In the early 1990s, it was believed that in human development and ecological economic growth the supply of money was reflective of loss in well-being. To calculate a country’s growth trend, one has to get the calculations that involve its domestic output and expenditure. For one to get to know the net worth of a country, calculating the Gross Domestic Product of the country is of much importance. It is very important to get the GDP of a country since it helps in planning for the well-being of the people with the available resources maximally (Wiley Publishing, Inc. 1).
What is GDP?
This is the monetary value of goods and services produced within a given region at a specific time. It is inclusive of private and public consumption outlays by the government, investments, and exports excluding imports undertaken within a defined region. It is calculated as, GDP = C + G + I + NX where C is the private consumption or consumer spending in the economy. G is the total sum of government spending, while I is the total sum of the country’s business spending on capital and NX is the total net exports. To calculate the value of net export, we minus total imports from total exports (Anielski 1).
What are the drawbacks of using GDP and how does that affect society?
GDP does not account for work done by volunteers or people who work free since it can lower the GDP if included. The occurrence of disasters can raise GDP since they require helping hands. GDP cannot be used to check the quality of goods since; consumers opt to go for cheap products regularly (Chiras 570). Due to this fact, the GDP would continue to increase because of the inefficiency of use and wastage. The effect that GDP could have on society is that the consumers could spend a lot more replacing the cheap goods than they would have if they had bought the higher quality goods (Wiley Publishing, Inc. 1).
What is GPI and how does it compare to GGP?
GPI is the measure of how a county has grown, goods production, and expansion services so that it can test whether they have resulted in any change in the well-being of the people. GPI can be used more reliably to measure progress made in the economy and be able to distinguish between positive growth and slow growth. While GPI measures the progress made in the economy, GGP measures just the general growth made within a specified period (Chiras 570).
What benefits would use GPI have on the economy, the environment, and society?
GPI takes into account all the negatives of growth hence making it more appropriate since it takes account of all economic welfare of the economy. Society has a chance to know the measure of their living standards and their effects on them. GPI encourages sustainable growth rather than short-term growth hence enabling long-term planning which reduces GDP and lowers the risk of damage to the environment. GPI takes into account nature’s ability to provide things like clean air, water, and other resources of the environment (Chiras 570).
It is useful to compare both GDP and GPI while calculating the Gross product since it gives a wider picture of the resources of a region and what impacts they have on the society, environment, and economic power of a country (Daly 1).
Anielski, Mark. “The Alberta GPI Blueprint: The Genuine Progress Indicator (GPI) Sustainable Well-Being Accounting System.” Pembina Institute for Appropriate Development. Alberta: Cengage, 2001.
Chiras, Daniel. “Environmental Science”. Jones & Bartlett Learnin. 2010. Web.
Daly, Herman. “Beyond Growth: The Economics of Sustainable Development”. Boston: Beacon Press, 1996
Wiley Publishing, Inc. “What are the advantages and disadvantages of Gross Domestic Product?” Cliffs Notes. 2011. Web.