Problems with using GDP per capita figures
- Created by: Francesca Hill
- Created on: 07-06-14 12:36
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- Problems in using GDP per capita figures
- The figures take no account of income distribution
- Lorenz curve/ Gini coefficient
- GDP figures underestimate the national income because of the hidden economy
- e.g. black markets, informal sector and any unrecorded activity. Difference between Y and expenditure
- GDP per capita needs to be adjusted to real GDP per capita to remove changes in the price level
- Prices must be converted into a common currency if the price comparison between nations are to be made.
- The choice of the Xr at the time can crucially effect the outcome.
- Most figures are calculated under purchasing power parity (ppp)
- The Big Mac inderx
- GDP figures do not count the none traded output/ non-monetized output.
- DIY, child-care ironing, cooking, cleaning.
- In developing countries subsistence farming is not counted
- International comparisons can be very difficult
- Differences in collecting data
- Xr and calculation of PPP
- size of non-moneterised economy
- differences in inequalities
- Weather
- Culture and religions
- state of development
- Conflict and wars
- The figures take no account of income distribution
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