Topic: GDP is not really growth index or representation of economy (Read 270 times)

Don't look at the GDP figure as the only true indicator of health/strength/stability/... of a country. It is ONE of the indicators. It is like one of the blood indicators in a comprehensive blood test - it shows only part of the information but does not give a complete picture. Plus it is also worth remembering that GDP indicators, as well as all statistics, are a tool both for distortion and embellishment of reality, or even outright manipulation.

GDP is "growth" maybe it is not the only thing that a nation look at but that also doesn't mean that it is nothing neither, you should be considering it as a good indicator. Plus, we are talking about nations that are already big, and nations which are growing, you may not see the huge biggest nations to have a huge GDP growth, but they will stay strong because they are the biggest, whereas when we are talking about a place that ends up with a result that would be not that great, we are talking about a place that's so small, even smallest increase could mean a big growth.

Do not look at just one indicator, look at how much they have to work for an item. Like look at minimum wage workers salary compared to latest iphone, you will see which nations are rich and which are not.

But keep in mind that that this is still just crunching raw numbers without any required deep diving here. If you take GDP per capita, the question still remains 'who earns what?'. The number of billionaires in a country can skew that number significantly and suggest that on average the people in one country are richer than the people in another country. You need to add the Gini coefficient then to see what's going on in a country. If you take a little community of 100 people and 1 guy earns 1 billion a year "domestically" whereas everyone else is homeless and unemployed, the GDP per capita for that community would be 10 million per capita. There are several countries with enormous wealth inequality and since wealth is often the most significant production factor for income, wealth inequality is often close to income inequality.

GDP should be one of many categories to evaluate the standard of life, and that's probably how it is already.
There's GDP, there's GDP per capita, percentage of people in poverty, average salary and purchasing power, etc. In combination, they give a pretty good idea of how life is in a particular country, but I agree that looking only at GDP doesn't tell how people are actually living in a country, how many have access to benefits of that high GDP. But GDP alone is also a good indicator when assessing the capabilities of a country, so to speak.

I agree. And this is a huge problem - people have no basic financial education, no understanding of how the economy works, even at the simplest level! And the saddest thing is that most people are accustomed not to understand the problems, but to look for a "guilty" person, or to wait for someone "smarter" to officially "appoint" a guilty person, and then they will blame all their problems on him.... without solving them because someone else is to blame. Many poor countries in the world believe, for example, that the West, the USA, capitalists, and the dollar are to blame for their poverty. But the majority will not even think to raise the issue of localized corruption, undue benefits received by a group of people in power, and spiteful attitude towards the citizens of the country. And it is easier for everyone - for those who steal from people - you do not put yourself at risk, because there is "someone to blame, but not reachable", and it is easier for the people - "the dollar is to blame for everything, what can we do?", and they do not try to do anything.... It's a vicious, vicious circle. 

the GMO food is not correlative to age longevity
healthcare is

usually people start having health issues from 60+ and if healthcare is not their to do kidney/heart surgery or medications to avoid organ failures. that is what reduces life expectancy.

british empire for centuries was capitalist and would search the world for the best produce and take it.
but it was the healthcare system that raised the life expectance in the 1950's

hongkong, japan, canada, UK(many more on list) have better healthcare (free, so even the poor can be healthy) then the US
and they all have higher lifespans than the US

People do this a lot. They'll be like "The price of petrol in country A is much higher than ours therefore we're doing better than them". It's funny because how don't they look at the purchasing power of that country, look at their per-capita income, look at their minimum wage and rate of employment? How are they able to survive such high prices? The higher the standard of living, the higher the cost of living because when people make more, they'll want to spend more and this would lead to an increase in price.
The price of things will be different in a country with more purchasing power. When people have more money to purchase more goods the price of goods goes up.

I agree with you in part, but I'll add my own.
Misconceptions.
1. one of the misconceptions is to compare "expensive products" from developed countries and "cheap" ones from countries with a low standard of living. Let me explain - the price of the final product is formed, among other things, by the cost of production, which includes wages, taxes, social programs and much more. And the high cost of Western goods is due to high wages, high taxes (revenues to the state treasury), insurance, good jobs, etc. This means that the state can give more to people, companies pay higher wages, respectively people have a higher standard of living. So this is a good indicator.
2- Regarding the growing of "ecological" products. One simple question - how much their products from their fields are in demand, for example, in large grocery chains? I will answer right away - almost nothing. The only buyers of their products can be either private individuals or small shops selling vegetables at a low price. And this is neither bad nor good. It's just such a segment of the market. The problem is that such farmers cannot guarantee supplies to the networks in the right volumes, of the right quality, at the contract price. And in terms of quality, they are not much better than products from the fields of large agro-companies. I personally observed in one country how local people used to treat vegetable fields with preparations that have long been strictly prohibited in developed countries, which are real poisons. The answer to the question - why do you use such drugs, it is dangerous, even in the process of treatment of fields, the answer was simple - "and we do not have others, and this product kills all pests - beetles, reptiles, mice. cheap and immediately there is an effect. And I'm sure - so do many small farmers in low-income countries..... Unfortunately

I agree!
What I agree with - yes GDP is not exactly an indicator of happiness and standard of living of ALL people, it is an average indicator of the global "quality" of the economy of the country. Although there are nuances here as well - what is included in this indicator. Let me explain by example. Now there is one country that is trying to show that it is doing well. I will not politicize, but I think you can guess which one )
They are trying to show that sanctions do not affect the economy, and the economy is stable. The problem is that this country, for 2024, 40% of the country's budget is spent on war. And that means that 40% of GDP, where they add this "gross product", will not bring any benefit, but simply, very soon will turn into burned equipment, lost population, ammunition, etc. That is, it is a product that will not give anything to the economy and people, except costs and problems, i.e. it is a fake GDP.
On the other hand, there are countries that also spend not a small part of their budget on military-industrial complex, but they sell these products and get profit. And in this case, this is real GDP, not fake GDP. I.e. it is still necessary to correctly calculate what gives real growth and profit and what is just "money in the wind"

You are correct that GDP is not fully reflective of the economy.   At one point I read upto 30% of Italy business was done off books to evade tax or as part of criminal enterprises small or large.    [For balance Greece was accused of similar, I only mention the last news article but its many countries ]   That seems alot but its given not all business will show up in GDP properly.    Government itself has a bias towards itself, inflation is not fully reported imo, and various measures are taken to write off price rises as advancements in quality in some way so technology has enabled some hidden amounts of inflation and false growth to occur in GDP.

GPD will only be used to measure a country's overall economy in one year, it is never used to represent individual welfare. Usually, to calculate individual welfare, GDP per capita is used. That's why don't ever compare the welfare of society in Singapore with India, because even though India wins in terms of GDP, Singapore wins far in terms of individual welfare (2,256.59 USD vs 72,794.00 USD).

because in today's most popular religion, which is capitalism and consumerism, we are manipulated into believing that a better car = more happiness, because we watch advertisements of smiling people in expensive cars. There are no ads of smiling people walking barefoot on the grass. There are no ads for sleeping 8 hours a day with a happy person waking up at the end of the ad. we want something that is bad for us and we spend our whole lives chasing something that we do not need. From the time we are born until we die, we are told that happiness lies in consuming. This is not the case. Happiness comes from 1- eating good healthy food, 2- sleeping according to the daily cycles 3- physical activity 4- good social relationships. Happiness definitely does not come from having a Mercedes instead of a Skoda Octavia.

And yes, consumerism/capitalism can be classified as a religion. Religion is a set of beliefs unsupported by evidence and has nothing to do with God, an example is Buddhism, which is a religion but has no God, it is a belief in man's pursuit of perfection and happiness.


because there was more walking barefoot on the grass, more physical activity, healthier food, more mindfulness, fewer working hours a day, more interesting work, less artificial light, less chronic stress (unhealthy and demotivating), more temporary stress (healthy and motivating), fewer unfulfilled desires (a better car, a bigger house, new iphone each year) and even if they were, they were primal (hunger), and therefore healthy, and were not subliminally pushed to us by the mass media every single day.

If a decade can give a huge change in this world, how can you compare the situation on 10K years ago with the current condition?

If money isn't the reason to become happy, many girls will not open onlyfans accounts, zero case in money laundering or other illegal stuff, every women will fall in love in handsome guy instead of successful old businessman.

Do you regularly make a donation for your city from your signature campaign payment?

If someone is a freelancer who work by using high end PC and internet connection, does the society affect your performance?

I don't think so, because what I know is that GDP is the same with income. So if they have more income, why not use it to the advancement of their society? And I don't even think one can have more income if without advancing their society first because this attracts them money.

Some countries economies aren't well developed yet. This is where the term " growing " fits for them. For those economies who are already on the highest level, they can just stop developing it because there is almost no need to add and then as you said, growing will now be harder this time. It doesn't mean though that those lower GDP countries can now surpass them easily.

Then why do the citizens of those underdeveloped country seek to come to those countries with a high economy despite the fact that stuffs are expensive there, tax also is more enforced in developed country than in developing countries.
This shows that a country with a high economy has better standard of living and greater opportunity for people living their and this should answer your question mate.

Let's see, Central Asia countries, where you grow your won food in natural mud and everything si healthy and not touched by greedy capitalisms

Life Expectacy:
125  Uzbekistan   75.29   
152  Kazakhstan   72.53
159  Kyrgyzstan 72.35
163  Turkmenistan   71.83
179  Tajikistan   69.36

The evil corporatists capitalist country, full of GMO, mutated radioactive food, processed soilnet green menus all that stuff:
43  United States 78.9

How does it feel to kick the bucket even 10 years before those despite your organic food and having all that life spent working the fields all day long growing the same food that in the end didn't make one differnce whatsoever?

When you do a proper search on "the biggest countries in the world you'll see that they'll classify them into
The Biggest Countries by Economy
The biggest countries by land mass
The biggest countries by population
The biggest countries by military might and so on.


It is all these factors and so more that the strength of a country is measured.
The same applies when we're measuring the economy of a country.
You look at inflation rate, GDP, import and export, per capita income, standard of living, quality of life, employment and unemployment rate, and many more.

If a country's GDP is increasing, it means something is being done right by that country.
A country's economy is good isn't measured by just the GDP of that country, but you can't measure a country's economy without measuring the country's GDP.

I agree that nominal GDP isn't the one and only perfect method to measure the economy of every country, the problem is that there's no better way to measure an economy. The problem with nominal GDP is that it measures the economy based on prices. The higher the prices of everything, the better(including salaries, which represent labor prices). Higher real estate prices should mean that the real estate owners are rich, but in reality the expensive houses and apartments are one of big problems of the capitalist consumerist society.
I agree that everything is very expensive in the highly developed countries, but there's no other way around. If everything was cheap, the companies won't have enough revenue to pay big salaries, therefore the salaries would have to be lower as well.

I quite understand your plight and the Gross National Happiness you are talking about, in fact, a less-rich country could be happier than the richer country and this depends on many factors which includes money and the ease of getting the money. However, we can't use this to entirely remove the principle of economics which drives an economy itself, we can never remove the fact that the GDP is not a yardstick that contributes to the economy of a nation. GDP can never be underestimated here, and a major contributor for that matter, and it will be so nice that you do not entirely link happiness with richness and how progressive a country is, there are a lot that contribute to happiness, not money alone nor the economy.

Mind you, in those countries that are doing well, it's not the government that is doing the majority of things for them but the ability of the private citizens to think and create wealth for themselves (creativity and willingness) and also get to create businesses where a lot of people could also be employed. If this is happening in the opposite in any country, it's the responsibility of the citizens and government to change the narrative, but people often believe that the government should do everything for them. And if the GDP is progressive and people suffer, then it's highly possible that people are not doing enough and still believe the government must do more because I've seen cases where the government tried its best but it didn't work much.

With this mindset, citizens reduce the productivity and efficiency of the human resources in the country which is part of what drives the economy. Everyone wants cheap money and this often sets them even back more.

Cause GDP is not representative of the nation's individual earning capability. Just take India for example, they have a pretty alright GDP but they are pretty much still on the rural-based economy with a lot of their citizens in the considerable poverty line. Does that mean that India is dying economy-wise? Nope. In fact it states that they are doing quite fine. But is their GDP indicative of their progress as a country? Nope, we have other factors for that.

The only mistake you made is mistaking GDP for the Growth Index of a country. Don't worry, it happens to the best of us. For the meantime, try learning more about the ins and outs of the world economy and their terminologies, might wanna look into some economics books along the way too.

Tho I agree that most countries with highest GDP don't have more advance society than the other with lowest GDP, but I still think that GDP can be used to judge how much has the countries' economic is growing. The keyword is growing, because the economic is still growing it hasn't reach the peak point, and the higher the economic level the harder it gets to grow just like other thing, so it's easier for lower economic to have high GDP, compared to countries that already has high level economy.

As the name GDP stands, it hopes to represent the gross domestic product periodically. It doesn't quite say if the country is rich or not, but it such provides a good scope and insight into what should be expected when considering investment in any sector of the economy..
Net gross domestic product (ion)  on the other hand is an annual representation of the sum GDP for the duration requested.

Prosperous? probably not but if you use the word growing economy then yes


The fact is that all those exports were done mostly by the top companies in the respective countries but an increasing GDP means that the economy sector is growing as well because those numbers are not coming out magically thus there 'should' be alot more development taxes for the countries. Higher taxes means those countries would be able to build alot more things to improve the way of the life for the citizens

Unless of course if a country is govern by one of the most corrupted government then those GDP means literally nothing

because the formulae of GDP includes government spending they do not realise the funds of that spending can be stimulus debt(money printing)
consumption is also based on consumer spending which we all know is also debt included (credit cards and mortgages)

GDP = Consumption + Investment + Government Spending + Net Exports

but as i hinted at in last post. the bigger problem is, when they divide it up per person(capita) it then sets a FALSE vision of how much people can afford and retailers, real estate, and industry then "recommended retail price" their goods services and property based on a % of that amount

Maybe that's what the world measures for a country, if their GDP is high then they are declared a prosperous and prosperous country, even though what you say is true, some countries pay expensive rent and food every day, but the salaries they earn are also large.

GDP at best shows size of the economy and nothing else. And that is only if it is truly "domestic" "product" because in some cases like US what they are counting as GDP is neither domestics nor product! In any case it is certain that GDP is not a representation of economic strength, quality of life, and stuff like that.

If you want to analyze the economy of a country you have to consider at least two dozen different things. For example you can't talk about Ukraine economy without considering that it is a country at war, or you can't analyze US economy without considering how it is printing money out of thin air ($35 trillion debt) and sells that debt to other countries exporting its inflation abroad!

There is no conflicting of facts here, in simple words we cannot really consider it an country is prosperous just by looking at the GDP when the majority of resources and exports are catered by the wealthy elites who runs the government. Country might move forward and in terms of only numbers wherein still majority of it's citizens suffers. As you have given a good example of Nigeria just think where are we heading ? Everything is not number game and we cannot assume people are happy just because economy is good. This have to be redefined based on human happiness index. Try researching about Bhutan's GNH index and how they consider GNH over GDP.

You are just conflicting facts, maybe you should go back to your studies of the economy and draw the right facts once again as aggression or personal belief will solve nothing. The GDP is a major part of the economy and it entails a whole lot things to butress this fact. All the outputs of the masses and government in the country, the purchases of goods and services and many more contribute to the GDP of a nation. I wonder why such won't contribute to the growth of the economy in your own dictionary. What I believe you are trying to establish is that the country might be moving forward in the economy, in which GDP contributes, yet the masses are suffering, inflation going towards the roof. But these are separate economic reviews where some policies need to be adjusted for the betterment of the masses.

In cases like this, it's possible that the government is getting richer and a few private individuals too, but the wealth doesn't fairly circulate among the masses. This kind of situation is happening in Nigeria now, yet the economy is positive economic-wise, but the masses are suffering and more people are being dropped into the level of poverty. However, the source has to be tackled through viable policies by the government which is a different ballgame and the situation will never stop the fact that GDP is part of a country's economy. One of the best approaches here is social intervention coupled with a positive trade balance where the nation is not import reliance but otherwise.

GDP is one way to measure economic growth. So, yes, it represents the economic situation of a country so to speak. However, it isn't a way to measure the well-being of the country's population. So, if you speak of what the people are eating on a daily basis and whether their food is healthy or not, that's not something that's measured by GDP. A high GDP doesn't necessarily mean the people are happy. A high GDP doesn't even mean the people are living well. GDP only measures the country's overall good and services produced within a certain period.

On the contrary, it is an indicator of the extent of the prosperity of the economy, but it is not evidence of the luxury of life as in the example you mentioned. According to the happiness indicators prepared by specialized research centers, several criteria are based, of which the gross domestic product is one of them. The result is that the happiest countries, according to these studies, almost all of them do not have a good raw domestic product, meaning that the country’s economy is not that good.
Gross domestic product is generally an economic indicator for comparison between economies and not between individuals from one country to another.

I agree, GDP is not the only measure of economic growth, but it is an important index to measure and from there the national government will adjust, change, measures and policies to match compatible with the economy and promoting people's lives. That means considering GDP = happiness or prosperity of the people would be flawed and wrong. Increased GDP stimulates production, but economic growth promoting increased demand is reasonable, but on the contrary, it will push the economy into deficit and increase inflation. Therefore, I agree that GDP does not reflect or represent people's lives. Specifically, when GDP increases, only a small part will benefit, the rest will bear big risks from work, income, environment, health, education... That is even a serious imbalance.

GDP does not even represent Domestic Product
these days with money printing, the money becomes the "product" not the manufacturing/harvesting of domestic products sold to retail->consumers

the money printing does not end up in M1"cash"-M2"balance" of working class, middle class (majority) of population. it gets syphoned off into off shore accounts out of circulation and then only accounted for on the books to appear as if its part of a country domestically
...
the problem is whilst the real money is hidden away in big pockets.. the totals are divided by population overall. which makes things unfair for the working/middle class
because once averaged out unfairly. real estate agents use those unfair numbers to then say average person can afford mortgage payments of #0% of the average.. thus they raise the rates and housing prices/rents

Macroeconomic measures are greater than the prices of apartments, rent, and food prices, even if it is part of the basket through which inflation is calculated as one of the most important measures that the state adopts to set its monetary policies, and the fact that food is at a high price, but there is a good rate of wages, and an individual, with a regular job, can get Sufficient food, education, and housing in a comfortable place with basic services is sufficient in many countries. Just as the countryside has advantages, there are disadvantages in terms of the quality of education, access to health and medical services, the Internet, and receiving your products with a click.

This is what happens with economic concepts. GDP is useful to get an idea, but if you want to know more about the reality of a country's economy, especially the economy of the people, you will need to know more about average and median wages. In the stock market it is similar, a central concept to decide whether to buy a share is the P/E ratio, but you can't just stick to that, you have to compare it with the sector, the debt, the free cash flow, the evolution in the last five years, etc.

Bigger pay = more happiness? I am far from this statement. I am far from saying that a higher average salary = more happiness in society. According to the great writer and historian - Harrari, it is possible that we were happiest as humanity before the Neolithic agrarian revolution, 10,000 years ago, as hunters and gatherers and the domestication of plants and animals was our curse. median salary was equal to 0$.

@OP In the USA, everything is expensive, but you also earn much more. And ultimately, if you have to buy something in another country, it is better to buy living and earning money in a country with high GDP from a country with low GDP than the other way around. for example, a new iPhone 15 costs $800 in the USA, which is 6 days of work taking into account the median salary. in my country it is 15 days, in poorer African countries it is several months. The same applies to cars, computers, and household appliances. In my country, 1 m^2 of an apartment takes about 5-10 weeks of work to buy, in the USA it takes 4-7 weeks.

But there are states in the US where you can still live the life you described. buy a big ranch in texas and raise your own cattle. no one is forcing you to live in manhattan

GDP is can be used to measure the whole economy of a country, but since you're talk about growth or happiness of the citizen, GDP is useless. To know that we need to take a look on median salary, not GDP or average salary.

If there are 100 people, consist of: 10 rich people, 30 average people and 60 poor people. Judging it from GDP or average salary, we might judge the country has a good economy since the 10 rich people net worth is same to 10,000 poor people. But judging it from median salary, there's a problem on wealth distribution.

Do we really consider economy by GDP ? My answer would be no, If you look at world's largest economies their foods are slow poison and every single thing is expensive compared to some under developed nations. I had chance to see some Central Asian landlocked nations and was really surprised to that they organic foods and there are no adulteration unlike our chemically processed food which we consume and the best part is that they have their own house's and a backyard garden where they grow their own fruits and vegetable for consumption wherein on the other hand our living space has been squeezing as we develop further but guess what our GDP is increasing, But all the profit goes to the big capitalists who are on top of everything. 

GDP doesn't represent the citizens growth of that particular nation when the average working class people are paying exorbitant price for rent and food wherein there are countries where people are living peaceful countryside life paying less than 1/10th of what we pay for food.

There are pros and cons of these nations which I am referring to but I thought of highlighting the basic necessities and how it's been robbed from us in the developed nations in the name of growth and higher GDP has nothing to do with growth or happiness of people which is often misunderstood. Because there is no economy which has nothing to do with people of that nation.