The Limitations of GDP Calculations

Paper Summary:

This paper examines the statement that gross domestic product (GDP) provides neither an accurate nor an in-depth understanding of a nation's economic status and its population's living standards. It discusses Qatar, Kuwait, the United Arab Emirates and Equatorial Guinea compared to the US, UK and France as cases in point that calculating development in terms of per capita GDP leads to a distorted view of the developmental status of nations and their populations.

From the Paper:

"Even though GDP and GDP per capita fail to provide an accurate picture of a country's economic and developmental status and most certainly do not reflect the standards of living enjoyed by populations in question, the measurement has its uses. It may not accurately calculate standards of living and economic well-being but it is an indicator of the size of an economy (Ezcurra, 2007). Through the calculation of the monetary value of the goods and services which are produced within the economy and the financial exchanges which occur therein, the measure quite accurately conveys the size of the economy and by calculating the said size in relation to per capita income, it functions as an indicator of whether or not the economy has the capacity to sustain and maintain its population or not (Ezcurra, 2007). Therefore, even while conceding to its limitations and shortcomings, it is important to clarify that the measure has value and significance."

Sample of Sources Used:

• Amnesty International (2006) Amnesty International Report 2006: The State of the World's Human Rights. London: Amnesty international.
• Chant, S. (2008) Gender, Generation and Poverty. New York: Edward Elgar.
• Craig, G. and Dunn, W.L. (2006) Understanding human development. New York: Prentice Hall.
• Ezcurra, R. (2007) Is income inequality harmful for regional growth? Evidence from the European Union. Urban Studies, 44(10), 1953-1971.
• IMF (2008) Report for selected countries and subjects. World Economic Outlook and Database. Accessed on 10 April 2008 from http://www.imf.org/external/pubs/ft/weo/2008/01/weodata/weorept.aspx?

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