Saturday, March 31, 2012

GDP Measures reflecting 'Quality of Life'

When we think of GDP (Gross domestic product) and other economic measures, our mind gets lost in larger than life calculations. Contradictory, GDP is simply the single most useful number, describing the size of a country's economy. A layman might get surprised to know how these measures of a nation reflect the respective standard of living. After all, to the majority of a country, the economy itself is less significant than the standard of living. 

Real GDP per capita is the average output of the economy per person measured in a year. This ratio is used a lot as a tool to measure standard of living in a country, or between different countries. As GDP is referred as national income, the value of GDP per capita is the income of an individual. This number is directly related to the standard of living. Ordinarily, higher GDP per capita in a country shows higher a standard of living. 

Economists have suggested many alternative measures of human welfare for any Country, few of them include life expectancy, infant mortality rate, caloric intake, access to safe water, adult literacy rate, school enrollment, distribution of income, and a long list of other similar measures of the "quality of life." 

An important thing to consider, economic measures of a nation reflect respective standard of living.

Statistical analysis from selected countries, between 1950 and 2007 shows a very weak trend in the annual increment of GDP per capita for the largest economies like Japan, France, USA, and Italy. Countries like Australia, UK and Canada show a positive trend in annual increments. Developing countries demonstrates annual GDP per capita increments far below those from these developed economies. 

The impact of education on economic benefits has been noticed in many countries because a population with low-level of education has little or no capacity to increase productivity. Education plays a major role in the economic well-being of a country as more people get educated they learn to be responsive to market demands and changes. Apparently, a feeble technology undercuts per capita real GDP across all countries. Due to the successful implementation of a free Internet strategy, U.S.A. now has the largest Internet market in the world.

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