StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Shortcomings of GDP - Essay Example

Cite this document
Summary
It is calculated by summing up the public and private consumption to the government spending and capital investments in the country. In addition to the total, net…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.8% of users find it useful
Shortcomings of GDP
Read Text Preview

Extract of sample "Shortcomings of GDP"

SHORTCOMINGS OF GDP GDP is the monetary value of the end products of goods and services in a country within a period of one year. It is calculated by summing up the public and private consumption to the government spending and capital investments in the country. In addition to the total, net exports are added to complete the equation. The net exports are calculated by deducting earnings from imports to those of exports. Gross domestic product is used to monitor a country’s economic stability.

GDP is limited as a measure of production because it does not reflect on all well being of the economy. It only sums up the outputs of production and does not include intermediary goods and those consumed households (Tyson and Lund 2014). As a result, it does not measure the social welfare and their lifestyles. A country may have high GDPs annually, but there are still cases of increased poverty among its citizens. Additionally, GDP does not include incomes from black markets and other nonmarket activities that are sources of employments and better economic welfares.

Lack of including economic activities that directly contribute to an individuals welfare has become a major setback especially in the United States (Tyson and Lund 2014). GDP includes gross incomes and does not account for economic factors such as depreciating capital stocks. On the other hand, solutions have been introduced to modify GDP as a measure of economic welfare. They include the introduction of indexes in the environmental and personal welfare sectors. The Human Development Index (HDI) and Environmental Sustainability Index (ESI) have been introduced to provide for omissions that the GDP does not cater for in the economy.

Since GDP does not account for social welfare, the HDI can be used as a measure of individual qualities of life and later be included in the GDPs final tally. GDP can also be modified by including other measures of income such as the Gross National Product.ReferencesTyson, L., & Lund, S. (2014, May 21). Global flows and global growth. BusinessDay |. Retrieved May 24, 2014, from http://businessdayonline.com/2014/05/global-flows-and-global-growth/#.U4Dw8XKSwoI

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Shortcomings of GDP Essay Example | Topics and Well Written Essays - 250 words”, n.d.)
Shortcomings of GDP Essay Example | Topics and Well Written Essays - 250 words. Retrieved from https://studentshare.org/macro-microeconomics/1647658-shortcomings-of-gdp
(Shortcomings of GDP Essay Example | Topics and Well Written Essays - 250 Words)
Shortcomings of GDP Essay Example | Topics and Well Written Essays - 250 Words. https://studentshare.org/macro-microeconomics/1647658-shortcomings-of-gdp.
“Shortcomings of GDP Essay Example | Topics and Well Written Essays - 250 Words”, n.d. https://studentshare.org/macro-microeconomics/1647658-shortcomings-of-gdp.
  • Cited: 0 times

CHECK THESE SAMPLES OF Shortcomings of GDP

FRB Beige Book 2013

According to research, Philadelphia gdp between 2009 and 2012 grew tremendously by 9.... The gdp is approximately 364 billion which is the best increase ever recorded in United States (“BGFRU”).... Several sectors of the economy showed moderate expansion consequently making the district's gdp to be one of the best (“BGFRU”)....
4 Pages (1000 words) Admission/Application Essay

The Way GDP Describes One's Personal Economic Well-Being

This essay discusses the way gdp describes one's personal economic well-being.... It explains the gross domestic product and personal economic well-being, and the link between gdp and economic wellbeing, and the influence of GPI on personal economic wellbeing.... he gdp of a country can be determined using the following three approaches; which should all provide similar results; the output or product approach, the expenditure approach, and the income approach (Walter, 2000)....
6 Pages (1500 words) Essay

The Employment Relations Environment in France

hellip; Employment relations and respective environment matter a lot in the overall development of a nation as it is the working class that contributes to the success and increasing the overall gdp of the country.... rance is faced with many serious problems and challenges with respect to its employment relations structure due to some inherent shortcomings and governance loopholes which are discussed as below (Jenkins 17):There is no provision of either insurance or hygienic working conditions....
3 Pages (750 words) Essay

What lessons could the Tsars government have learnt from 1891-1892 but have not

Towards the end of the 19th century, the Tsars government plunged into social, economic, and political crisis that resulted from a… The Russian population was at the receiving, while the government tried to do all it could to salvage the situation.... For the two years the famine lasted, approximately half a million people lost their lives. While drought and famine was the The 1891-1892 crises brought a number of issues to the attention of Tsars government....
4 Pages (1000 words) Essay

Human Resource Management Term Paper

The description of a bad employee in an organization that decided to terminate them meets the mentioned shortcomings ranging from arriving to work late and not fulfilling their duties to taking perversely long breaks.... Although there might not be a pleasant way of terminating an employee, there are some correct and lawful procedures that the employer should follow so as not to be… Inappropriate ways of termination can lead to lawsuits....
9 Pages (2250 words) Essay

Measuring Human Development

GNP and gdp are cited as the main traditional methods of measuring development.... The articles espouses that gdp and GNP per capita uses the income to analyses development while there are other factors that cannot be owned or produce by individuals that lead to the development.... HDI was development to remedy these shortcomings, however, HDI is criticised in using poor source of data to construct its constituents....
4 Pages (1000 words) Essay

Gross Domestic Product of China

Chinese economy has also affected considerably due to financial crisis that set in 2008 in the US and then… The paper attempts to explore china's current economic status and the policy options that it may adopt to come out from the difficult economic situation that it faces currently. Gross Domestic Product (gdp) is a good measure of economic growth in any country.... ese economy has grown at the phenomenal rate in last two decades; however, gdp growth rates between the year 2010 and 2014 has been falling consistently after touching close to 12% In spite of the over 7....
4 Pages (1000 words) Assignment

Political Economic Situation of HK

The results have been the shortcomings in the economy as 30 percent of Chinese visitors travel via package tours.... In the paper “Political Economic Situation of HK” the author analyzes tension between Hong Kongers and the government in Beijing.... The tension has been on democratic situation of the city....
8 Pages (2000 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us