Is it better to use GDP per Essay Example for Free

Is it better to use GDP per Essay Many numbers could be calculated to make a judgment on an economy. But we need a general number that measures the total economys strength, but is it better to use the cruel GDP number to measure the level of growth of a particular economy, or calculate the GDP per head number to get a better judgment? On March 13th under the title of Grossly distorted picture in the Journal The Economist an article talked about that issue and compared between the two measures with evidences and examples. The writers opinion The writer tries to grab our attention to the fact that maybe using the total GDP does not show the real state of the economy, but a better way to measure the economy is the GDP per head which the writer is considering it a rough guide to average living standards. (GDP, 2008). So, according to the writer (2008) opinion the amount of total GDP doesnt necessarily indicates to the real growth of the economy, even sometimes the level of economic growth in a particular country could be higher than another country that has a higher GDP number because of the lower level of growth in population. The writer (2008) in this article demonstrates two obvious examples which they are America and Japan, while the US economy made a growth of 2. 9% Japans economy made a growth of 2. 1%, so most people would say immediately that the US economy scored better but we must consider also the level of population growth, while the GDP per head growth in US was 1. 9% it scored 2. 1% in Japan, higher domestic increase in population and a very high level of new people come from abroad cause a 1% growth in population, but in Japan the GDP per head growth reached the level of 2. 1% because Japans population has been decreasing. (GDP, 2008). Shortcomings Anonymous (2008) also gives other example of how using GDP per head tells a completely different story than using the GDP, as using the GDP growth doesnt necessarily provide the right image of a countrys welfare, but population growth must be regarded too. The writer (2008) provides examples like Brazil which has been in a fast growing economy, but for the last fast year the GDP per head increase by only 2. 3% because of the high growth of population, and the writers (2008) gives the opposite example which is Russia who has a GDP growth near the level of Brazil, but yet still the GDP per head tripled for Russia because population rapidly decrease. In general, the GDP is a tricky measure but GDP per head provides a clearer image according to what the writer (2008) say. Should recession be redefined? the standard definition of a recession—a decline in real GDP over some period . (GDP, 2008). But, should this definition still be used? The writer (2008) disagrees with that as recession doesnt necessarily mean an actual decrease in GDP but simply a decrease in GDP per head, and for example he imagines that in Japan where the population is decreasing if the GDP growth was 0% the GDP per head will increase, but in America the GDP per head growth will be considered dropping over the past couple of months because the population growth exceeded the GDP growth, so the writer (2008) suggests that the right definition of recession should be a fall in average income per Person. Conclusion The writer (2008) suggests GDP per head not just for the fact the GDP per head considers the growth of population, but he thinks that using GDP per head can boost up economies. By giving Japan as an example the writer (2008) recommends that government announces GDP per head which is increasing because of decreasing population instead of disappointing GDP number, this will make people optimistic and make them consume more and economy gains. References Grossly distorted picture. (2008, March 13). Retrieved April 6, 2008, from http://media. economist. com/finance/displaystory. cfm? story_id=10852462