advantages and disadvantage of using GDP

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 advantages and disadvantage of using GDP

The major advantages to using GDP per capita as an indicator of standard of living are that it is measured frequently, widely and consistently. Frequently in that most countries provide information on GDP on a quarterly basis, which allows a user to spot trends quickly. Widely in that some measure of GDP is available for practically every country in the world, which allows crude comparisons between the standard of living in different countries. And consistently in that the technical definitions used within GDP are relatively consistent between countries, and so there can be confidence that the same thing is being measured in each country.
The major disadvantage of using GDP as an indicator of standard of living is that it is not, strictly speaking, a measure of standard of living.. For instance, in an extreme example, a country which exported 100 per cent of its production would still have a high GDP, but a very poor standard of living.
The argument in favour of using GDP is not that it is a good indicator of standard of living, but rather that (all other things being equal) standard of living tends to increase when GDP per capita increases. This makes GDP a proxy for standard of living, rather than a direct measure of it.
Because of the limitations in the GDP concept, other measures of welfare such as the Human Development Index (HDI), Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI) and Sustainable National Income (SNI), Gross National Happiness(GNH), Green GDP, natural resource accounting have been suggested.
They are proposed in an attempt to give a complete picture of the level of well-being and the position with reference to natural resource depletion, but there supply of goods or services or both except taxes on the supply of manufacture or production of the following

Petroleum Crude
High Speed diesel
Petrol
Natural Gas
Aviation Turbine Fuel
Tobacco and Tobacco Products

The State Governments shall have the power to levy tax on the sale (other than in the course of inter-state trade or commerce) of petroleum crude, high speed diesel, petrol, natural gas, aviation turbine fuel and alcoholic liquor for human consumption
 
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