Transcript Measuring Wealth

Measuring Wealth
Socials 9
Measuring the Wealth of Countries:
GNP
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Organizations such as the World Bank use
an annual calculation called Gross National
Product (GNP) to measure a country’s
wealth
The GNP is the sum total of the country’s
Gross Domestic Product (GDP), or income
earned from all domestic goods and
services, plus the net income earned on
foreign investments
GNP= GDP+ net income on foreign
investments
Measuring the Wealth of Countries:
GNP continued..
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Usually, the GNP for a country is divided by the country’s
total population to provide a figure called GNP per capita,
or for each person
GNP per capita= GNP/country’s total population
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Some economists use per capita GNP to measure a
country’s standard of living, or the average degree of
material comfort that a country’s people enjoy
Per Capita GNP US$765 are LLDC’s
Per Capita GNP US$766-US$9385 are LDC’s
Per Capita GNP US$9386 are MDC’s
Measuring the Health of Countries:
The Human Development Index
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Some economists state that measuring a
country’s standard of living by per Capita
GNP solely is misleading
This is because the method ignores
pockets of terrible poverty that exist in
some MDC’s and the pockets of wealth
that exist in many LDC’s
Second, money should not be the only
criterion of a nation’s well being; social
factors such as education levels, life
expectancy, gender equality, and freedom
from persecution apply
Measuring the Health of Countries: The
Human Development Index continued…
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There have been a number of attempts to devise a more
complete system of measuring a country’s standard of
living
Today, the most common and authoritative measurement of
living standards is the United Nations Human Development
Index
Each year, the UN releases its Human Development Report,
which includes a list that ranks every country in the world
according to three basic factors:
1) Longevity (life expectancy)
2) Knowledge (literacy rates and educational attainment)
3) Income (GDP per capita)