Economics Assessment 1.docx - Question 1 Gross Domestic...

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Question 1Gross Domestic Product (GDP) is a conventional way of measuring economic wellbeing, whichindicates the market value of final goods and services produced by a country for a specificperiod of time.The main focus of GDP per capita is to measure the production capacity per person indicatingeconomic growth, higher welfare and lower unemployment. However it doesn’t take the peopledevelopment factors into consideration and can be criticized as an inefficient measure ofwelfare. As a result, GDP per capita excludes many non-economic factors which are crucial formeasuring overall country’s wellbeing such as;Change in income distributionQuality of educationLife expectancy at birthQuality of lifeEnvironment costsLeisure timeGoods/services produced by the house-hold marketUse of infrastructureSocial costs (over-crowding)Due to ignoring many non-economic factors, UN developed the Human Development Index(HDI), an alternative method of measuring welfare that incorporated three key features - health,education and standard of living.Hence, HDI can provide a more realistic picture of a nation’swelfare than GDP. Most importantly, if both GDP per capita and HDI measures are combined, itcan help the economists to identify the main economic issues and the existingeconomic/welfare policies can be amended accordingly.HDI Dimensions (Source:UN)
The two graphs below are plotted based on historical GDP per capita and HDI for Australia andUnited Arab Emirates from 1990 to 2019.19901991992199319941995199619971998199920002001200200320042005200620072008200920102011201201320142015201620172018201915,00020,00025,00030,00035,00040,00045,00050,00055,00060,00065,00070,000UAE and Australia GDP Per Capita - Historical DataUAE GDP Per Capita (US $)Linear (UAE GDP Per Capita (US $))Australia GDP Per Capita (US $)GDP per capita US $1990199199219931994199519961997199819992000200120020032004200520062007200820092010201120120132014201520162017201820190.70.750.80.850.90.951UAE and Australia- Human Development Index (HDI)UAE Human Development Index (HDI)Linear (UAE Human Development Index (HDI))Australia Human Development Index (HDI)HDIThe GDP per capita for both developed countries are trending upwards. Overall Australia hasshown a higher economic growth than UAE though there has been few instances with negativeGDP growth for both countries since year 2000 trending in a similar pattern where the

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Term
N/A
Professor
Andrew Makes
Tags
Economics, gross domestic product

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