{"id":71293,"date":"2020-11-30T18:05:04","date_gmt":"2020-11-30T12:35:04","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=71293"},"modified":"2020-11-30T18:12:48","modified_gmt":"2020-11-30T12:42:48","slug":"drawbacks-of-measuring-economic-growth-in-gdp","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/drawbacks-of-measuring-economic-growth-in-gdp\/","title":{"rendered":"Drawbacks of measuring economic growth in GDP"},"content":{"rendered":"<p><span data-contrast=\"none\">Although the GDP is a pretty good indicator of the economy, there are some disadvantages of the GDP, including the concepts that the GDP does not take into consideration.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"10\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\">Rising GDP of a country\u00a0<\/span><b><span data-contrast=\"none\">does not necessarily mean the rise in the welfare\u00a0<\/span><\/b><span data-contrast=\"none\">of citizens. This is because the rise in GDP may be concentrated in the hands of very few individuals or firms.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"10\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">GDP\u00a0<\/span><b><span data-contrast=\"none\">does not reflect inequality\u00a0<\/span><\/b><span data-contrast=\"none\">present within the economy. Economic inequality is not revealed by GDP figures.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"10\" aria-setsize=\"-1\" data-aria-posinset=\"5\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Non-monetary exchanges<\/span><\/b><span data-contrast=\"none\">: Many activities in an economy are not evaluated in monetary terms. For example, domestic services women perform at home are not paid for. This is a case of underestimation of GDP. GDP\u00a0<\/span><b><span data-contrast=\"none\">ignores voluntary and charitable work, social service as it is unpaid<\/span><\/b><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"10\" aria-setsize=\"-1\" data-aria-posinset=\"6\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Externalities:<\/span><\/b><span data-contrast=\"none\">\u00a0<\/span><br \/>\n<span data-contrast=\"none\">Externalities refer to the benefits (or harms) a firm or an individual causes to another for which they are not paid (or penalized).\u00a0<\/span><span data-contrast=\"none\">Externalities do not have any market in which they can be bought and sold. For example,\u00a0<\/span><b><span data-contrast=\"none\">output of oil refinery<\/span><\/b><span data-contrast=\"none\">\u00a0is taken into GDP calculation but\u00a0<\/span><b><span data-contrast=\"none\">pollution and ill effects are not deducted from GDP<\/span><\/b><span data-contrast=\"none\">. This is the case of overestimation of GDP.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"10\" aria-setsize=\"-1\" data-aria-posinset=\"7\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Underground Economy<\/span><\/b><span data-contrast=\"none\">: The underground economy (or black market) refers to cash and barter transactions that are not formally recorded and are often\u00a0<\/span><b><span data-contrast=\"none\">used to support the trade of illegal goods and services<\/span><\/b><span data-contrast=\"none\">\u00a0(<\/span><span data-contrast=\"none\">i<\/span><span data-contrast=\"none\">.e., drugs, weapons\u00a0<\/span><span data-contrast=\"none\">etc<\/span><span data-contrast=\"none\">). Some nations\u2019 economic output may be understated by GDP.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"10\" aria-setsize=\"-1\" data-aria-posinset=\"8\" data-aria-level=\"1\"><span data-contrast=\"none\">GDP<\/span><b><span data-contrast=\"none\">\u00a0does not value intangibles<\/span><\/b><span data-contrast=\"none\">\u00a0like leisure, quality of life etc.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"10\" aria-setsize=\"-1\" data-aria-posinset=\"9\" data-aria-level=\"1\"><span data-contrast=\"none\">GDP\u00a0<\/span><b><span data-contrast=\"none\">does not take into account the economic value of the environment<\/span><\/b><span data-contrast=\"none\">. Rather it neglects services provided by ecosystems and incentivizes economic activities causing environmental degradation by counting them.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"10\" aria-setsize=\"-1\" data-aria-posinset=\"10\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Gender disparities are not reflected<\/span><\/b><span data-contrast=\"none\">\u00a0through GDP measure.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"10\" aria-setsize=\"-1\" data-aria-posinset=\"11\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Barter exchanges are also not taken<\/span><\/b><span data-contrast=\"none\">\u00a0care of<\/span><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Although the GDP is a pretty good indicator of the economy, there are some disadvantages of the GDP, including the concepts that the GDP does not take into consideration.\u00a0 Rising GDP of a country\u00a0does not necessarily mean the rise in the welfare\u00a0of citizens. This is because the rise in GDP may be concentrated in the&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/drawbacks-of-measuring-economic-growth-in-gdp\/\">Continue reading <span class=\"screen-reader-text\">Drawbacks of measuring economic growth in GDP<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-71293","post","type-post","status-publish","format-standard","hentry","category-public","entry"],"jetpack_featured_media_url":"","views":{"total":70,"cached_at":""},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/71293","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=71293"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/71293\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=71293"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=71293"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=71293"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}