![]() Despite these potential problems, GDP remains a rough estimate for comparing different living standards.Ī further potential problem when comparing GDP values of different countries, is the influence of exchange rates, which are only determined by international traded goods. Therefore, when comparing countries with different population sizes it is advisable to compare the GDP per capita (GDP earned per capita). ![]() ![]() The source of a high total GDP value could be extensive population density, because more people are available as labour force. In addition, many aspects of economic wealth cannot be measured by GDP. The indicator commonly used for examine the degree of development of a country’s economy is the Gross Domestic Product (GDP), which measures the market value of all services or final goods produced in a country during a year.Įconomic measurement with the GDP (output or national income) also includes potential problems for instance, GDP also includes foreign investment and does then not represent wealth in that Country, but the foreign investment value. Measurement of economic development: GDP versus PPP Back to top Chaper 1: Facts and measurements about Growth
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