DESGROWTH DOMESTIC PRODUCT (DDP)

Abstract.

This paper tries to introduce a new macroeconomic indicator is called “Desgrowth Domestic Product (DDP).” This hybrid and holistic macroeconomic indicator include qualitative and quantitative variables in its calculation. The main objective is to propose a new and alternative macroeconomic indicator from a methodological and analytical point of view. The evaluation of the DDP can help to understand macroeconomically the behavior of the full economy works in a fixed period of time (one year). We try to probe that the DDP is able to show the economic leaking's that can generate a poor economic performance of any country or region.

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Keywords: Econographicology, economic growths input-output table, indifference curves maps, game theory, and economic growth. ?

JEL: D0,E0

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1.???? Introduction

Any economic analysis about the economic performance by academics, policy makers, or economists is always based on the uses of different macroeconomic indicators such as economic growth, inflation, unemployment, interest rate, trade balance, taxes, and other indicators. The main objective is to give a better idea about the economic performance in the short or long run as a whole. We focus our attention on the analysis of the Gross Domestic Product (GDP) evaluation from a methodological and analytical perspective. According to many authors the calculation of the Gross Domestic Product (GDP) is to show the total output of any country from the spending, income, and production side. Therefore, we propose a new indicator to complement the GDP analysis, this new indicator is called “Desgrowth Domestic Product (DDP)”. The DDP tries to show how much economic growth we lose in the GDP formation in a period of one year. At the same time, we propose that DDP is going to show the economic desgrowth in the GDP formation and the economic leakages with more precision to find possible solutions to the poor economic performance at least developd countries (LDC’s) and developing countries. We like to remind that the DDP is a hybrid and holistic macroeconomic indicator can be applied in any country or region.

Basically, the analysis of the GDP analysis plays around of a growth rate (Δ) that can help to compare the economic behavior of it under three different stages are followed by the grow or stagnation or contraction of the economy. This growth rate (Δ) is called “The GDP Growth Rate (ΔGDP).” (see expression 1). The ΔGDP is comparing the past ΔGDPt-1 (last year GDP) with the present ΔGDPt+1 (present year GDP) (see Expression 1). At the same time, we need to mention the difference between real ΔGDP (we included the inflation rate is using the Consumer Price Index -CPI- in its calculation) according to expression 2 and nominal ΔGDP (we don’t include inflation rate (CPI) under the application). Always, the nominal GDP is largest than the real GDP (see Expression 3), because we didn’t include the inflation rate in its calculation.

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ΔGDP = [ΔGDPt+1 – ΔGDPt-1]/ΔGDPt-1] X 100%? (1)

?ΔGDPreal = (ΔGDPnominal - [ΔGDPnominal x ΔCPI]) (2)

?ΔGDPnominal > ΔGDPreal (3)

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In our perception of the ΔGDP keeps an ?encrypted in a quantitative calculation to observe the changes of the total output of goods and services from the spending, income, and production side between two periods (last year and present year). In the case of the Desgrowth Domestic Product go more far to include more complex and dynamic issues in its construction to evaluate the economic performance as a whole. We cannot evaluate the full economy performance on the uses of a superficial and specialize macroeconomic indicator such as the GDP. Because this research believe that the evaluation of the economic performance needs to include diversify and different quantitative and qualitative variables to analyze the economic performance such as economic and non-economic variables together.

Finally, we like to remind that the final objective of the GDP growth rate (ΔGDP) in the existence of economic growth that we like to extended more in the next section of this research paper to have a better understanding about this deep and complex issue about economic growth and economic desgrowth respectively.

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2. An Introduction to Economic Growth

For long time different thinkers and economists try to figure about the origins and behavior of the economic growth through the formulation of a large number of theories and models. We can mention that the platform of different economic growth theories and models are based on the uses of production factors, restrictions, assumptions and conditions to explain how economic growth works or behave from an empirical and theoretical perspective such as the classical growth economic theory by Smith (1776) and Ricardo (1817); neo-classical economic growth theory by Solow (1956), Swan (1956) and Meade (1961); Keynesians: Keynes (1936); endogenous economic growth theory: Lucas (1988) and Romer (1986); post-Keynesian: Kalecki (1936), Hicks (1981) and Kaldor (1959). All these theories always are looking for the origins, reasons and conditions to how maximize the economic growth by any nation from an expansionist point of view.? We are referring to expansionist point of view when we try to find mechanisms (policies) and conditions (incentives) to generate a good performance or expansion in the performance of any economy from a production, spending and distribution perspective. However, our idea about economic growth is totally different from because we are analyzing economic growth from a constructionist point of view.

It is mean that always any country in its GDP formation is going to lose some or all growth in different proportions according to the sizes of its leakages that affect the final performance of the final GDP of any nation. The main idea is to keep a constant GDP performance by control all possible older and newer leakages can affect directly or indirectly on the final performance of the GDP in any nation. In fact, our view about economic growth is totally different from the traditional view because we propose a new form to understand the complex and dynamic behavior of the GDP performance. Originally, we have two different approaches of economic growth are considering the idea of economic growth. Firstly, the traditional view that we need to assume the existence of a constant expansion of the GDP from inside (a small growth) to outside (a large growth). On the other hand, our idea about economic growth is opposite from the traditional view about economic growth because always we assume that in the process of the GDP formation exist the possibility of constant contraction from outside (a possible large growth) to inside (a small growth). This possibility of contraction of the GDP in its process of formation we are called “economic desgrowth (δ)”. According to the economic desgrowth we try to figure the constructionist point of view that the GDP can suffer into the process of formation into a determined period of time. Hence, in the case of the policy modeling orientation for economic desgrowth is not necessary of pro-incentives policies such as the case of the traditional economic growth thinking. In the specific case of the economic desgrowth policy modeling is based on the regulation and sustainability policies into the process of the GDP formation in a determined period of time that usually is one year. Therefore, economic desgrowth encourage to keeps a constant control on the expansion or appearance of new leakages in the process of the GDP formation in any nation.?????????????????

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3.???? An Introduction to Desgrowth Domestic Product (DDP)

Initially, we are defining the desgrowth domestic product (DDP) “as an indicator that can show different social, political, technological, and economic leakages originated from controlled or non-controlled factors that can affect on the GDP formation among a period of one year”. The DDP is based on the uses of intervals of probability between zero and one (see Expression 1).

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??? ?(DDPn+1) exist [0,1]? ??DDP ?? Ω = > P(DD[n+1) = Σ R+ ? DDPn? = > Σ R+ ε DDPXn+1? = 1?? (1)

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According to the DDP, we need to assume that exist an irregular oscillation into different periods of time by apply the simple rule of irregular series (DDPn) as a function of n (see Expression 4.2).

??????????????????????????????????????? DDPn+1 = ?(DDPn) ??????????????? ???????????????????????????????????????????????????? (2)

Additionally, we assume that the DDP always keep in a permanent chaos under different levels of vulnerability according to different magnitudes of irregularities. Therefore, we have a large number of irregular series under expression 3 and 4:

???????????????????????? DPPn+1 = T(DPPn) =??????DPn??????????????????????????????????????????????????????????????????????????????????????? (3)

??????? DDPn+1 = T(DDPn) = T(DDPn)/B(DDPn)? =>??? 2 DDPn????????????? (0 ≤ DDPn ≤ 1)????????? (4)

The DDP request to apply DDPn+1 random intervals to make possible analyze possible unexpected results from different controlled and non-controlled events that cannot be predicted and monitored easily from the traditional methods of linear and non-liner mathematical modeling. It is because we assume from beginning that the DDP keep in a permanent chaos. At the same time, we are looking to include the Lorenz transformation assumptions to facilitate the analysis of the DDP in this specific model.????

4.???? Measurement of the Desgrowth Domestic Product (DDP):

Firstly, the measure of desgrowth domestic product (DDP) is based on the application of large number of multi-dimensional partial derivatives in real time (?). It is according to the uses of a large list of non-controlled events probability between the present time (this year t+1) and the past time (last year = t-1) (see Expression 5).

?????????????? ?ij? = ?δαit+1/?δαit-1? ≥ n where n = {-∞…,-1, 0, 1,…∞+}???????????? (5)?????????????

????????????? ?11 = ??α1(t+1)/?α1(t-1)? ???12 = ??α2(t+1)/?α2(t-1) ??13 = ??α3 (t+1)/?α3(t-1) ????14 = ??α4(t+1)/?α4(t-1)

?-ΔΩ=??? ?21 = ????β5(t+1)/?β5(t)?? ?22 = ??β6(t+1)/? β6(t) ?23 = ???β7(t+1)/?β7(t) ????24 = ???β8(t+1)/? β8(t)

????????????? ?31 = ??β9(t+1)/?β9(t) ???32 = ??β10(t+1)/? β10(t) ?33 = ??β11(t+1)/?β11(t) ??34 = ??β12(t+1)/? β12(t)

?????????????? ?41 = ??β13(t+1)/?β13(t) ?42 = ?β14(t+1)/? β14(t) ?43 = ??β15(t+1)/?β15(t) ??44 = ??β16(t+1)/? β16(t)???????????????????????????????????????????

?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? (6)

???????????????????????????????? Note: present period of time (t+1) = next period of time

Therefore, our model the number of controlled and non-controlled events is equal to sixteen growth rates such as natural disasters (?11), corruption (?12), epidemics (?13), financial crisis (?14), international trade crisis (?21)war (?22), social conflicts (?23), evasion of tax (?24), violence (?31), limitations of infrastructure (?32), political instability (?33), unemployment (?34), inflation (?41), black markets (?42), revolutions (?43), pollution (?44). Each growth rate is applied multidimensional partial differentiation (?) in real time (?) respectively (see Expression 4.6). Secondly, to measure the negative GDP growth rate vulnerability propensity determinant (–ΔΩ) is focused on find a single determinant (Δ) from a matrix four by four under the uses of sixteen different possible controlled and non-controlled events that was mentioned before it. Finally, the measurement of the DDP is based on multiply the ?GDP by –ΔΩ ) (see Expression 7).

?DDP = (GDP? ) x ( -ΔΩ)????????????????????????? ?(7)

The modeling of the DDP request the application of the Omnia Mobilis assumption by Ruiz Estrada (2011) to generate the relaxation of all leakages calculation (non-controlled events) that can generate a considerable reduction of the ?GDP final formation. Thirdly, if we finish calculate the DDP then it is possible to start to evaluate the impact of all economic leakages that can generate less ?GDP on any country. Therefore, the final ?GDP is equal to the forecasting the full potential ?GDP minus the final ?GDP follow by expression 8.

???????????????????????????????????????????????? ?GDPfinal ?= ?GDP?? – ?DDP? ?????????????????????? (8)

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5.???? The Visualization of the Desgrowth Domestic Product (DDP)

According to figure 1 is possible to observe that in the process of the GDP full potential formation that its initial stage starts with the ?GDP forecasted that can be affected its original size by the possible appearance or existing of multi-leakages into the process of the ?GDP formation until we can arrive to the final ?GDP. The main point in discussion in this part of our research is that the reduction of the final ?GDP is directly connected to the different leakages in the process of the ?GDP formation. Our argument is that the control of all possible leakages in the process formation of the ?GDP is depended on the regulation and sustainability policies in the short run (one year). Moreover, if we keep low final ?GDP in the long run then this mean that the leakages are expanding so fast that we can lose control on them. If we lose control to manage all these economic leakages then our ?DDP can damage severely the final ?GDP always. The final result became materialized by fast growth rates of poverty and economic parasitism. The economic parasitism is defined “when major part of the population is inactive for long periods of time from the labor market, at the same time, this can generate conformism and sedentary among large part of the unemployed labor of any country”. Finally, the conformism and sedentary among the unemployed labor is going to have a several repercussion on the low productivity and the production of non-competitive good and services for the domestic and international market.

?Fig. 1. ?? The Desgrowth Domestic Product (DDP) Graphical Representation

????????????????????? Source: Ruiz Estrada (2017)

6.???? Conclusion

This paper probe that exists a desgrowth domestic product (DDP) that the ?GDP formation suffering in different levels and proportions in different levels in a period of one year. This paper beleave that ?GDP is a simple quantitative variation and superficial macroeconomic indicator that we cannot get the full picture of the full economic performance in any country or region as a whole. We request to apply the DDP to improve the evaluation of the economic performance of any country or region respectively. We confirm that qualitative and quantitative variables need to be included in the ?GDP analysis such as social, political, technological, and economic issues. This new holistic and hubrid macroeconomic indicator is the DDP.

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