capital account) and the non-reserve portion of the financial account.
Decreases in official international reserves indicate the central bank is selling the assets in return for domestic currency denominated assets, usually to maintain the value of the domestic currency. Increases in official international reserves indicate that the central bank is buying the assets in return for domestic currency denominated assets, usually to maintain the value of a foreign currency. Countries that attempt to influence the value of their currencies can have large net changes in their official reserves. In 2003 and 2004, the Bank of Japan increased its official international reserves by more than US$330 billion
[edit] Net errors and omissions
This is the last component of the balance of payments and principally exists to correct any possible errors made in accounting for the three other accounts. These errors are common to occur due to the complexity of the calculations and difficulty in obtaining measurements.[6]
Omissions are rarely used usually by governments to conceal transactions.
They are often referred to as "balancing items".
[edit] Balance of payments identity
The balance of payments identity states that:
Current Account = Capital Account + Financial Account + Net Errors and Omissions
This is a convention of double entry accounting, where all debit entries must be booked along with corresponding credit entries such that the net of the Current Account will have a corresponding net of the Capital and Financial Accounts:

where: * X = exports * M = imports * Ki = capital inflows * Ko = capital outflows
Rearranging, we have:
,
yielding the BOP identity.
The basic principle behind the identity is that a country can only consume more than it can produce (a current account deficit) if it is supplied capital from abroad (a capital account surplus).[7]
Mercantile thought prefers a so-called balance of payments surplus where the net current account is in surplus or, more specifically, a positive balance of trade.
A balance of payments equilibrium is defined as a condition where the sum of debits and credits from the current account and the capital and financial accounts equal to zero; in other words, equilibrium is where

This is a condition where there are no changes in Official Reserves.[8] When there is no change in Official Reserves, the balance of payments may also be stated as follows:

or:

Canada's Balance of Payments currently satisfies this criterion. It is the only large monetary authority with no Changes in Reserves.[9]
[edit] History
Historically these flows simply were not carefully measured due to difficulty in measurement, and the flow proceeded in many commodities and currencies without restriction, clearing being a matter of judgment by individual private banks and the governments that licensed them to operate. Mercantilism was a theory that took special notice of the balance of payments and sought simply to monopolize gold, in part to keep it out of the hands of potential military opponents (a large "war chest" being a prerequisite to start a war, whereupon much trade would be embargoed) but mostly upon the theory that large domestic gold supplies will provide lower interest rates. This theory has not withstood the test of facts.
As mercantilism gave way to classical economics, and private currencies were taxed out of existence, the market systems were later regulated in the 19th century by the gold standard which linked central banks by a convention to redeem "hard currency" in gold. After World War II this system was replaced by the Bretton Woods institutions (the International Monetary Fund and Bank for International Settlements) which pegged currency of participating nations to the US dollar and German mark, which was redeemable nominally in gold. In the 1970s this redemption ceased, leaving the system with respect to the United States without a formal base, yet the peg to the Mark somewhat remained. Strangely, since leaving the gold standard and abandoning interference with Dollar foreign exchange, the surplus in the Income Account has decayed exponentially, and has remained negligible as a percentage of total debits or credits for decades. Some consider the system today to be based on oil, a universally desirable commodity due to the dependence of so much infrastructural capital on oil supply; however, no central bank stocks reserves of crude oil. Since OPEC oil transacts in US dollars, and most major currencies are subject to sudden large changes in price due to unstable central banks, the US dollar remains a reserve currency, but is increasingly challenged by the euro, and to a small degree the pound.
The United States has been running a current account deficit since the early 1980s. The U.S. current account deficit has grown considerably in recent years, reaching record high levels in 2006 both in absolute terms ($758 billion) and as a fraction of GDP (6%).

1.b) BOT (Balance Of Trade)
Balance of trade
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The balance of trade encompasses the activity of exports and imports, like the work of this cargo ship going through the Panama Canal.
The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of exports and imports in an economy over a certain period of time. It is the relationship between a nation's imports and exports.[1] A positive balance of trade is known as a trade surplus and consists of exporting more than is imported; a negative balance of trade is known as a trade deficit or, informally, a trade gap. The balance of trade is sometimes divided into a goods and a services balance. Contents[hide] * 1 Definition * 2 Views on Economic impact * 2.1 Trade deficit considered harmful * 2.2 Trade deficit is not significant * 3 Milton Friedman on trade deficits * 4 Warren Buffett on trade deficits * 5 John Maynard Keynes on the balance of trade * 6 Physical balance of trade * 7 United States trade deficit * 8 See also * 9 Notes * 10 External links |
[edit] Definition
The balance of trade forms part of the current account, which also includes other transactions such as income from the international investment position as well as international aid. If the current account is in surplus, the country's net international asset position increases correspondingly. Equally, a deficit decreases the net international asset position.
The trade balance is identical to the difference between a country's output and its domestic demand (the difference between what goods a country produces and how many goods it buys from abroad; this does not include money re-spent on foreign stocks, nor does it factor the concept of importing goods to produce for the domestic market).
Measuring the balance of trade can be problematic because of problems with recording and collecting data. As an illustration of this problem, when official data for all the world's countries are added up, exports exceed imports by a few percent; it appears the world is running a positive balance of trade with itself. This cannot be true, because all transactions involve an equal credit or debit in the account of each nation. The discrepancy is widely believed to be explained by transactions intended to launder money or evade taxes, smuggling and other visibility problems. However, especially for developed countries, accuracy is likely.
Factors that can affect the balance of trade figures include: * Prices of goods manufactured at home (influenced by the responsiveness of supply) * Exchange rates * Trade agreements or barriers * Offset agreements * Other tax, tariff and trade measures * Business cycle at home or abroad.
The balance of trade is likely to differ across the business cycle. In export led growth (such as oil and early industrial goods), the balance of trade will improve during an economic expansion. However, with domestic demand led growth (as in the United States and Australia) the trade balance will worsen at the same stage in the business cycle.
Strong growth economies such as the United States, Australia and Hong Kong run consistent trade deficits, as do poorer growing economies (where heavy investment fuels growth and the trade deficit).
Mature but stagnant economies such as Canada, Japan, and Germany typically run trade surpluses. China also has a trade surplus[citation needed]. A higher savings rate generally corresponds with a trade surplus. Correspondingly, the United States with its negative savings rate consistently has high trade deficits.
[edit] Views on Economic impact
Modern economists are split on the economic impact of the trade deficit.
[edit] Trade deficit considered harmful
Some economists believe that GDP and employment[2][3] can be dragged down by an over-large deficit over the long run.[4][5]
Those who ignore the effects of long run trade deficits may be confusing David Ricardo's principle of comparative advantage with Adam Smith's principle of absolute advantage, specifically ignoring that latter. The economist Paul Craig Roberts notes that the comparative advantage principles developed by David Ricardo do not hold where the factors of production are internationally mobile.[6] [7] Free trade concepts presume free floating currencies; however, in the real world, currencies such as China's are not free floating, while others may be manipulated by governments.
Since the stagflation of the 1970s, the U.S. economy has been characterized by slower GDP growth. In 1985, the U.S. began its growing trade deficit with China. Over the long run, nations with trade surpluses tend also to have a savings surplus while the U.S. has been plagued by persistently lower savings rates than its trading partners which tend to have trade surpluses with the U.S. Germany, France, Japan, and Canada have maintained higher savings rates than the U.S. over the long run. In 2006, the primary economic concerns have centered around: high national debt ($9 trillion), high non-bank corporate debt ($9 trillion), high mortgage debt ($9 trillion), high financial institution debt ($12 trillion), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (-24% of GDP),[8] high trade deficits, and a rise in illegal immigration.[9][10] These issues have raised concerns among economists and unfunded liabilities were mentioned as a serious problem facing the United States in the President's 2006 State of the Union address.[citation needed]
[edit] Trade deficit is not significant
Those who defend this position refer to explanations of comparative advantage. Buyers in the receiving country send the money back. A firm in America sends dollars for Brazilian sugarcane, and the Brazilian receivers use the money to buy stock in an American company. This may lead to profits leaving the U.S however as Americans may forfeit control. Although this is a form of capital account reinvestment, it may not be a liability on anyone in America.
Such payments to foreigners have intergenerational effects: by shifting the consumption schedule over time, some generations may gain and others lose [11]. However, a trade deficit may incur consumption in the future if it is financed by profitable domestic investment, in excess of that paid on the net foreign debts. Similarly, an excess on the current account shifts consumption to future generations, unless it raises the value of the currency, detering foreign investment.
However, trade inequalities are not natural given differences in productivity and consumption preferences. Trade deficits have often been associated with international competitiveness. Trade surpluses have been associated with policies that skew a country's activity towards externalities, resulting in lower standards. An example of an economy which has had a positive balance of trade was Japan in the 1990s.
Milton Friedman and Dewly Tiwana argued that trade deficits are not important as high exports raise the value of the currency, reducing aforementioned exports, and vise versa for imports, thus naturally removing trade deficits not due to investment. This opinion is shared by David Friedman, who has said that they are 'fossil economics', based on ideas obsolete since David Ricardo.[12]
[edit] Milton Friedman on trade deficits
Milton Friedman, the Nobel Prize-winning economist and father of Monetarism, argued that many of the fears of trade deficits are unfair criticisms in an attempt to push macroeconomic policies favorable to exporting industries. He stated his belief that these deficits are not harmful to the country as the currency always comes back to the country of origin in some form or another (country A sells to country B, country B sells to country C who buys from country A, but the trade deficit only includes A and B). In fact, in his view, the "worst case scenario" of the currency never returning to the country of origin was actually the best possible outcome: the country actually purchased its goods by exchanging them for pieces of cheaply-made paper. As Friedman put it, this would be the same result as if the exporting country burned the dollars it earned, never returning it to market circulation.[13]
Friedman also believed that deficits would be corrected by free markets as floating currency rates rise or fall with time to encourage or discourage imports in favor of the exports, reversing again in favor of imports as the currency gains strength. A potential difficulty however is that currency markets in the real world are far from completely free, with government and central banks being major players, and this is unlikely to change within the foreseeable future. Nevertheless, recent developments have shown that the global economy is undergoing a fundamental shift. For many years the U.S. has bore world has lent and sold. However, as Friedman predicted, this paradigm appears to be changing.
As of October 2007, the U.S. dollar has grown weaker against the euro, British pound, and many other currencies. For instance, the euro hit $1.42 in October 2007[14], the strongest it has been since its birth in 1999. Against this backdrop, American exporters are finding quite favorable overseas markets for their products and U.S. consumers are responding to their general housing slowdown by slowing their spending. Furthermore, China, the Middle East, central Europe and Africa are absorbing more of the world's imports which in the end may result in a world economy that is more evenly balanced. All of this could well add up to a major readjustment of the U.S. trade deficit, which as a percentage of GDP, began in 1991.[15]
Friedman and other economists have also pointed out that a large trade deficit (importation of goods) signals that the country's currency is strong and desirable. To Friedman, a trade deficit simply meant that consumers had opportunity to purchase and enjoy more goods at lower prices; conversely, a trade surplus implied that a country was exporting goods its own citizens did not get to consume or enjoy, while paying high prices for the goods they actually received.
Perhaps most significantly, Friedman contended strongly that the current structure of the balance of payments is misleading. In an interview with Charlie Rose, he stated that "on the books" the US is a net borrower of funds, using those funds to pay for goods and services. He pointed to the income receipts and payments showing that the US pays almost the same amount as it receives: thus, U.S. citizens are paying lower prices than foreigners for capital assets to exchange roughly the same amount of income. The reasons why the U.S. (and UK) appear to earn a higher rate of return on their foreign assets than they pay on their foreign liabilities are not clearly understood. An important contributing factor is that the U.S. has investment primarily in stocks abroad, while foreigners have invested heavily in debt instruments, such as U.S. government bonds [16]. [17] Other reports contend that U.S. net foreign income has deteriorated, and appears set to stay in deficit in the future [18].
Friedman presented his analysis of the balance of trade in Free to Choose, widely considered his most significant popular work.
[edit] Warren Buffett on trade deficits
The successful American business man and investor Warren Buffett was quoted in the Associated Press (January 20, 2006) as saying "The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil... Right now, the rest of the world owns $3 trillion more of us than we own of them."
[edit] John Maynard Keynes on the balance of trade
In the last few years of his life, John Maynard Keynes was much preoccupied with the question of balance in international trade. He was the leader of the British delegation to the United Nations Monetary and Financial Conference in 1944 that established the Bretton Woods system of international currency management.
He was the principal author of a proposal—the so-called Keynes Plan—for an International Clearing Union. The two governing principles of the plan were that the problem of settling outstanding balances should be solved by 'creating' additional 'international money', and that debtor and creditor should be treated almost alike as disturbers of equilibrium. In the event, though, the plans were rejected, in part because "american opinion was naturally reluctant to accept the principal of equality of treatment so novel in debtor-creditor relationships". [19]
His view, supported by many economists and commentators at the time, was that creditor nations may be just as responsible as debtor nations for disequilibrium in exchanges and that both should be under an obligation to bring trade back into a state of balance. Failure for them to do so could have serious consequences. In the words of Geoffrey Crowther, then editor of The Economist, "If the economic relationships between nations are not, by one means or another, brought fairly close to balance, then there is no set of financial arrangements that can rescue the world from the impoverishing results of chaos." [20]
These ideas were informed by events prior to the Great Depression when—in the opinion of Keynes and others—international lending, primarily by the United States, exceeded the capacity of sound investment and so got diverted into non-productive and speculative uses, which in turn invited default and a sudden stop to the process of lending. [21]
Influenced by Keynes, economics texts in the immediate post-war period put a significant emphasis on balance in trade. For example, the second edition of the popular introductory textbook, An Outline of Money, [22] devoted the last three of its ten chapters to questions of foreign exchange management and in particular the 'problem of balance'. However, in more recent years, since the end of the Bretton Woods system in 1971 and the increasing influence of Monetarist schools of thought in the 1980s, and particularly in the face of large sustained trade imbalances, these concerns—and particularly concerns about the destabilising affects of large trade surpluses—have to some extent disappeared from mainstream economics discourse and Keynes' insights have slipped from view, [23] although they are receiving some attention again in the wake of the financial crisis of 2007-2008. [24]
[edit] Physical balance of trade
Monetary balance of trade is different from physical balance of trade (which is expressed in amount of raw materials). Developed countries usually import a lot of primary raw materials from developing countries at low prices. Often, these materials are then converted into finished products, and a significant amount of value is added. Although for instance the EU (as well as many other developed countries) has a balanced monetary balance of trade, its physical trade balance (especially with developing countries) is negative, meaning that in terms of materials a lot more is imported than exported.
[edit] United States trade deficit

United States trade deficit (1991-2005).
The United States has posted a trade deficit since the late 1960s (and trade deficits in the late 1960s forced the US off the so-called gold standard in 1971), and it has been rapidly increasing since 1997 [25] (See chart). The US trade deficit hit a record high of 817.3 billion dollars in 2006, up from 767.5 billion dollars in 2005.[26]
It is worth noting on the graph that the deficit slackened during recessions and grew during periods of expansion. Also of note, many economists calculate trade deficits and/or current account deficits as a percentage of GDP. The US last had a trade surplus in 1991, a recession year. Every year there has been a major reduction in economic growth, it is followed by a reduction in the US trade deficit.[15] The well known investor Warren Buffett has proposed a tool called Import Certificates as a solution to the United States' problem

2. FDI Foreign direct investment
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This article is about economics. For the magazine, see FDi magazine.
Foreign direct investment (FDI) in its classic form is defined as a company from one country making a physical investment into building a factory in another country. It is the the establishment of an enterprise by a foreigner. [1]Its definition can be extended to include investments made to acquire lasting interest in enterprises operating outside of the economy of the investor.[2] The FDI relationship consists of a parent enterprise and a foreign affiliate which together form a multinational corporation (MNC). In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate. The IMF defines control in this case as owning 10% or more of the ordinary shares or voting power of an incorporated firm or its equivalent for an unincorporated firm; lower ownership shares are known as portfolio investment.[3] Contents[hide] * 1 History * 2 Opposition * 3 See also * 4 References * 5 External links |
[edit] History
In the years after the Second World War global FDI was dominated by the United States, as much of the world recovered from the destruction brought by the conflict. The US accounted for around three-quarters of new FDI (including reinvested profits) between 1945 and 1960. Since that time FDI has spread to become a truly global phenomenon, no longer the exclusive preserve of OECD countries. FDI has grown in importance in the global economy with FDI stocks now constituting 28 percent of global GDP.[4]
US International Direct Investment Flows[5] Period | FDI Outflow | FDI Inflows | Net | 1960-69 | $ 42.18 bn | $ 5.13 bn | + $ 37.04 bn | 1970-79 | $ 122.72 bn | $ 40.79 bn | + $ 81.93 bn | 1980-89 | $ 206.27 bn | $ 329.23 bn | - $ 122.96 bn | 1990-99 | $ 950.47 bn | $ 907.34 bn | + $ 43.13 bn | 2000-07 | $ 1,629.05 bn | $ 1,421.31 bn | + $ 207.74 bn | Total | $ 2,950.69 bn | $ 2,703.81 bn | + $ 246.88 bn |
[edit] Opposition
In the US, in the late 1960s and early 1970s, outward investment became increasingly politicized. Organized labor, convinced that investment abroad exported jobs, undertook a major campaign to reform the tax provisions which affected foreign direct investment. The Foreign Trade and Investment Act of 1973 (or the Burke-Hartke Bill) would have eliminated both the tax credit and tax deferral. The Nixon Administration, influential members of Congress of both parties, and well-financed lobbying organizations came to the defense of the multinational. The massive counterattack of the multinational corporations and their allies defeated this first major challenge to their interests

Foreign Institutional Investor - FII

What Does Foreign Institutional Investor - FII Mean?
An investor or investment fund that is from or registered in a country outside of the one in which it is currently investing. Institutional investors include hedge funds, insurance companies, pension funds and mutual funds.

Investopedia explains Foreign Institutional Investor - FII
The term is used most commonly in India to refer to outside companies investing in the financial markets of India. International institutional investors must register with the Securities and Exchange Board of India to participate in the market. One of the major market regulations pertaining to FIIs involves placing limits on FII ownership in Indian companies
Foreign Institutional Investor
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Foreign Institutional Investor (FII) is used to denote an investor - mostly of the form of an institution or entity, which invests money in the financial markets of a country different from the one where in the institution or entity was originally incorporated.
FII investment is frequently referred to as hot money for the reason that it can leave the country at the same speed at which it comes in.
In countries like India, statutory agencies like SEBI have prescribed norms to register FIIs and also to regulate such investments flowing in through FIIs. FEMA norms includes maintenance of highly rated bonds(collateral) with security exchange.

International investment position
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U.S.A. net international investment position
A country's international investment position (IIP) is a financial statement setting out the value and composition of that country's external financial assets and liabilities.
The difference between a country's external financial assets and liabilities is the net international investment position (NIIP).
International Investment Position = domestically owned foreign assets - foreign owned domestic assets

4. A Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods. Some countries (like India and The Philippines) use WPI changes as a central measure of inflation. However, India and the United States now report a producer price index instead.

Consumer price index
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"CPI" redirects here. For other uses, see CPI (disambiguation). | This article includes a list of references or external links, but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations where appropriate. (October 2008) |

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A consumer price index (CPI) is a measure of the average price of consumer goods and services purchased by households. It is a price index determined by measuring the price of a standard group of goods meant to represent the typical market basket of a typical urban consumer. [1]Related, but different, terms are the CPI, the RPI, and the RPIX used in the United Kingdom. It is one of several price indexes calculated by most national statistical agencies. The percent change in the CPI is a measure of inflation. The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, or regulated or contracted prices. The CPI is, along with the population census and the National Income and Product Accounts, one of the most closely watched national economic statistics. Contents[hide] * 1 Overview * 2 Weighting * 2.1 Weights and sub-indices * 2.2 Estimating weights * 2.3 The nature of the data used for weighting * 2.4 Reweighing * 3 History * 4 See also * 5 References * 6 External links |
[edit] Overview
Two basic types of data are needed to construct the CPI: price data and weighting data. The price data are collected for a sample of goods and services from a sample of sales outlets in a sample of locations for a sample of times. The weighting data are estimates of the shares of the different types of expenditure as fractions of the total expenditure covered by the index. These weights are usually based upon expenditure data obtained for sampled periods from a sample of households. Although some of the sampling is done using a sampling frame and probabilistic sampling methods, much is done in a commonsense way (purposive sampling) that does not permit estimation of confidence intervals. Therefore, the sampling variance is normally ignored, since a single estimate is required in most of the purposes for which the index is used. Stocks greatly affect this cause.
The index is usually computed yearly, or quarterly in some countries, as a weighted average of sub-indices for different components of consumer expenditure, such as food, housing, clothing, each of which is in turn a weighted average of sub-sub-indices. At the most detailed level, the elementary aggregate level, (for example, men's shirts sold in department stores in San Francisco), detailed weighting information is unavailable, so elementary aggregate indices are computed using an unweighted arithmetic or geometric mean of the prices of the sampled product offers. (However, the growing use of scanner data is gradually making weighting information available even at the most detailed level.) These indices compare prices each month with prices in the price-reference month. The weights used to combine them into the higher-level aggregates, and then into the overall index, relate to the estimated expenditures during a preceding whole year of the consumers covered by the index on the products within its scope in the area covered. Thus the index is a fixed-weight index, but rarely a true Laspeyres index, since the weight-reference period of a year and the price-reference period, usually a more recent single month, do not coincide. It takes time to assemble and process the information used for weighting which, in addition to household expenditure surveys, may include trade and tax data.
Ideally, the weights would relate to the composition of expenditure during the time between the price-reference month and the current month. There is a large technical economics literature on index formulae which would approximate this and which can be shown to approximate what economic theorists call a true cost of living index. Such an index would show how consumer expenditure would have to move to compensate for price changes so as to allow consumers to maintain a constant standard of living. Approximations can only be computed retrospectively, whereas the index has to appear monthly and, preferably, quite soon. Nevertheless, in some countries, notably in North America and Sweden, the philosophy of the index is that it is inspired by and approximates the notion of a true cost of living (constant utility) index, whereas in most of Europe it is regarded more pragmatically.
The coverage of the index may be limited. Consumers' expenditure abroad is usually excluded; visitors' expenditure within the country may be excluded in principle if not in practice; the rural population may or may not be included; certain groups such as the very rich or the very poor may be excluded. Saving and investment are always excluded, though the prices paid for financial services provided by financial intermediaries may be included along with insurance.
The index reference period, usually called the base year, often differs both from the weight-reference period and the price reference period. This is just a matter of rescaling the whole time-series to make the value for the index reference-period equal to 100. Annually revised weights are a desirable but expensive feature of an index, for the older the weights the greater is the divergence between the current expenditure pattern and that of the weight reference-period.
[edit] Weighting
[edit] Weights and sub-indices
Weights can be expressed as fractions or ratios summing to one, as percentages summing to 100 or as per mille numbers summing to 1000.
In the European Union's Harmonised Index of Consumer Prices, for example, each country computes some 80 prescribed sub-indices, their weighted average constituting the national Harmonised Index. The weights for these sub-indices will consist of the sum of the weights of a number of component lower level indexes. The classification is according to use, developed in a national accounting context. This is not necessarily the kind of classification that is most appropriate for a Consumer Price Index. Grouping together of substitutes or of products whose prices tend to move in parallel might be more suitable.
For some of these lower level indexes detailed reweighting to make them be available, allowing computations where the individual price observations can all be weighted. This may be the case, for example, where all selling is in the hands of a single national organisation which makes its data available to the index compilers. For most lower level indexes, however, the weight will consist of the sum of the weights of a number of elementary aggregate indexes, each weight corresponding to its fraction of the total annual expenditure covered by the index. An 'elementary aggregate' is a lowest-level component of expenditure, one which has a weight but within which, weights of its sub-components are usually lacking. Thus, for example: Weighted averages of elementary aggregate indexes (e.g. for men’s shirts, raincoats, women’s dresses etc.) make up low level indexes (e.g. Outer garments),
Weighted averages of these in turn provide sub-indices at a higher, more aggregated level,(e.g. Clothing) and Weighted averages of the latter provide yet more aggregated sub-indices (e.g. Clothing and Footwear).
Some of the elementary aggregate indexes, and some of the sub-indexes can be defined simply in terms of the types of goods and/or services they cover, as in the case of such products as newspapers in some countries and postal services, which have nationally uniform prices. But where price movements do differ or might differ between regions or between outlet types, separate regional and/or outlet-type elementary aggregates are ideally required for each detailed category of goods and services, each with its own weight. An example might be an elementary aggregate for sliced bread sold in supermarkets in the Northern region.
Most elementary aggregate indexes are necessarily 'unweighted' averages for the sample of products within the sampled outlets. However in cases where it is possible to select the sample of outlets from which prices are collected so as to reflect the shares of sales to consumers of the different outlet types covered, self-weighted elementary aggregate indexes may be computed. Similarly, if the market shares of the different types of product represented by product types are known, even only approximately, the number of observed products to be priced for each of them can be made proportional to those shares.
[edit] Estimating weights
The outlet and regional dimensions noted above mean that the estimation of weights involves a lot more than just the breakdown of expenditure by types of goods and services, and the number of separately weighted indexes composing the overall index depends upon two factors: 1. The degree of detail to which available data permit breakdown of total consumption expenditure in the weight reference-period by type of expenditure, region and outlet type. 2. Whether there is reason to believe that price movements vary between these most detailed categories.
How the weights are calculated, and in how much detail, depends upon the availability of information and upon the scope of the index. In the UK the RPI does not relate to the whole of consumption, for the reference population is all private households with the exception of a) pensioner households that derive at least three-quarters of their total income from state pensions and benefits and b) “high income households” whose total household income lies within the top four per cent of all households. The result is that it is difficult to use data sources relating to total consumption by all population groups.
For products whose price movements can differ between regions and between different types of outlet: * The ideal, rarely realisable in practice, would consist of estimates of expenditure for each detailed consumption category, for each type of outlet, for each region. * At the opposite extreme, with no regional data on expenditure totals but only on population (e.g. 24% in the Northern region) and only national estimates for the shares of different outlet types for broad categories of consumption (e.g. 70% of food sold in supermarkets) the weight for sliced bread sold in supermarkets in the Northern region has to be estimated as the share of sliced bread in total consumption × 0.24 × 0.7.
The situation in most countries comes somewhere between these two extremes. The point is to make the best use of whatever data are available.
[edit] The nature of the data used for weighting
No firm rules can be suggested on this issue for the simple reason that the available statistical sources differ between countries. However, all countries conduct periodical Household Expenditure surveys and all produce breakdowns of Consumption Expenditure in their National Accounts. The expenditure classifications used there may however be different. In particular: * Household Expenditure surveys do not cover the expenditures of foreign visitors, though these may be within the scope of a Consumer Price Index. * National Accounts include imputed rents for owner-occupied dwellings which may not be within the scope of a Consumer Price Index.
Even with the necessary adjustments, the National Account estimates and Household Expenditure Surveys usually diverge.
The statistical sources required for regional and outlet-type breakdowns are usually weaker. Only a large-sample Household Expenditure survey can provide a regional breakdown. Regional population data are sometimes used for this purpose, but need adjustment to allow for regional differences in living standards and consumption patterns. Statistics of retail sales and market research reports can provide information for estimating outlet-type breakdowns, but the classifications they use rarely correspond to COICOP categories.
The increasingly widespread use of bar codes and scanners in shops has meant that detailed cash register printed receipts are provided by shops for an increasing share of retail purchases. This development makes possible improved Household Expenditure surveys, as Statistics Iceland has demonstrated. Survey respondents keeping a diary of their purchases need to record only the total of purchases when itemised receipts were given to them and keep these receipts in a special pocket in the diary. These receipts provide not only a detailed breakdown of purchases but also the name of the outlet. Thus response burden is markedly reduced, accuracy is increased, product description is more specific and point of purchase data are obtained, facilitating the estimation of outlet-type weights.
There are only two general principles for the estimation of weights: use all the available information and accept that rough estimates are better than no estimates.
[edit] Reweighing
Ideally, in computing an index, the weights would represent current annual expenditure patterns. In practice they necessarily reflect past expenditure patterns, using the most recent data available or, if they are not of high quality, some average of the data for more than one previous year. Some countries have used a three-year average in recognition of the fact that household survey estimates are of poor quality. In some cases some of the data sources used may not be available annually, in which case some of the weights for lower level aggregates within higher level aggregates are based on older data than the higher level weights.
Infrequent reweighing saves costs for the national statistical office but delays the introduction into the index of new types of expenditure. For example, subscriptions for Internet Service entered index compilation with a considerable time lag in some countries, and account could be taken of digital camera prices between re-weightings only by including some digital cameras in the same elementary aggregate as film cameras.
[edit] History
Between 1971 and 1977, the United States CPI increased 47%

5. Human Development Index
From Wikipedia, the free encyclopedia
Jump to: navigation, search | This article needs additional citations for verification. Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (January 2008) |
This article is about the Human Development Index (HDPI). For other uses of HDI, see HDI.

World map indicating Human Development Index (2008 Update) 0.950 and over 0.900–0.949 0.850–0.899 0.800–0.849 0.750–0.799 | 0.700–0.749 0.650–0.699 0.600–0.649 0.550–0.599 0.500–0.549 | 0.450–0.499 0.400–0.449 0.350–0.399 under 0.350 not available |
(Color-blind compliant map) For red-green color vision problems.

High income Upper-middle income Lower-middle income Low income
The Human Development Index (HDI) is an index combining normalized measures of life expectancy, literacy, educational attainment, and GDP per capita for countries worldwide. It is claimed as a standard means of measuring human development—a concept that, according to the United Nations Development Program (UNDP), refers to the process of widening the options of persons, giving them greater opportunities for education, health care, income, employment, etc. The basic use of HDI is to rank countries by level of "human development", which usually also implies to determine whether a country is a developed, developing, or underdeveloped country.
The index was developed in 1990 by Pakistani economist Mahbub ul Haq, Sir Richard Jolly, with help from Gustav Ranis of Yale University and Lord Meghnad Desai of the London School of Economics. It has been used since then by UNDP in its annual Human Development Report. It is claimed that ideas of Indian Nobel prize winner Amartya Sen were influential in the development of the HDI. But Sen described it as a "vulgar measure"[citation needed], because of its limitations, though accepting that it nonetheless focuses attention on wider aspects of development than the per-capita income measure it supplanted. Nowadays the HDI is a pathway for researchers into the wide variety of more detailed measures contained in the Human Development Reports.
The HDI combines three basic dimensions: * Life expectancy at birth, as an index of population health and longevity * Knowledge and education, as measured by the adult literacy rate (with two-thirds weighting) and the combined primary, secondary, and tertiary gross enrollment ratio (with one-third weighting). * Standard of living, as measured by the natural logarithm of gross domestic product (GDP) per capita at purchasing power parity (PPP) in United States dollars.
From the time it was created, the HDI has been criticized as a redundant measure that adds little to the value of the individual measures composing it; as a means to provide legitimacy to arbitrary weightings of a few aspects of social development; and as a number producing a relative ranking which is useless for inter-temporal comparisons, and difficult to interpret because the HDI for a country in a given year depends on the levels of, say, life expectancy or GDP per capita of other countries in that year.[1][2][3][4] However, each year, UN member states are listed and ranked according to the computed HDI. If high, the rank in the list can be easily used as a means of national aggrandizement; alternatively, if low, it can be used to highlight national insufficiencies. Using the HDI as an absolute index of social welfare, some authors have used panel HDI data to measure the impact of economic policies on quality of life.[5]
An alternative measure, focusing on the amount of poverty in a country, is the Human Poverty Index. Contents[hide] * 1 Methodology * 2 2008 statistical update * 2.1 Countries not included * 3 2007/2008 report * 3.1 Countries not included * 4 2009 report * 5 Past top countries * 5.1 In each original report * 5.2 2008 revision * 6 References * 7 See also * 8 External links |
[edit] Methodology

HDI trends between 1975 and 2004 OECD Central and eastern Europe, and the CIS Latin America and the Caribbean East Asia | Arab States South Asia Sub-Saharan Africa |
In general, to transform a raw variable, say x, into a unit-free index between 0 and 1 (which allows different indices to be added together), the following formula is used: * x-index = where and are the lowest and highest values the variable x can attain, respectively.
The Human Development Index (HDI) then represents the average of the following three general indices: * Life Expectancy Index = * Education Index = * Adult Literacy Index (ALI) = * Gross Enrollment Index (GEI) = * GDP Index =
LE: Life expectancy at birth
ALR: Adult literacy rate (ages 15 and older)
CGER: Combined gross enrollment ratio for primary, secondary and tertiary schools
GDPpc: GDP per capita at PPP in USD
[edit] 2008 statistical update
Main article: List of countries by Human Development Index
A new index was released on December 18, 2008. This so-called "statistical update" covers the period up to 2006 and was published without an accompanying report on human development. The update is relevant due to newly released estimates of purchasing power parities (PPP), implying substantial adjustments for many countries, resulting in changes in HDI values and, in many cases, HDI ranks.[6] 1. Iceland 0.968 (▬) 2. Norway 0.968 (▬) 3. Canada 0.967 (▲ 1) 4. Australia 0.965 (▼ 1) 5. Ireland 0.960 (▬) 6. Netherlands 0.958 (▲ 3) 7. Sweden 0.958 (▼ 1) 8. Japan 0.956 (▬) 9. Luxembourg 0.956 (▲ 9) 10. Switzerland 0.955 (▼ 3) | 1. France 0.955 (▼ 1) 2. Finland 0.954 (▼ 1) 3. Denmark 0.952 (▲ 1) 4. Austria 0.951 (▲ 1) 5. United States 0.950 (▼ 3) 6. Spain 0.949 (▼ 3) 7. Belgium 0.948 (▼ 1) 8. Greece 0.947 (▲ 6) 9. Italy 0.945 (▲ 1) 10. New Zealand 0.944 (▼ 1) | 1. United Kingdom 0.942 (▼ 5) 2. Hong Kong 0.942 (▼ 1) 3. Germany 0.940 (▼ 1) 4. Israel 0.930 (▼ 1) 5. South Korea 0.928 (▲ 1) 6. Slovenia 0.923 (▲ 1) 7. Brunei 0.919 (▲ 3) 8. Singapore 0.918 (▼ 3) 9. Kuwait 0.912 (▲ 4) 10. Cyprus 0.912 (▼ 2) |
[edit] Countries not included
The following nations are not ranked in the 2008 Human Development Index, for being unable or unwilling to provide the necessary data at the time of publication. Africa * Somalia * Zimbabwe | Asia * Afghanistan * Iraq * North Korea | Europe * Andorra * Liechtenstein * Monaco * San Marino * The Principality of Sealand * Vatican City | Oceania * Kiribati * Marshall Islands * FS Micronesia * Nauru * Palau * Tuvalu |
[edit] 2007/2008 report
The report for 2007/2008 was launched in Brasilia, Brazil, on November 27, 2007. Its focus was on "Fighting climate change: Human solidarity in a divided world."[7] Most of the data used for the report are derived largely from 2005 or earlier, thus indicating an HDI for 2005. Not all UN member states choose to or are able to provide the necessary statistics.
The report showed a small increase in world HDI in comparison with last year's report. This rise was fueled by a general improvement in the developing world, especially of the least developed countries group. This marked improvement at the bottom was offset with a decrease in HDI of high income countries.
A HDI below 0.5 is considered to represent "low development". All 22 countries in that category are located in Africa. The highest-scoring Sub-Saharan countries, Gabon and South Africa, are ranked 119th and 121st, respectively. Nine countries departed from this category this year and joined the "medium development" group.
A HDI of 0.8 or more is considered to represent "high development". This includes all developed countries, such as those in North America, Western Europe, Oceania, and Eastern Asia, as well as some developing countries in Eastern Europe, Central and South America, Southeast Asia, the Caribbean, and the oil-rich Arabian Peninsula. Seven countries were promoted to this category this year, leaving the "medium development" group: Albania, Belarus, Brazil, Libya, Macedonia, Russia and Saudi Arabia.
On the following table, green arrows (▲) represent an increase in ranking over the previous study, while red arrows (▼) represent a decrease in ranking. They are followed by the number of spaces they moved. Blue dashes (▬) represent a nation that did not move in the rankings since the previous study.

1. Iceland 0.968 (▲ 1) 2. Norway 0.968 (▼ 1) 3. Australia 0.962 (▬) 4. Canada 0.961 (▲ 2) 5. Ireland 0.959 (▼ 1) 6. Sweden 0.956 (▼ 1) 7. Switzerland 0.955 (▲ 2) 8. Japan 0.953 (▼ 1) 9. Netherlands 0.953 (▲ 1) 10. France 0.952 (▲ 6) | 1. Finland 0.952 (▬) 2. United States 0.951 (▼ 4) 3. Spain 0.949 (▲ 6) 4. Denmark 0.949 (▲ 1) 5. Austria 0.948 (▼ 1) 6. Belgium 0.946 (▼ 4) 7. United Kingdom 0.946 (▲ 1) 8. Luxembourg 0.944 (▼ 6) 9. New Zealand 0.943 (▲ 1) 10. Italy 0.941 (▼ 3) | 1. Hong Kong 0.937 (▲ 1) 2. Germany 0.935 (▼ 1) 3. Israel 0.932 (▬) 4. Greece 0.926 (▬) 5. Singapore 0.922 (▬) 6. South Korea 0.921 (▬) 7. Slovenia 0.917 (▬) 8. Cyprus 0.903 (▲ 1) 9. Portugal 0.897 (▼ 1) 10. Brunei 0.894 (▲ 4) |
[edit] Countries not included
The following United Nations member states are not ranked in the 2007 Human Development Index, for being unable or unwilling to provide the necessary data at the time of publication. Africa * Liberia * Somalia | Asia * Afghanistan * Iraq * North Korea | Europe * Andorra * Liechtenstein * Monaco * Montenegro * San Marino * Serbia | Australia and Oceania * Kiribati * Marshall Islands * FS Micronesia * Nauru * Palau * Tuvalu |
[edit] 2009 report
The 2009 report —to be launched in October 2009— will deal with the issue of migration.[8]
[edit] Past top countries
The list below displays the top-ranked country from each year of the index. Canada has been ranked the highest eight times, followed by Norway at six times. Japan has been ranked highest three times and Iceland twice.
[edit] In each original report
The year represents when the report was published. In parentheses the year for which the index was calculated. * 2008 (2006)– Iceland * 2007 (2005)– Iceland * 2006 (2004)– Norway * 2005 (2003)– Norway * 2004 (2002)– Norway * 2003 (2001)– Norway * 2002 (2000)– Norway | | * 2001 (1999)– Norway * 2000 (1998)– Canada * 1999 (1997)– Canada * 1998 (1995)– Canada * 1997 (1994)– Canada * 1996 (1993)– Canada * 1995 (1992)– Canada | | * 1994 (????)– Canada * 1993 (????)– Japan * 1992 (1990)– Canada * 1991 (1990)– Japan * 1990 (????)– Japan |
[edit] 2008 revision
The 2008 Statistical Update calculated HDIs for past years using a consistent methodology and data series. They are not strictly comparable with those in earlier Human Development Reports. The index was calculated using data pertaining to the year shown.[6] * 2006– Iceland * 2005– Iceland * 2004– Norway * 2003– Norway * 2000– Norway |

8. Current account
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Jump to: navigation, search
This article is about the macroeconomic current account. For day to day bank accounts, see Current account (banking).

Current account balance 2006[1]

Current Account Balance 2006 as percentage of GDP[2]

Current Account Balance 2006, per capita, U.S. dollars[3]
The current account is the difference between a nation's exports of goods and services and its imports of goods and services, if all financial transfers and investments and the like are ignored. A nation is said to have a current account deficit if it is importing more than it exports.
In economics, the current account is one of the two primary components of the balance of payments, the other being the capital account. It is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid).

The current account balance is one of two major metrics of the nature of a country's foreign trade (the other being the net capital outflow). A current account surplus increases a country's net foreign assets by the corresponding amount, and a current account deficit does the reverse. Both government and private payments are included in the calculation. It is called the current account because goods and services are generally consumed in the current period.[4]
Positive net sales abroad generally contributes to a current account surplus; negative net sales abroad generally contributes to a current account deficit. Because exports generate positive net sales, and because the trade balance is typically the largest component of the current account, a current account surplus is usually associated with positive net exports.
The net factor income or income account, a sub-account of the current account, is usually presented under the headings income payments as outflows, and income receipts as inflows. Income refers not only to the money received from investments made abroad (note: investments are recorded in the capital account but income from investments is recorded in the current account) but also to the money sent by individuals working abroad, known as remittances, to their families back home. If the income account is negative, the country is paying more than it is taking in interest, dividends, etc. For example, the United States' net income has been declining exponentially since it has allowed the dollar's price relative to other currencies to be determined by the market to a point where income payments and receipts are roughly equal.[citation needed] The difference between Canada's income payments and receipts have been declining exponentially as well since its central bank in 1998 began its strict policy not to intervene in the Canadian Dollar's foreign exchange.[5] The various subcategories in the income account are linked to specific respective subcategories in the capital account, as income is often composed of factor payments from the ownership of capital (assets) or the negative capital (debts) abroad. From the capital account, economists and central banks determine implied rates of return on the different types of capital. The United States, for example, gleans a substantially larger rate of return from foreign capital than foreigners do from owning United States capital. Contents[hide] * 1 Reducing current account deficits * 1.1 The "Pitchford Thesis" * 2 Interrelationships in the balance of payments * 3 See also * 4 References * 5 External links |
[edit] Reducing current account deficits
Action to reduce a substantial current account deficit usually involves increasing exports or decreasing imports. This is generally accomplished directly through import restrictions, quotas, or duties (though these may indirectly limit exports as well), or subsidizing exports. Influencing the exchange rate to make exports cheaper for foreign buyers will indirectly increase the balance of payments. This is primarily accomplished by devaluing the domestic currency. The Feds primary tools for devaluing a currency are 1) lowering the fed funds rate 2) increasing the money supply 3) lowering the reserve ratio 4) lowering the discount rate 5) pressuring banks to loosen underwriting standards. Adjusting government spending to favor domestic suppliers is also effective.
Less obvious but more effective methods to reduce a current account deficit include measures that increase domestic savings (or reduced domestic borrowing), including a reduction in borrowing by the national government.
[edit] The "Pitchford Thesis"
It should be noted that a current account deficit is not always a problem. The "Pitchford Thesis" states that a current account deficit does not matter if it is driven by the private sector. Some feel that this theory has held true for the Australian economy, which has had a persistent current account deficit, yet has experienced economic growth for the past 17 years (1991-2008). Others argue that Australia is accumulating a substantial foreign debt that could become problematic, especially if interest rates increase. A deficit in the current account also implies that the country is a net capital importer.
[edit] Interrelationships in the balance of payments
Main article: Balance of payments
Absent changes in official reserves, the current account is the mirror image of the sum of the capital and financial accounts. One might then ask: Is the current account driven by the capital and financial accounts or is it vice versa? The traditional response is that the current account is the main causal factor, with capital and financial accounts simply reflecting financing of a deficit or investment of funds arising as a result of a surplus. However, more recently some observers have suggested that the opposite causal relationship may be important in some cases. In particular, it has controversially been suggested that the United States current account deficit is driven by the desire of international investors to acquire U.S. assets (See Ben Bernanke, William Poole links below). However, the main viewpoint undoubtedly remains that the causative factor is the current account and that the positive financial account reflects the need to finance the country's current account deficit.

Capital account
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In financial accounting, the capital account is one of the accounts in shareholders' equity. Sole proprietorships have a single capital account in the owner's equity. Partnerships maintain a capital account for each of the partners.
In economics, the capital account is one of two primary components of the balance of payments, the other being the current account. The capital account is referred to as the financial account in the IMF's definition; the IMF has a different definition of the term capital account.[citation needed] (See balance of payments.)

The capital account records all transactions between a domestic and foreign resident that involves a change of ownership of an asset. It is the net result of public and private international investment flowing in and out of a country. This includes foreign direct investment, portfolio investment (such as changes in holdings of stocks and bonds) and other investments (such as changes in holdings in loans, bank accounts, and currencies).
From a domestic point of view, a foreign investor acquiring a domestic asset is considered a capital inflow, while a domestic resident acquiring a foreign asset is considered a capital outflow.
Along with transactions pertaining to non-financial and non-produced assets, the capital account may also include debt forgiveness, the transfer of goods and financial assets by migrants leaving or entering a country, the transfer of ownership on fixed assets, the transfer of funds received to the sale or acquisition of fixed assets, gift and inheritance taxes, death levies, patents, copyrights, royalties, and uninsured damage to fixed assets. (http://www.investopedia.com/articles/03/070203.asp).
Countries can impose capital controls to control the flows into and out of their capital accounts. Countries without capital controls are said to have full Capital Account Convertibility.