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to what extent is gdp per capita a useful measure of economic development

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Introduction

To what extent is GDP per Capita a useful measure of economic development? Gross Domestic Product (GDP) is considered by most economists to be the principal indicator of a nation or region's wealth. Alongside, GDP per capita is the most important measure of individual economic welfare. Gross domestic product per capita is one of the measures of national income and output for a given country's economy. It is the total value of all final goods and services produced in a particular economy; the dollar value of all goods and services produced within a country's borders in a given year. High levels of, and steady growth in, both GDP and per capita GDP are primary aims of economic policy. GDP is relatively straight forward and therefore widely understood. ...read more.

Middle

A country's GDP may grow at a very fast rate and yet only a small proportion of its population could be the benefices of such growth, while the masses of its population may not experience any improvement in their standard of living. There may be growth but no development. Secondly, a fast growth rate in total output may indicate a healthy state of economy, but if population growth rate matches the output growth rate, then per capita grown rate is negligible. Thirdly, the use of per capita real income, converted into the foreign exchange rate, may not always be an adequate index to measure the development in a world of floating exchange rates for an index of real GDP adjusted for changes in terms of trade. ...read more.

Conclusion

The above analysis suggests that the per capita real income growth rather is not a very satisfactory measure of economic development and that it needs to be supplemented by other indicators. On the other hand * doesn't count unpaid labour, especially women's care work. * doesn't count externalities - costs that are externalized (passed on ) to someone else. For example, polluting factory are able to pass on the cost of damage to health and the environment. * does count negative goods - the clean up of a toxic waste dump is counted as a plus in terms of GDP. * ignores distribution, quality of life, equality, sustainability * ignores the question of whether the world can sustain high rates of growth given the depletion of non-renewable resources and environmental damage Introduction--> explain gdp per capita and its current involvement into the economy. For Against Conclusion ...read more.

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