Many definitions regard nominal as absolute.
If the nominal is done in the local currency, sure....given that is what the economic activity of a country is largely conducted in.
However nominal done in a foreign currency is just as relative as a PPP measurement....both adulterate the original attempt at absolute measurement. But there is little choice when you want to compare across countries with different currencies. Nominal USD (at exchange rate) assumes whatever demand/supply profile regarding a country's foreign trade/investment also extends to its entire economic landscape....in the interest of simplicity at compromise of accuracy. PPP does the reverse, it wants to counter that assumption in the interest of accuracy at the compromise of simplicity. But both of them are relative since they are not the primary acquired data.
It kind of parallels with the heisenberg uncertainty principle....where you can entirely know either the position or momentum of a particle but not both simultaneously...because measuring one compromises the other. So is the case when you have an absolute measure of GDP. The absoluteness only is useful within BD own time series (in Taka), as soon as you want to bring it to an international comparison, the absoluteness is lost. Absoluteness is thus of limited utility to the larger questions we all want to know answers to (we all perceive and interact with that which lies beyond our immediate man made boundaries). Hence why Einstein's model (relativity) prevails over Newton's (absolute time and space).....given we are similarly no longer interested in only the realm of slow moving objects.
Understood. However at the end of the day the money has to be paid back with interests. In my opinion for a developing country the debt should never be more than 40% of its GDP.
I can already ask you a question. Are you talking about govt debt, total debt or foreign debt? Gross or net?
Total debt of Canada for example is 3 - 4 times its GDP.
China has 65% of its GDP as gross govt debt, double that of Bangladesh. Is Bangladesh able to borrow/leverage twice as easily as China?
And how did you come to 40% as the figure for the no go zone? Is a country at 39% doing immensely better than one at 41%? How do we draw lines in the sand and apply them to entire arbitrary groupings of countries like "developing" rather than treat the phenomenon as more continuous, complicated and intricate?
This is why countries have credit ratings you know.....if BD's credit rating is upgraded to some investment grade, you think its govt would keep its debt to the 33% figure (or whatever it currently is)....or transitions to whatever higher % it can manage under the new equilibrium the credit rating offers? i.e is the govt debt more fundamentally controlled by its own prudent fiscal policy or by its own credit standing among the major creditors? I can tell you from what I have seen, the latter always prevails as the larger environment....and the former is more of tinkering within that environment.
The higher the better?
Then I guess Bangladesh is not doing too bad here.
29% as of 2015. 33% for India, 15% for Pak, China 45%
Yes the higher the better for developing countries generally. BD has earned praise from me for this....I am sure you have come across it before.
Interestingly 54% for Bhutan and 41% for Congo
Massive hydro-electric projects in both causing GCF spurts (you will notice its not the first time for either). What matters more is how the investment rate is sustained....and what that long term investment rate is. For larger economies, it is hard to get such spurts so the trends are easier to visualise.
