Measurement

of
Economic
Growth
Group 2
INTRODUCTION

•Economic growth is the increase in the

inflation-adjusted market value of the
goods and services produced by an
economy over time. It is conventionally
measured as the percent rate of increase in
real gross domestic product, or real GDP.
•“Modern economic growth reflects a
continuing capacity to supply a growing
population with an increased volume of
commodities and services per capita.” –
Simon Kuznets
 • Shortcomings of GNP/PCI
• Measurement
• The Real Indicators of
Economic Growth
Contents • The Real Products of
Development
• Social Indicators: A Measure
of Well-Being
 • National Income Accounting in less
developed countries is understated.

• Trade transactions which are not placed in

markets.
Shortcoming
• Inadequacy and inaccuracy of statistics.
s of GNP/PCI
• Using US dollar as basis of comparison.

• Local currencies that are overvalued or

undervalued in relation to the US dollar.
 • Gross National Product
• Measures the goods and services produce by
the citizens of the country regardless of
production location
• Formula: GDP – foreign net factor income
• Gross Domestic Product
• Measures the goods and services produce
within the country’s boundary, including
Measurement foreign businesses.
• Formula: consumption + business
of Economic investments+government spending +exports -
imports
Growth • Dual Economy
A dual economy is the existence of two separate
economic sectors within one country, divided by
different levels of development, technology, and
different patterns of demand.
“Behind the facade of prosperity is a dismissal
spectacle of extreme poverty and squalor.”
 SOCIO ECONOMIC
PROFILE

• Top wages earner- SWITZERLAND

• Life Expectancy- JAPAN

• Poorest Country - AFRICA

GNI GDP
 The Real Indicators
of Economic Growth
 GNP or PCI
- Is not an accurate yardstick of economic growth.
1. Reduction or elimination of poverty.
Indicators:
• food
Development Economists
• clothing
- Todaro and Seers
• shelter
• health
• education
>>A government program should not only be stressed in industrialization or balanced
agricultural- industrial development.
>>Government should direct its main resources in improving the quality of life of the
poorest of the poor.
2. Eradication of Inequality
•Inequality- does not only mean differences in income and wealth but also social, political ,
and educational disparities among the members of society.

Ancient times
- the elite of the vast Roman Empire wallowed in luxuries at the expense of the peasants.
Feudalism
•Feudal Lords- masters
•Peasants- slaves

20% of the world population are the owners of 90% of the resources of the world
Inflation and population explosion
- the reason why the great masses who are poor become poorer.

To remove inequalities:
- There should be institutional reforms in economic, social, and political
areas.
- Every member of society should have equal opportunities in jobs,
education, public health, government service, and other other fields of
human endeavors
Government programs which are social equalizers
-agrarian reforms
-cooperatives
-taxation

Comprehensive Agrarian Reform Program

(CARP Program)
- good program for the poor

3. Minimizing unemployment
-According Myrdal, the problems of unemployment and underemployment
have been the principal cause of poverty in Southeast Asia.
• Employment- is a major source of income among the poor.

• Creation of Labor-intensive industries

-provide more employments to the idle rural population.
The Real Products
of Development
 Real Products of Development

PEOPLE
- real products of development
- True key factors in improving the
conditions of their own nations. 1. The freedom of choice
- Free in choosing their foods, clothes, houses, and other
personal needs and aspirations.

Higher needs which people Command Economy

naturally crave for as human - there are no economic freedoms
- Everything is being planned, decided, and implemented
beings — freedom and dignity by the state
- The role of people is to obey and follow
 The Real Products of Development

2. Freedom and Poverty 3. The existence of human dignity

- people have economic freedom but Human Dignity
have no opportunities to use such - inherent in man
freedoms because of absolute proverty. - Priceless gift of God to man
- Without it man is a useless
Professor Todaro human being
- said that the poor ones are not
respected by the rich nations
Social Indicators: A
Measure of
Well-Being
 - A Measure of Well-Being
Social Indicators - OECD’s (Organization for
Economic Cooperation and
Development)-
 •Health
•Education and learning
•Employment and quality of working life
Social •Time and leisure
Indicators •Command over goods and services
•Physical environment
•Social environment
•Personal safety
 Social Indicators

•Health • Command over goods and services

- length and healthfulness of life - distribution of income and wealth

•Education and learning •Physical environment

- learning and use of educational facilities - housing conditions, accessibility to services, and
environmental nuisances
•Employment and quality of working life
•Social environment
- availability of employment and the quality of
working life - social attachment

•Time and leisure •Personal safety

- the use of time - exposure to risk and perceived threat