Measures of economic performance
GDP
The value of all final goods produced in an economy per year
Gives a measure of growth
Gives measure of living standards
Risk of double counting, this is when you include the value of the output in the primary sector and then include it again after the good has been manufactured into something in the secondary sector
Informal activity doesn't show up, for example firms that are not registered or black market goods
Errors are very likely to take place
Just looking at output doesn't look at quality or take into account negative externalities, for example the cost of air pollution or deforestation
Many other quality of life aspects that GDP doesn't take into account, for example good healthcare increases living standards but isn't taken into account when using GDP as a measure of living standards
GDP per capita
GDP / Population
GDP doesnt tell us anything about average level of individual incomes in an economy
GDP per capita measures the average level of individuals incomes in the economy
GNI
The total income generated by a countries factors of production regardless of where those FoP are located
Benifits of GNI
Factor income will be included, as long as its domestic
Income generated by workers working abroad will be counted
Domestic businesses income will be counted will be counted
FDI will not be accounted for in GNI as its not domestic factors of production
GNI = GDP + Net factor income
Still doesn't take into account externalities and environmental impacts of production
Drawbacks of GDP per capita
GDP per capita doesn't taking into account remittances
FDI can distort the final figure
Green GDP
A measure of GDP that accounts for the environmental costs of production
GDP - Environmental costs of production
Drawbacks of green GDP
Putting a monetary value on environmental cost is quiet difficult and very subjective
GDP could fall drematically