Abstract GDP, or gross domestic product, measures the output of goods and services within an economy by factors of production, e.g. labour, within a twelve month period. This paper focuses on explaining what GDP is, methods of measuring GDP and its limitations as a measure for the quality of life of residents.
From the Paper "There are other limitations of GDP's usefulness as an indicator of the quality of life that must also be evaluated. For example, GDP may not accurately reflect the total economic activity of a nation because items such as DIY and household labour (housewifery) are excluded as is the underground economy. Activities such as drugs and prostitution go unrecorded. Although such activities are illegal they are a highly lucrative business and the expenditure on these goods or services may amount to a sizeable sum that has therefore been withdrawn from the circular flow and disappeared into this underground sector from the national accounts. We cannot know for sure the exact amount that has been withdrawn but we can estimate this by analysing the demand for cash in the economy as illegal activity is usually conducted with cash."
Abstract This paper explores the relationship between Keynesian theory, GDP (Gross Domestic Product) and employment levels. It looks at ways in which full employment can be achieved; effect of government manipulation of fiscal policy on GDP and concepts of supply and demand.
From the Paper John Maynard Keynes revolutionized the study and practice of economics most especially through his writings on the causes of long-term high levels of unemployment such as were seen during the Great Depression ..."
Abstract The paper explains the examination can best be pursued by analyzing the connection between unemployment and GDP growth. The paper quotes Altig et al (1997) who says this is often formally summarized by the statistical relationship known as Okun's law. The paper discusses this law as developed by economist Arthur Okun in 1962, how it related decreases in the unemployment rate to increases in output growth.
From the Paper "Examining unemployment and GDP in terms of the banking industry can best be pursued by analyzing the connection between unemployment and GDP growth. As Altig et al (1997) notes, this is often formally summarized by the statistical relationship known as 'Okun's law.' As developed by economist Arthur Okun in 1962, this law related "decreases in the unemployment rate to increases in output growth." Unemployment of course is defined as people who are both out of work and seeking employment. The percentage of people in the entire labor force who are in this category is the unemployment rate. GDP is of course Gross Domestic Product, and is defined as the total value of all goods and services produced by an economy. It is a function of productivity and hours worked."
This research examines national income in general, and the use of one metric (real GDP) in particular. Real GDP is then contrasted against standard of living for its relevance and appropriateness.
Abstract This paper begins by introducing the concept of the GDP and defines national income. It then examines factors which influence the real GDP and factors which the real GDP does not address. It then discusses the concept of "standard of living" and looks at alternative approaches to GDP as a measure of well-being.
From the Paper "There are a variety of uses for measures of national income. Governments are interested in national income since it helps them determine levels of taxation and the economic activity generated by the nation as a whole. Trade agreements can be based on a nation's national income and its income relative to other economies. Companies are interested in national income in order to determine countries which might represent significant new markets, or to gauge the effectiveness of competitors based on other countries. Individuals might be interested in national income in order to identify potential investment opportunities, or to even make relocation decisions. These are only some of the reasons which support the desire to develop some type of national income measure."
Abstract The paper explains the components of the gross domestic product (GDP) that is used as a measure of the standard of living of a country's economy. First, the current currency exchange rate is discussed and then the advantages and disadvantages of using the GDP as a measure of the standard of living of the economy are outlined. Finally, the paper reveals that the welfare of a nation can hardly be inferred from a measure of national income.
Outline:
How Do We Keep Score
It's Components
Measures of Economic Performance
Advantages and Disadvantages of the GDP Welfare of a Nation
From the Paper "GDP per capita is used generally as a measure of the standard of living of the economy of each individual country. It records spending on all goods and all services. It can also measure income that is earned (and reported). Those numbers are counted and kept by a national government statistical agency. For example, In the United States uses the BEA, or Bureau of Economic Analysis as our scorekeeper. Australia uses the ABS, or Australian Bureau of Statistics and Germany uses the Statistisches Bundesamt."
Abstract The components of the GDP are analyzed for their contribution to the estimated results. These include consumption, investment, government spending and net exports. The paper examines all these facts and concludes that the U.S. economy is not on the road of recovery anytime soon and that unless there is an increased level of consumption as well as exports, the likelihood of a higher GDP is dim.
From the Paper "One of the largest components of GDP, consumption depends largely on how the masses consume and the price index. In the last few months it could be seen that due to the energy crises, consumption of non-durable goods have slowed down. Producer indicates high price inflation which have gained as much as 1 percent in March, 2002. The rising price of energy which increased by 5.5 percent have resulted in approximately an increase in crude price upto 43%. As a result of this Economists at Bear Stearns predict that consumer price inflation will rise upto 1.5 percent for the year 2002 from 1.1 in 2001 [Bandur, April 2002]."
Abstract This paper discusses the Gross Domestic Product (GDP) concept and examines how it is used to determine the level of output of an economy within a given year. It looks at how there are three approaches to calculating GDP including the production, expenditure and income approach.
From the Paper "Economics studies the behavior of the aggregate economy. It is broken down into two parts: microeconomics and macroeconomics. Microeconomics analyzes market behavior of individual consumers and firms to understand the decision-making process of firms and households (Lieberman et al, 2000, p. 337). Macroeconomics is the study and measurement of an entire economy. Macroeconomics studies the movement and trends in the economy as a whole, while in microeconomics the focus is on factors that affect the decisions made by firms and individuals. "
Abstract This paper discusses the comparative GDP growth in the developed world. It focuses on why the US GDP growth has been consistently higher than the major economic powers of the European Union since 1982. It also looks at why the unemployment rate (or more accurately, the percentage of people of working age employed) is so much higher in the United States than in the major countries of Western Europe. The paper focuses primarily on France, Germany and Italy, with some mention of the United Kingdom.
From the Paper "France has a significant problem with some of the highest government burdens in Europe. Over 50% of GDP goes to the State in the form of direct and indirect taxes. As a result of this high social welfare spending, France is lagging other major countries in productivity growth. Sarkozy is pulling France back from the 35-hour work week, retirement at age 50 for some public workers (transport, coal mining) and attempting to reduce top income tax rates. This will be a wrenching change for France, but the cure should improve the country's overall chances of increasing growth."
Abstract 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."
Abstract This paper defines and discusses the connection between unemployment and the GDP, the connection between unemployment and inflation, and the connection between unemployment and the financial markets.
Abstract This paper presents an analysis of the economic structure of Morocco from 1984 to 2003. It looks at Morocco as a developing country and discusses Gross Domestic Product, GDP performance and export trade performance. The paper includes tables.
From the Paper "Subsequently Morocco occupied and attempted to annex the Western Sahara. The status of the annexation remains unresolved. Morocco as a developing country confronts problems for which most developing countries must find solutions modernizing and opening the economy, privatizing state-owned enterprises, reversing the import-export imbalance and so forth. .."
Abstract This paper discusses the differences between two methods of analyzing the economy, Gross Domestic Product (GDP), which is considered to be the most comprehensive measure of economic activity, and the Genuine Progress Index (GPI), an alternative approach offered by the group Redefining Progress as a way of linking the economy with social and environmental variables so as to create a more comprehensive and accurate measurement tool by accounting for the value of human, social, and natural capital, in addition to standard measures of produced capital.
From the Paper "Economic indicators demonstrate the rate of progress in the economy in terms of growth, income, employment, government expenditures, imports, and similar factors. For the most recent quarter available, the second quarter of 2005, the Bureau of Economic Analysis reports that inflation-adjusted gross domestic product (GDP), which is considered to be the most comprehensive measure of economic activity, increased 3.4 percent after increasing 3.8 percent in the first quarter. Growth has thus slowed slightly and is far below the high in 2003 when the increase exceeded 7 percent. The current rate of growth was enhanced by consumer spending on goods and services, which increased 3.3 percent; by exports, which increased 12.6 percent; and by business fixed investment, which increased 9.0 percent."
Abstract This paper explains that the Democratic Republic of Congo, formerly known as Zaire, has been plagued with ethnic turmoil and civil war, exacerbated by the massive influx of refugees from Rwanda and Burundi, which has reduced a once prospering country into a state of turmoil. The author points out that there are over 200 African ethnic groups in the Democratic Republic of Congo of which the majority of these are Bantu. The paper explains that the U.N.'s Human Development Index (HDI), which is a composite of human development indicators, such as longevity, knowledge and education, and economic measurements, is a better system of determining living standards than the GDP alone; Democratic Republic of Congo ranks very near the bottom. Many graphs and charts.
Table of Contents
Democratic Republic of Congo Background
Introduction
Geographic Placement
Ethnic Composition of the Democratic Republic of Congo
Religious Composition of the Democratic Republic of Congo
Colonial History of the Democratic Republic of Congo
Form of Government for the Democratic Republic of Congo
Main Sources of Economic Activity
Structure of the Economy of Democratic Republic of Congo
Economic Background
Nominal and Real GDP Per Capita for the Previous 10 Years, in US$
Nominal and Real GDP Per Capita for the Previous 10 Years, in LCU
Comparison of Two Graphs
Life Expectancy
Adult Literacy Rate
Primary School Enrollment Rate
Human Development Index (HDI)
HDI Formula
HDI Versus GDP 5 Obstacles to Economic Development in the Past 5 Years
Actions that Could be Taken to Overcome These Challenges
From the Paper "Currently the country is under a dictatorship and is presumably transitioning towards a representative government; however, this has yet to be realized. A 500-member transitional National Assembly, along with a 120-member Senate was installed in July of 2003. These members were drawn from groups that signed the Pretoria Accord in December 2002. Elections were scheduled to be held in June of 2005; however, these are not likely to take place. Instead, it is likely that the transitional government will remain in place until the early part of 2006. President Joseph Kabila heads this transitional government. The transitional government includes an executive president, four vice-presidents, and a cabinet that is drawn from five armed groups, the unarmed political opposition, civil society, and the previous government of Joseph Kabila."
Abstract This paper discusses how the 1990s unprecedented GDP growth shows increasing wages, but more likely labor inefficiencies due to the increased participation of older and less skilled workers. This paper also explores how several factors lead to an increase in the price per unit of GDP.
From the Paper "The concept no longer had to do with production, now it had to with anything, good or service, to which a market price could be attached. The focus of GDP changed from production to consumption (Cobb, Halstead, Rowe). The increase in services provided by divorce lawyers, day care centers, and financial advisors caused a shift. In January 1962 the Personal Consumption Expenditures broke into 45.1% non-durables, 12.7% durables, and 42.2% services. In January 1972 the Personal Consumption Expenditures broke into 39.7% non-durables, 14.3% durables, and 46.1% services. The trend continued through January 2002, 29.0% non-durables, 11.9% durables, and 59.1% services (Bureau of Economic Analysis). In 40 years, non-durables dropped from 45.1% of personal consumption expenditures to 29.0%."
Abstract The paper shows that there are some important limitations of the real GDP concept as an indicator of improvements in the welfare of a society. The paper shows that the limitations of real GDP can be explored in three ways: (1) non-market productive activities are left out; (2) real GDP is not a welfare measure; and (3) inequality exists in the distribution of income.
From the Paper "Real GDP (Gross Domestic Product) is a measure of the value of all the goods and services newly produced in a country during some period of time, adjusted for inflation. Real GDP has been increasing in Australia since the 1990s. According to Taylor, Moosa & Cowling (100) in Macroeconomics, improvements in the welfare of individuals in any society cannot occur without such increases in real GDP. However, real GDP was never intended for this role. It is merely a gross tally of goods and services bought and sold, with no distinctions between transactions that add to welfare, and those that diminish it. Instead of separating costs from benefits, and productive activities from destructive ones, real GDP assumes that every monetary transaction adds to welfare. Real GDP is the most comprehensive measure of a nation's economic activity."
Tags: Child-rearing, surplus, production, income, distribution
