Question

In: Economics

The standard of living in Argentina is higher than the standard of living in Luxembourg purely...

  1. The standard of living in Argentina is higher than the standard of living in Luxembourg purely because the size of Argentina’s real GDP in 2018 (using 2010 constant prices) was USD446,880.91 million as opposed to Luxembourg’s USD67,301.21 million (figures from the World Development Index Database).


Do you agree or disagree with this statement? Refer to the UN Human Development Index to Justify your answer.

Solutions

Expert Solution

I disagree with the statement. In the Human Development Index( an index to measure the human development or say standards of living), Argentina ranks currently at 48 whereas Luxembourg ranks at 21. This means that according to this standard, standard of living of people in Luxembourg is way better than the people living in Argentina. This is despite the fact that the Size of real GDP of Argentina is greater than the size of real GDP of Argentina. This is because, size of GDP (income) is just one dimension of human development. Other important dimensions are Health and Education on whose account Luxembourg is doing much better than Argentina. Human development index takes three indicators human development i.e, Income, health and education. So, despite the bigger size of Argentina's GDP, standard of living of people of Luxembourg is much better because income is not the only indicator which defines standard of living. There are other indicators like health and education in which Luxembourg is doing relatively better than Argentina. Therefore, standard of living of people in Luxembourg as measured by Human Development Index is way better than the standard of living of people living in Argentina.


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