Using National Income Statistics to Measure Well-being
- National income statistics are useful for making comparisons between countries
- They provide insights into the effectiveness of government policies
- They allow judgments to be made about the relative wealth and standard of living within each country
- They allow comparisons to be made over the same or different time periods
- For example, the growth of the Asian Economies in the last 15 years can be compared to the growth of the European Economies in the 1990s
- For example, the growth of the Asian Economies in the last 15 years can be compared to the growth of the European Economies in the 1990s
- Using real GDP is a better comparison than nominal GDP
- One country may have a much higher rate of economic growth, but also a much higher rate of inflation. Real GDP provides a better comparison
- Using real GDP/Capita provides better information than real GDP as it takes population differences into account
- Using real GNI/capita is a more realistic metric for analysing the income available per person than GDP/capita
- Using real GNP/capita provides information on the income that is actually within a country's borders
- This value can be significantly different from GDP/Capita
Examiner Tip
When studying national income data that has been provided for data response questions, you will often see a generalised pattern emerge
- Developed countries will have a smaller gap between their GNI and GDP
- Developing countries often have a higher GDP than GNI - as much as 6%
The reason for this is usually linked to multinational companies involved in resource extraction, who then send income/profits home