GDP - Gross Domestic Product and Alternatives

When one speaks of GDP, they are referring to the total value of all final goods and services that are produced in the economy. This is measured within a given year. This is Gross Domestic Product. In other words, GDP is a measure of a country's aggregate demand. There are three ways to measure Gross Domestic Product. The first way is by taking a survey of firms and using that to figure out the value of final goods and services. The second and most focused on way in this section is by adding up aggregate spending on domestically produced final goods and services. Lastly, one can measure GDP by adding up the total factor income earned by households from firms in the economy. Because GDP measures the size and performance of the economy, it is known that if an economy has a higher GDP, it is considered to be booming, or in good shape. If there is a low GDP, the economy is considered to be poor.

When measuring GDP as spending on domestically produced final goods or services, spenders can be divided up into four different categories including consumer spending, investment spending, government spending, and net exports. Consumer spending is considered to be households while investment spending is the spending used in production. An example of government spending is the money spent on building highways and net exports are the country's exports minus the imports. GDP is actually equal to aggregate spending on domestically produced goods and services by final buyers. The equations for GDP would be the sum of consumer, investment, and government spending all minus the country's net exports.

In 1972, Bhutan's former king attempted to modernize and improve the overall quality of life for his country. As a result, GNH, Gross National Happiness, was created. Gross National Happiness is a measure of happiness and well-being. It was developed for the purposes of defining a quality of life by incorporating spiritual and material development simultaneously. There are four pillars of GNH which include; promotion of sustainable development, establishment of good governance, conservation of the natural environment, and preservation and promotion of sustainable development. Also, there are seven ways to measure the development of the country. These measures include; economic wellness, physical wellness, workplace wellness, political wellness, environmental wellness, mental wellness, and social wellness.

As mentioned before GNH is the measure of the happiness and well-being of a country using measures of wellness with hopes to preserve and promote the standard of living materially and spiritually. There are other ways to measure the growth of an economy such as GPI, which is Genuine Progress Indictor, as well as HDI, which is Human Development Index. These three measures are similar because they all measure economic growth in some way and are used to develop a better economy. They all incorporate the actual people within the country and their well being whether it be based on happiness or education level. Although there are some similarities, there are also differences between the three indicators. For example, GNH focuses on sustaining wellness throughout the country by measuring well-being and the quality of life. This also incorporates certain personal spiritual elements. GPI measures whether or not a country's growth is actually benefiting or making things worse off for the economy. It separates good growth from the bad. HDI is more of a ranking system that shows whether or not a country is the process of developing, developed or under-developed.

With all of this being said, I believe that having several different ways to measure a country's economic growth is actually a good thing. The idea of measuring a nation's state of well-being is a very good idea, and having more than one way to do so would seem even more efficient. With the four ways discussed, it seems to be that they are different angles to the same general purpose. They support one cause, which is to better the well-being of an economy by having a way to measure its current state and being able to make changes accordingly.