Gross Domestic Product and Welfare - Essay Example

Since the land areas of these countries are almost the same, their GDP can be explained by the other factors of production, the economic policies being implemented, the political situation, and the overall economic atmosphere. For all the years considered, it should be noted that the United State leads in terms of GDP. US has always been regarded as one of the largest and strongest economies in the whole world with its highly developed industries. The country boasts of its advancement in technologic especially in the fields of information technology, medicine, aerospace, and military equipment (United States 2007).

Currently, the economy is still the largest and most powerful in the world with a GDP of $12.98 trillion. During years under consideration, US report the largest amount of GDP albeit at a decreasing rate. The economy had experienced the drawbacks of financial crisis in the late 1990s. In 2001, the 9-11 terrorist attack also led to an economic slowdown. Later in 2003, the country transfers huge amount of resources to finance its war against Iraq (Economy of United States 2007). Canada, like the United States is one of the most developed and stable economies in the world.

The economic condition of the country is largely attributed to its vast resources giving life to its high revenue generating industries like mining, forestry, and oil (Economy of Canada 2007). Unlike any other industrialized nations, it is a net exporter of oil and gas which hugely enhances its earnings considering the continuous rise in oil prices. The slower growth from 1994-1999 is largely attributed to the poor economic condition following the overwhelming rejection of the Progressive Conservative Party and other political issues.

The economy started to pick up yet slid back to recession in the 1995-1996. Even though its stock exchange is adversely affected by the bursting of the economic bubble in the US in 2001, the country continues to enjoy average annual GDP growth rates of 2% (Economy of Canada 2007).China, unlike the countries considered has long been considered as a "Sleeping Giant." Yet it had awakened from its slumber due to the establishment of various reforms transforming it into a more market oriented economy.

Currently, China ranks third worldwide in terms of factory output (Economy of China 2007). The figure above shows that China previously lags behind Canada in terms of GDP. However, during 1999 and 2005, China overtakes Canada with its double digit GDP growth rates. The rapid economic growth and development in China has been commended. This is attributed to the growing foreign trade, inflow of direct foreign investment, competitive labor costs, and tighter monetary policy (China 2007). Part B.

Economic welfare often refers to the utilitarian state of the society where each individual is taken as a unit. Economic welfare is often measured cardinally in terms of dollars or utils or measured ordinally in terms of relative utility (Economic Welfare 2007). However, producing measures of economic welfare posts significant problems. Generally, most measures fail to take into account all the necessary variables which