How is The Growth of the Economy Measured? Indicators

The growth of the economy is measured through the Gross Domestic Product (GDP), that is, with the annual increase in GDP in a nation.

What is GDP?

GDP represents the value of all final goods and services that are produced by a nation in a given time, which usually corresponds to the year.

GDP is a variable that changes and fluctuates according to this:

•          When GDP grows faster than population growth, it is said that the standard of living increases,

• On the opposite case, if the growth rate of said population is higher than GDP, it would be affirming that the population's standard of living would be decreasing.

Growth Can Be Measured In either Nominal or Real Terms:

That is why if nominal GDP has increased at a growth rate of 5% while inflation reached the number of 4% at the same time, it would have to be according to real terms, the growth rate is barely 1%, and this 1% increase is the real increase in GDP.

In the following article, you can find more information about the Gross Domestic Product:

Criticisms of Economic Growth

The concept of economic growth and its positive influence on the economy is deeply rooted in society. This is due to the influence of neoclassical thinkers who bet on the "wildest" version of the market economy, what we know as capitalism. Within its thesis, the objective is to grow to continue generating wealth in the economy of a country at an aggregate level. This idea seems quite logical, but wealth in many cases does not directly affect the quality of life of the population: improvements in education, health, salaries, in the quality of life in general.

A clear example of this is many developing countries, with high growth rates were driven mainly by the global globalization process, but in which the redistribution of income is totally unbalanced. In other words, the rich accumulate more and more capital while lower-level workers continue to live on the poverty line.

What Does Economic Development Mean?

Economic Development is the ability of a country or region to create wealth in order to promote or maintain the economic and social well-being of its inhabitants. The branch of economics that deals with the study of development issues is Development Economics.

However, in economies with unstable state models and strong institutional weakness, high growth rates do not correspond to acceptable levels of development.

To determine a more realistic relationship, a combination of indicators that measure a country's economic development is used, including per capita Gross Domestic Product, income and wealth distribution, life expectancy at birth, adult literacy rate. And other indicators related to economic prosperity and quality of life, collected in the Human Development Index (HDI) prepared by the United Nations Development Program (UNDP). More visit Besteconstuition Thanks.

 

 

 

 

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