Real GDP per capita to measure SOL

Real GDP per capita to measure SOL

1. Thesis

   • ↑ Real GDP per capita, ↑ Y, ↑ PP
     • ↑ cons of G&S, ↑ mat SOL
     • ↑ cons of HC, Edu, etc, ↑ non-mat SOL
   • factors in...
     • Inflation
       • Remove effects of Px changes
         • ↑ Real GDP per capita, amt of o/p & PP is ↑ing
     • Pop size
       • shows avg Y
         • c/f b/w countries
           • eg:
     • Demographic changes
       • shows changes in avg Y
         • c/f b/w past & present
           • eg:

2. Anti Thesis

   • does not factor in...
     • Non-mat aspects
       • eg: Pollution levels, Leisure time
         • ↑ Real GDP per capita due to ↑ EG
           • EG may be due to longer working hrs/ create pollution
             • ↓ health / ↑ stress
               • ↓ non-mat SOL
     • Y inequality
       • eg: Y very unevenly distributed
         • Even with ↑ real GDP per capita
           • Majority not experiencing ↑ real Y & mat SOL
     • Differences in costs of living
       • eg:
         • • SG's real GDP per capita > that of China
             • But costs of living in China < that of SG
               • Need PPP e/r
     • Composition of o/p
       • Military vs K vs consumer gds
         • Production ≠ Consumption
           • ↑ Real GDP per capita due to gov military expenditure
           • ↑ Real GDP per capita due to prod of K gds
             • Current mat SOL may not ↑
     • Unrecorded o/p
       • Non-marketed DIY activities
         • eg: Subsistence farming
           • No mkt Px & qty, estimating mkt values v difficult
       • Underground economy
         • Illegal activities
           • eg: Drug trafficking, Prostitution
         • Legal activities
           • Mostly 'moonlighting' activities
             • Not declared to avoid taxes
     • G&S produced OUTSIDE cty from resources belonging to RESIDENTS
       • Dom firms earning Y from DIA
         • Avg Y actually higher
     • G&S produced INSIDE cty from resources belonging to FOREIGNERS
       • Y outflows from FDI
         • Avg Y actually lower
           • Need real GNP per capita

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