Evaluation Of The Alternative Of Economic Progress

-The nation’s GDP is a good measure of its economic well being and progress because it represents the total value of all goods and services produced in an economy, and what a country produces and what it consumes are nearly identical.

14. Explain why a nation’s GDP is both a good and poor measure of its economic well-being and progress?

While it provides an indication of how far the economy has come on the long road it is not a direct measure of the nation 's welfare or well-being. GDP measures only output and makes no claims on the quality of that output. GDP lets alone subjective concepts such as social progress or human happiness. It only offers a value of marketed goods and services produced in a country in a given time frame but from the perspective of a citizen living with the day-to-day realities of life, GDP can be rather misleading. Based on that, optimism about national economy remains still limited.

Economics growth is, it the short run an increase in real GDP and in the long run an increase in the productive capacity of an economy (the maximum output that the economy can produce). GDP stands for Gross Domestic Product which is the country’s production of goods and services valued at market price in a given time period. Real GDP is when these figures are corrected for inflation using a base year (The UK uses 2003 as its base year). It can be measured in three different ways; the output measure is the value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government. The

Measures of economic well-being such as GDP are subject to some limitations hence it is appropriate to use other alternative measures of economic growth. The limitations of GDP in measuring the economic well-being of a country include failure to capture the underground economy and failure to capture changes inequality. Others include the development of new products and failure to take in account human or leisure costs (Maddison 48).

Robert F Keneddy speech on GDP highlighted the unique aspects associated with the understanding of GDP. The speech talked about the meaning and importance of GDP and the misinterpretations that are often attached with the concept. He was of the view that accumulation of material things has remained a main focus of economic agents and doing so community values and community excellence are often compromised. In his speech he presented an important concept that GDP cannot be used as a measure of welfare of wellbeing of the economy because it does not take into account the health of individuals, their standard of living, quality of education provided to the individuals etc. In this way it is not a good option to rely on GDP while having an idea about the development of an economy.

A theoretical foundation to support the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and other related indexes

I will advance the thesis that the Human Development Index (HDI) is a better measure of economic performance than the Gross Domestic Product (GDP) per capita. By saying that the HDI is a better system to measure economic performance, I mean that because the HDI highlights the trend between longevity, education and economic growth, it calculates a better analysis of an economy (Costa, Steckel 1997, p. 71). In contrast, the GDP per capita only accounts for the gross domestic product without paying any attention to other factors of an economy (Hawthorn, Sen 1997, p. 60). With this being said, my thesis asserts that the HDI is a better measure for economic performance because it considers significant factors that play large roles in an

GDP or Gross Domestic Product GDP is considered as a measure of how wealthy the country is.

Every country around the world uses GDP as a way to monitor the overall “output” of its economy, and an understanding of this measurement is vital to success in economics. The text book defines “real GDP” as, “the total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year” (Textbook). The book later goes on to define “GDP per capita” as the “GDP divided by the size of the population; equivalent to the average GDP per person” (Textbook). So, logically we could draw the conclusion that the “real GDP per capita” is simply the real GDP of a nation’s economy divided by the population of said nation, or in other words, it’s “a measure of an economy’s average aggregate output per person” (Textbook pg. 201). Perhaps one of the most defining factors of a country, when compared to other countries, is the overall “standard of living”. The quality of life within countries can vary greatly, even between neighboring, geographical nations. Many people have come to believe that the standard of living within a country is directly proportional to the country’s “real GDP per capita”, when in fact this is far from true. In reality, a “high GDP per capita makes it easier to achieve a good life but countries aren’t equally successful in taking advantage of that possibility” (Textbook pg. 200). It is clear that a country’s standard of living ultimately depends on its ability to effectively use the

Economic growth refers to the rate of increase in the total production of goods and services within an economy. Economic growth increases the productivity capacity of an economy, thereby allowing more wants to be satisfied. A growing economy increases employment opportunities, stimulates business enterprise and innovation. A sustained economic growth is fundamental to any nation wishing to raise its standard of living and provide a greater well being for all. Gross domestic product (GDP) is the monetary value of all final goods and services produced over a year. It is the total value of production within the economy. The total value of production is the total value of the final goods or services less the cost of

In earlier times Gross Domestic Product was one of the main indicators to measure a country’s wealth. Gross Domestic Product (GDP) is defined as the total value of all the goods and services produced by a nation in any given year ("Is the Gross Domestic Product (GDP) a Good Measure of Prosperity?"). There are two ways of calculating a country’s GDP. The first is the income approach which is calculated by adding the wages of workers, income from rent, interest and profits. The second, more common form of calculating GDP, is the expenditure approach. Here GDP totals consumption expenditure, investment, government spending and net exports. GDP statistics are considered to reflect a county’s economic output which could possibly lead to growth. However GDP is a measure of income and it should not be confused with wealth. Which is why most modern economists do not consider GDP to be a good measure of a

In his article, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence,” Richard probes whether, or not, income and wealth have a direct effect on happiness. The paper is based on an analysis of surveys conducted in the 19th Century, in the period after the Second World War. The data was collected from both the developed and the less developed countries. His probe is informed by the fact that many economists had, previously, claimed that the economic growth does, indeed, have an effect on a person’s, or persons,’ social welfare, in that they are, directly, proportional. Bearing this in mind, the author sought to find evidence that supports this claim, with the primary emphasis being on happiness, which is an indicator of contentment in a particular social setting. Richard’s paper would be the first to investigate the evidential aspect of the topic. He concludes that there is some level of skepticism surrounding the possibility that an increase in income causes immediate happiness, or has a positive effect on the social welfare of a group of people, or an individual (Easterlin, 1974).

Growth of the economy can be measured in several ways. One of the most common ways is by measuring the changes in GDP of the country. GDP (Gross Domestic Product) is the total value of goods and services produced in a country. As per Mankiw (2003), the long-run determinants of GDP are the factors of production, which are capital, labour and technology. The correlation is such that GDP grows when the factors of production increase or when the available technology improves.

Due to the fact that focuses on only three aspects of development, it does not give a complete picture of the level of development. More aspects of development could increase the value of the HDI as a measure of development, however it could be argued that adding more and more indicators reduces the value of a composite indicator of development As each subsequent indicator becomes less significant in its overall measure. Moreover, the HDI brings equal weighting to those three indicators. There is no economic or social justification supports the three indicators being given equal weight. Overall however it must not be taken too literally or in isolation from other indicators of human well-being. Other indexes Also in development and include ‘The Happy Planet Index’ which places significant importance on resource sustainability and environmental degradation management, as well as the overall welfare of the general population. For example the feeling of “stress” of the population this felt to be very important and works out the average working week and average leisure time per capita. This is perhaps a very important measure is in terms of productivity and workforce which has a high GDP but much leisure time could be said to have greater productive efficiency. International trade is one of the ways in which countries globally can increase their populations welfare and lead ultimately to increased development. Trade is defined as the