Economics for managers Essay Example | Topics and Well Written Essays - 1500 words

Economics for managers - Essay Example 246). This is the reason why the national governments of most of the nations attempt to enhance the GDP level of their respective economies. Some of the reasons why GDP of any nation could not be used to evaluate the standard of living prevailing in a nation and hence, its well-being, have been depicted underneath. Firstly, GDP takes no account of the distribution of wealth or income among the residents of a given nation and thus, does not portray a true account of the standard of living among various strata of the society. One appropriate example of a lack of discreteness of GDP, in measuring the well being of any nation could be derived from the terrorist attacks in USA in 2001. The attacks left the nation distraught and its citizens at a worse-off state. Many people lost their lives and among those who lived, many lost their jobs. Yet, the GDP of the nation was hiked primarily due to the fact that the statistic included the sums injected in the economy in the form of aids and fund reliefs (Baumol & Blinder, 2009, p. 474). Furthermore, the instance with that of the developing nations or rather the ones passing through the transition phase often record very high GDP values which does not go with the actual living standards prevailing in these nations. China and India are regarded to be the fastest developing nations in the world. These nations record one of the fastest economic growth rates even though the degree of well being in both of them are quite low with only a handful of the population base experiencing a betterment in their living standards. The primary reason behind this is the huge population bases in both the nations, which respectively are regarded as the ones endowed with the largest and second-largest populations in the world. A lion’s share of the population bases in both these nations live in utter poverty with dwindling resources. Though both these nations are associated with an economic growth rate of about 8 percent and more, the Gin i coefficient in these nations are evident of the deteriorating living standards. While it is 33 for India that for China as measured in the year 2006 was, 44.7 (Gehring & Kulkarni, 2006, p. 12). Hence, though China is slightly better off than India, none could be regarded in a highly good social condition. But income inequality and prevalence of poverty in a nation are not the only factors which indicate towards a nation’s standard of living. There are certain other aspects such as environmental concerns which are equally essential in evaluating the same. Secondly, GDP does not deduct the used up values from its account which is why it gives a wrong impression about the true economic picture in a nation. It includes the values depreciated through usage of capital, natural resources depleted on account of deforestation or excessive deployment, reduction in mineral and fuel resource endowments, as well as loss of fertilisation of land. Thirdly, the extent of environmental poll ution and degradation in a nation often hampers a variety of production processes in an economy which is why it is often counted as a drawback