Post Test Analysis

Post Test Analysis

The Split Velocity test reveals that an imbalance between expenditure on Households and Capital moves an economy into distress and has a greater likelihood of inducing a higher gini coefficient. When the capital base is disproportionately smaller than households it means naturally since industry is inadequately financed it supports fewer jobs and business owners or entrepreneurs. This in turn means that dependency of those without adequate income and earnings on those with adequate income and earnings within the population is high. This is true whether an economy is that of a developing or developed country. What does this mean? It means a country can be considered wealthy because it is developed yet its population lives under higher levels of duress due to a high level of competition for scarce resources; be it jobs, food, housing and so on. On the other hand a developing country with a more balanced split, though less wealthy will have a lower geni coefficient and face lower distress due to lower dependency within the population that has a better distribution of resources.

For instance, the US and the EU have robust economies with decent per capita incomes, however, the split shows underfinancing of capital and high levels of household consumption, which leads to higher levels of dependency within the population where competition for scarce resources is high leading to increased levels of distress. This implies that while a higher standard of living is possible, there may tend to be higher levels of stress, intolerance, unhappiness, mental health problems and general malaise. The worst position is being a developing country with a similar split, that is too consumption heavy, this scenario may lead to this kind of country experiencing what might be considered extreme levels of poverty bordering on internal social conflicts between various groups under duress.

Below is a scatter graph of 24 countries at various stages of development ranging from those with a more even balance between Households and Capital, and those with extreme variance toward consumption that is not balanced by industrial activity.

Countries where the split is high may appear at a greater disadvantage, however, governments that implement Split Velocity here are likely to experience a more profound socio-economic transformation

Interestingly Zambia scores quite high in the group. What the splits reveal is that though Zambia is considered a poor developing country, the income dependency and levels of competition for scarce resources is not as high, which means though you may be more comfortable materially and enjoy a higher standard of living in countries below Zambia, in the list further down, you are likely to experience less stress and therefore greater wellbeing or sense of happiness living in Zambia than any country in the list below it.

End of Brief