Measuring Gross National Product in Poor Countries

Measuring Gross National Product in Poor Countries

Calculating of Gross National Product (GNP) especially in poor countries are largely guesswork and even if they are accurate GNP itself can be a poor measurement of welfare.

Discuss this view of the problem of measuring and using GNP statistics.

Introduction

Gross National Product (GNP) is the term is the total market value of all final goods and services produced by the citizens of a country. It is equal to the Gross Domestic Product (GDP) minus the net income of the foreigners. For example a Jamaican resident has invested in America, it would still be valued as GNP not GDP because Gross domestic Product (GDP) has not only to do with goods and services within the borders of a country. However GNP is used to measure economic growth, it is believed to be equal with the health of the economy and economic progress. GNP is use to measurement to see if it can truly reflects the economic welfare and growth of a country and especially in relation to the poor countries. As it is important for a country to grow and that the benefits of growth must reach all of the society Thus concepts like GNP and GDP have come into being to reflect the actual state of the economy. It has however, been debated by economists whether GNP is the true measure of welfare and growth especially in poor countries.

Gross National Product is essential as it highlights the society-wellbeing and development, it is also structured around change of production and employment in terms of the fact where there is a shift from undeveloped to developed, as well as to indicate improvement in certain social indicators like school and health conditions which is also seen as a prime factor in measuring societies development. Economic growth refers to the increasing ability of a nation to produce goods and services, and economic development, which also takes into consideration that the nation will be better off if it takes into consideration accounting changes in the economic and social structure that will decrease or terminate poverty.

Therefore quantitative figures in terms of higher salary, higher volume of production does not reflect upon the welfare of the society, even though it may reflect a high GNP. It has been argued that in less developed countries GNP cannot be seen to accurately represent the welfare level. One of the arguments put forward has been that there are different approaches by which GNP can be arrived at.