#GDP #EconomicIndicators #VietnamGDP
Hey everyone! 👋 Let’s dive into a common question in economics: Is GDP a good indicator of how healthy an economy is? 🤔 Let’s take a closer look at Vietnam as an example.
– Vietnam’s GDP has seen a significant increase from 20 billion dollars to over 400 billion dollars. 📈
– But does this mean Vietnam has become 20 times better than before? Or could there be other factors at play, like a potential economic bubble? 🤔
– As someone who isn’t an economics major, it’s totally normal to have questions and seek clarification. Don’t worry, we’re here to help!
Possible solution:
– While GDP can provide valuable insights into the size and growth of an economy, it’s important to consider other factors like income distribution, employment rates, and overall quality of life.
– Looking at a more holistic view of Vietnam’s economy, rather than solely relying on GDP figures, can give a more comprehensive understanding of its progress. 🌏
What are your thoughts on this? Share your insights and let’s learn from each other! 💡 #EconomicGrowth #GlobalEconomy
Per capita GDP is a much better indicator than GDP. Over what time frame did Vietnam’s GDP change that much? What was the population change over that time? PPP is also going to be a better indicator for standard of living within a country than GDP.
GDP is a measure of the goods and services produced in an economy over a given period of time. The goods and services are valued in $ (or € or £ or whatever) because that’s the only way we have of aggregating things as different as tonnes of coal and vet visits. They’re valued at market prices (or the best available proxy to a market price), not at the consumer value, so for example a life-saving course of antibiotics contributes way less to GDP than a life-saving course of cancer treatment. Basically we’re measuring the opportunity cost of making those goods and services. GDP says nothing about the sustainability of said production, be that financially or environmentally, or how effective the economy is at achieving things we value like health or happiness. Economists use other measures for those things, when they are available.
That said, GDP per capita is generally fairly well correlated with measures such as life expectancy and life satisfaction so it often gets used as a proxy if there aren’t direct measures.
It depends what you mean by “healthy”
In modern western economies GDP per capita is likely the best correlation to standard of living. SOL being the goods and services that can be bought by the population. Presumably this would meet your definition of a healthy economy?
It would be less useful as a measure in controlled economies. There has to be some distributive mechanism to “lift all boats”.