Anonymous
Jan 14
With example discuss the reasons as to why the countrys GNP per capital is the most commonly reported development statistic but it is however not a good measure of poverty?
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Jan 14
GNP per capita, or Gross National Product per capita, is a commonly reported development statistic that measures the average economic output per person in a country. While it provides some insights into a country's overall economic performance, it is not a good measure of poverty due to several reasons. Let's discuss these reasons with an example:
Example: Consider two countries, Country A and Country B, with similar GNP per capita figures but vastly different poverty levels.
Country A has a GNP per capita of $10,000, while Country B has a GNP per capita of $10,500. At first glance, one might assume that Country B is better off economically. However, when we delve deeper, we find that GNP per capita fails to capture the distribution of wealth and the living conditions of the population.
1. Income Inequality: GNP per capita does not account for income inequality within a country. In Country A, the wealth might be concentrated in the hands of a few individuals or a specific region, while the majority of the population lives in poverty. This means that the average income per person (GNP per capita) does not accurately reflect the living conditions of the majority.
2. Cost of Living: GNP per capita does not consider the cost of living in a country. In Country A, the cost of basic necessities like food, housing, and healthcare might be significantly higher than in Country B. Therefore, even if the GNP per capita is higher in Country A, the actual purchasing power and standard of living may be lower.
3. Informal Economy: GNP per capita fails to account for the informal economy, which includes unregistered businesses, subsistence farming, and other unreported economic activities. In many developing countries, a significant portion of the population relies on the informal sector for their livelihoods. Since these activities are not captured in official statistics, GNP per capita underestimates the economic well-being of these individuals.
4. Non-Monetary Indicators: GNP per capita solely focuses on economic output and does not consider non-monetary indicators of poverty, such as access to education, healthcare, clean water, and sanitation. A country may have a high GNP per capita but still have a large proportion of its population lacking access to basic services, indicating high levels of poverty.
In conclusion, GNP per capita is a commonly reported development statistic that provides a general overview of a country's economic performance. However, it is not a good measure of poverty as it fails to account for income inequality, cost of living, informal economy, and non-monetary indicators of poverty. To gain a comprehensive understanding of poverty, policymakers and researchers need to consider multiple indicators and measures that capture the multidimensional nature of poverty.
Example: Consider two countries, Country A and Country B, with similar GNP per capita figures but vastly different poverty levels.
Country A has a GNP per capita of $10,000, while Country B has a GNP per capita of $10,500. At first glance, one might assume that Country B is better off economically. However, when we delve deeper, we find that GNP per capita fails to capture the distribution of wealth and the living conditions of the population.
1. Income Inequality: GNP per capita does not account for income inequality within a country. In Country A, the wealth might be concentrated in the hands of a few individuals or a specific region, while the majority of the population lives in poverty. This means that the average income per person (GNP per capita) does not accurately reflect the living conditions of the majority.
2. Cost of Living: GNP per capita does not consider the cost of living in a country. In Country A, the cost of basic necessities like food, housing, and healthcare might be significantly higher than in Country B. Therefore, even if the GNP per capita is higher in Country A, the actual purchasing power and standard of living may be lower.
3. Informal Economy: GNP per capita fails to account for the informal economy, which includes unregistered businesses, subsistence farming, and other unreported economic activities. In many developing countries, a significant portion of the population relies on the informal sector for their livelihoods. Since these activities are not captured in official statistics, GNP per capita underestimates the economic well-being of these individuals.
4. Non-Monetary Indicators: GNP per capita solely focuses on economic output and does not consider non-monetary indicators of poverty, such as access to education, healthcare, clean water, and sanitation. A country may have a high GNP per capita but still have a large proportion of its population lacking access to basic services, indicating high levels of poverty.
In conclusion, GNP per capita is a commonly reported development statistic that provides a general overview of a country's economic performance. However, it is not a good measure of poverty as it fails to account for income inequality, cost of living, informal economy, and non-monetary indicators of poverty. To gain a comprehensive understanding of poverty, policymakers and researchers need to consider multiple indicators and measures that capture the multidimensional nature of poverty.
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