Gross Domestic Product (GDP) Author Critique Free Sample Essay

The Gross Domestic Product abbreviated as GDP is the sum of consumers’ expenditure, government expenditure, all investments, and the net-total exports which are used to define a country’s productive capacity over a period of time for example in a year or a few months. Gross Domestic Product can thus be used to assess an economy, monitor it, and rank different economies against one another based on collective capacity. GDP is used in worldwide ranking systems materially and also based on institutions such as international lenders. Governments around the globe utilize GDP systems in making budgets, creating monetary policies, as well as in guiding and assessing social policies that are in place. Since the GDP system is a standard measure, it is a critical tool vital for tracking performances and measuring reactions to certain programs (Hern et al. 126).

The authors do not like the GDP system since they contend that it only measures just one aspect of human life; monetary spending flowing in the market which limits its usability. They argue that the GDP system falls short of incorporating ills and negative activities such as environmental degradation thereby failing to differentiate harmful spending and important spending. Further, GDP comes short of taking into cognizance any non-market industry, does not speak of wealth distributions, fails to consider things that are grown and consumed within a household, and does not account for many activities. GDP system’s failure to check on health, education, welfare, and poverty alleviation thus renders its usefulness null as it has the potential of collapsing politics and policy discussions to an unchecked quest for only limited aspects of growth (Hern et al. 127). They argue that sticking to only a certain definition growth of the economy only targets at benefiting a few individuals at the expense of many others.

I think the authors raise a very critical point that policymakers in the economic field need to take into consideration. A country’s definition of growth should be tied with the very basic lives of the citizens ranging from health, food consumption, education, individual contribution to the economy, and the capital flows but these should also be in relation to the very specific policies that each country undertakes. This is because it seems a bit illogical to rank the growth of different economies on the same scale without considering the policies of each nation are different.