Building a development Database (Part 2)
- Go to the World Bank data site http://data.worldbank.org/ and find GDP, GNP and GDP per capita figures for the following countries:
- Enter the data into a spreadsheet.
- Produce a list showing the countries in rank order based on GDP per capita.
- Choose two countries with a marked difference in GDP per capita and see if you can find out what factors cause the differences in their GDP per capita.
- To what extent do you think the list from question 3 gives an accurate picture of the living standards of the respective population?
In Section 2.1 you came across some of the problems of using GDP and GNP data as reliable indicators of welfare and living standards. We saw that increases in population will reduce per capita GDP and per capita GNP figures, suggesting that living standards may have fallen because national income is divided between more people.
Similarly, inflation will increase the value of GDP in nominal terms, but not in real terms. Indeed, if the rate of inflation is growing faster than the countries' national income, then real GDP figures will fall and possibly reduce peoples' living standards. However, even using real GDP figures as an indicator of economic development and welfare is not without its problems.