Understanding GDP and its Limitations in Global Economics
The Gross Domestic Product (GDP) measures the monetary value of goods and services produced within a country, reflecting its economic development. However, simply comparing GDP figures may not provide a complete picture. GDP per capita is a better indicator, showing the average wealth per person. Despite its usefulness, GDP has limitations as it doesn't account for income equality, social cohesion, environmental impact, or overall well-being. This overview prompts a deeper reflection on economic indicators beyond GDP.
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Gross Domestic Product IB Global Politics UWC Costa Rica
The definition the monetary value of all the finished goods and services produced within a country's borders in a specific time period
Comparing GDP The USA has GDP of $17,968,200 million So, the larger the GDP figure, the more developed a country is, right? The Gambia has GDP of $824 million Figures taken from IMF 2014
GDP is more useful when expressed in terms of population The USA has GDP of $17,968,200 million But when we divide GDP by population we get a figure of GDP per capita (PPP) of $54,370 The Gambia has GDP of $824 million When we divide GDP by population we get a figure of GDP per capita (PPP) of $1,605 Figures taken from IMF 2014
How might this affect rankings? GDP GDP per capita 1. United States 2. China 3. Japan 4. Germany 5. UK 6. France 7. Intaly 8. India 9. Brazil 10. Canada 1. Qatar 2. Luxembourg 3. Singapore 4. Brunei 5. Kuwait 6. Norway 7. UAE 8. San Marino 9. Switzerland 10. USA
Limitations of GDP as a measure of development GDP does measure Income Growth GDP does not measure Equality Destruction Social cohesion Environment
