Question

• How was the GDP measurement invented?
• Are you a supporter or a critic of this measurement?
• From your perspective as a supporter or critic, provide your evaluation of alternative measurement systems.

Answer 1

Ans 1=William Petty came up with a fundamental concept of Gross Domestic Product to attack landlords against unethical taxation during war between the Dutch & the English ( 1654- 1676)^. C. Davenant further developed the methodology in 1695. The modern conception of GDP was 1^st developed by Simon Kuznets for an American report in 1934. In this report, S. Kuznets warned against its utilization as an index of welfare . After the Bretton Woods session ( 1944), GDP became the chief instrument for measuring a nation's economy. At that time gross national product was the preferred measurement, which varied from GDP in that it gauged production by a nation's citizens at home & abroad instead of its “resident institutional units”.

Ans 2=Though a rising level of GDP is usually linked to enhanced economic & social progress within a nation, many scholars have pointed out that this doesn’t necessarily play out in most instances. For example, Amartya Sen has pointed out that an augmentation in GDP doesn’t necessarily lead to a better standard of living, particularly in domains like healthcare and education. Another essential domain that doesn’t necessarily improve along with Gross Domestic Product is political liberty.

Ans 3=In 1990 Mahbub Haq, (a Pakistani Economist) introduced the HDI . It is a composite computation of life expectancy at birth, adult rate of literacy & standard of living calculated as a logarithmic function of Gross Domestic Product, adjusted to purchasing power parity