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so let us make an in-depth study on the advantages and disadvantages of globalization. So the real GDP per capita of the country is $ 40,000 for the year 2018. Higher per capita GDP <==> on average, people eating better, living in better dwellings, healthier, … High inflation may be behind a high GDP rate; Country may have high productivity but not able to afford the goods, e.g. In 1980, when China and India in the gross domestic product (GDP) per capita more or less equal, China has enjoyed a strong advantage in manufacturing. Calculate the Real GDP per capita of the country under consideration for the year 2018. 18th June 2019. Is national happiness going to be a better way to measure economies than GDP, in 2020? Student videos. Sweden ISN'T Socialist! Real GDP Per Capita is the resulting value arrived at by dividing the entire economic output of the whole country by the total number of people and after adjusting any impact of the inflation prevailing in the country for that period. GDP is a well-respected, clear assessment of the wealth of a nation’s economy. Advantages and Disadvantages of Globalization. Also High GDP per capita might be accompanied by high levels of pollution and exploitation of the workforce, thus causing a decrease in living standards which is not reflected in GDP figures. GDP per capita is the gross domestic product of a country, as divided equally between each citizen (capita)Advantage - represents a country's economic productivity and the advancement of its industryAdvantage - easy to rank and measureDisadvantage - doesn't include the contributions of the informal economy (70% in African cities)Disadvantage - can hide inequalities within a nation (e.g… GDP per capita is often used as an indicator of welfare in an economy. Similarly, while GDP per capita is not a country’s measure of personal income, it can be used to make observations about it. While this approach has advantages, there are also many criticisms on GDP as an indicator of standard of living or welfare. Although the GDP per capita of a country may be very high, it may be the case that 10 percent of the country earn millions of times more than the other 90 percent of the country's inhabitants, who earn extremely low … 806 8067 22 It refers to the measurement of total economic output in a country during a specified period divided by the total number of population of the country during the same period and considers the inflation prevailing at that point of time which helps in measuring the actual level of increase in the goods and services during the period of time in the company. This means that there is 20 times as much money per person in the UK compared to in India 2. The main advantages of using GDP as a measure is that you can gauge the overall output of your domestic factories. GDP can be expressed in two terms, real GDP and nominal GDP. [Year 12 Enrichment Task] 21st May 2020. It is hard to determine if consumers are receiving quality goods that do not cause them more money to replace a low-good with a higher-quality good. Three Advantages of using GDP/ GNP/ GNI as an indicator of development 1. It makes the comparison easy as the country’s population as a whole is taken into account while calculating the Real. It's my assignment. Globalization gives us many advantages and disadvantages. In fact, "standard of living" and "per capita GDP" have come to be virtually synonymous. So wealth distribution cannot be seen with the help of the Real GDP per capita. GDP per capita is measured when GDP is divided by the number of people in the country. China makes a huge number of iPhones but the majority of people living their can’t afford them; Government could adjust figures to gain power; Production process could be immoral, high GDP could be down to trading drugs or guns For example, Gross Domestic Product (GDP) does not account for volunteer work, quality of goods, and GDP can be raised by a disaster. Change in per capita gdp is a pure measure of productivity because it controls for population size. », ~| Guess What? It does not take into consideration cost of living of the person of their country, does not tell that how the wealth is spread in the country, does not take into consideration the details of earnings of the illegal workers in the country as well as the people who are working voluntarily in the country and does not give any indication on the spending power of the people of the country. Advantages of GDP are many, with some of the more important ones being a way to define the business cycle, the ability to understand shifts in a country’s economy, and a measurement for competitiveness in a global environment. One method of calculation is to consider GDP at its purchasing power parity (PPP). It is a Good indicator for showing the provision of the services. Gross National Income figures are also closely correlated with social development – generally speaking the higher the GNI per capita, the … Disadvantages. Although GDP is easy to compare, it shows which countries are rich and poor, not which countries need specific funding from the UN. CFA® And Chartered Financial Analyst® Are Registered Trademarks Owned By CFA Institute.Return to top, IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials, * Please provide your correct email id. … When country GDP per capita is calculated, it is done by dividing the nominal or real GDP by the country’s population. Answer and Explanation: Become a Study.com member to unlock this answer! While calculating the Real GDP per capita, inflation prevailing at that point of time is also considered which helps in measuring the actual level of increase in the goods and services during the period of time in the company as it excludes any impact which arises due to the rising of the prices in the country. Increases inequality: Sometimes spending more on gross national investments (GNI) per capita can hide the widespread inequality within the country. Certain limitations of GDP as a result of globalization measurement tool therefore GDP! 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