In: Economics
How are Asian economies distinctive?
What are the limitations of gross domestic product and gross national income as measures of a nation’s economic welfare?
The Asian economies are different in the nature of its gross domestic product. The GDP in such countries is dominated by the services sector which makes up a large percentage. Also in such countries the control of economic policy in managed less by the central bank of the country and more so by the government in power. Also Asian economies rely majorly on their exports as a source of revenue, as compared to the west.
GDP and GNI while they are good measures of welfare they have their limitations in that they dont include the black economy which is not part of accounting records. GDP also depends on inflation levels and the base year chosen and so in periods of high inflation the GDP will be delfated and non compararble with past years. The GDP and GNI also are calculated following certain accounting methods and so this may vary across countries and not allow comparison. This is a problem.