Measuring

Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth

Measuring Economic Growth and Measuring GDP: What Is

Left Out?
Exchange-rate Conversion
Problems
Development Economic Growth
Around The
World: A Brief
Overview

Vo Tat Thang 1 Economic Growth,

1970-2010

What Do We
Mean By
1 University of Economics Ho Chi Minh City Economic
Development?
Measuring Economic
Development
August 10, 2021 What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Outline Economic Growth
and Development

Vo Tat Thang

Measuring Economic Growth Measuring

Economic Growth
Measuring GDP: What Is Left Out? Measuring GDP: What Is
Left Out?
Exchange-rate Conversion Problems Exchange-rate Conversion
Problems

Economic Growth
Economic Growth Around The World: A Brief Overview Around The
World: A Brief
Economic Growth, 1970-2010 Overview
Economic Growth,
1970-2010

What Do We Mean By Economic Development? What Do We

Mean By
Measuring Economic Development Economic
Development?
What Can We Learn From The Human Development Measuring Economic
Development

Index? What Can We Learn From

The Human Development
Index?
Sustainable Development Goals Sustainable Development
Goals

Is Economic
Is Economic Growth Desirable? Growth Desirable?
 Measuring
Measuring Economic Growth Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Two basic measures of national income are Left Out?
Exchange-rate Conversion

I Gross national product (GNP) is the sum of the Problems

Economic Growth
value of finished goods and services produced by a Around The
World: A Brief
society during a given year. Overview
Economic Growth,
I Gross domestic product (GDP) is similar to GNP, 1970-2010

What Do We
except that it counts all output produced within the Mean By
Economic
borders of a country, including output produced by Development?
resident foreigners, but excludes the value of production Measuring Economic
Development
What Can We Learn From
by citizens living abroad. The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Measuring Economic Growth Economic Growth
and Development

Vo Tat Thang

Measuring
I GNP or GDP divided by total population provides a Economic Growth
measure of per capita income. Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
I Unless otherwise indicated, when discussing trends over Problems

Economic Growth
time, real GDP and real GDP per capita—that is, per Around The
World: A Brief
capita gross domestic product adjusted for domestic Overview
price inflation. Economic Growth,
1970-2010

I The contribution of a sector or component of GDP, is What Do We

Mean By
measured by the value added by that sector. Economic
Development?
I Value added refers to the incremental gain to the price Measuring Economic
Development

of a product at a particular stage of production What Can We Learn From

The Human Development
Index?

I GDP is a measure of both total income and total Sustainable Development

Goals

output. Is Economic
Growth Desirable?
 Measuring
Outline Economic Growth
and Development

Vo Tat Thang

Measuring Economic Growth Measuring

Economic Growth
Measuring GDP: What Is Left Out? Measuring GDP: What Is
Left Out?
Exchange-rate Conversion Problems Exchange-rate Conversion
Problems

Economic Growth
Economic Growth Around The World: A Brief Overview Around The
World: A Brief
Economic Growth, 1970-2010 Overview
Economic Growth,
1970-2010

What Do We Mean By Economic Development? What Do We

Mean By
Measuring Economic Development Economic
Development?
What Can We Learn From The Human Development Measuring Economic
Development

Index? What Can We Learn From

The Human Development
Index?
Sustainable Development Goals Sustainable Development
Goals

Is Economic
Is Economic Growth Desirable? Growth Desirable?
 Measuring
Measuring GDP: What Is Left Out? Economic Growth
and Development

Vo Tat Thang

I One way to calculate GDP is to add up the value of all Measuring

Economic Growth
the goods and services produced within a country and Measuring GDP: What Is
Left Out?
then sold on the market. Exchange-rate Conversion
Problems

I In most developing countries, a large number of Economic Growth

Around The
activities do not enter the market. World: A Brief
Overview
I Adding up the total value of goods and services that are Economic Growth,
1970-2010

traded in markets requires using their market prices. What Do We

Mean By
But accurate price information may not be available or Economic
Development?
may not be representative of market prices at the Measuring Economic

national level. Development

What Can We Learn From
The Human Development
I GDP may be a measure of the goods and services Index?
Sustainable Development
Goals
produced by an economy, but does not account for the
Is Economic
“bads” society produces. Growth Desirable?
 Measuring
Outline Economic Growth
and Development

Vo Tat Thang

Measuring Economic Growth Measuring

Economic Growth
Measuring GDP: What Is Left Out? Measuring GDP: What Is
Left Out?
Exchange-rate Conversion Problems Exchange-rate Conversion
Problems

Economic Growth
Economic Growth Around The World: A Brief Overview Around The
World: A Brief
Economic Growth, 1970-2010 Overview
Economic Growth,
1970-2010

What Do We Mean By Economic Development? What Do We

Mean By
Measuring Economic Development Economic
Development?
What Can We Learn From The Human Development Measuring Economic
Development

Index? What Can We Learn From

The Human Development
Index?
Sustainable Development Goals Sustainable Development
Goals

Is Economic
Is Economic Growth Desirable? Growth Desirable?
 Measuring
Exchange-rate Conversion Problems Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems

Economic Growth
Around The
World: A Brief
Overview
Economic Growth,
1970-2010

What Do We
Mean By
Economic
Development?
Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Exchange-rate Conversion Problems Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
I For cross-country comparisons, GDP per capita is best Problems

Economic Growth
measured in terms of purchasing power parity (PPP). Around The
World: A Brief
I The International Comparison Program (ICP), Overview
Economic Growth,
tackles this difficult task by deriving a set of 1970-2010

international prices in a common currency. What Do We

Mean By
I PPP estimates are superior to comparisons based solely Economic
Development?
on market exchange rates. Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Exchange-rate Conversion Problems Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems

Economic Growth
Around The
World: A Brief
Overview
Economic Growth,
1970-2010

What Do We
Mean By
Economic
Development?
Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Exchange-rate Conversion Problems Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
I Market exchange rates tend to underestimate the GDP Measuring GDP: What Is
Left Out?

levels of poorer nations. Exchange-rate Conversion

Problems

I This is because market exchange rates are based on Economic Growth

Around The
World: A Brief
traded goods and capital flows and fail to account for Overview
the much lower prices of non-traded goods in poor Economic Growth,
1970-2010

nations. What Do We
Mean By
I The PPP estimates obtained from the UN International Economic
Development?
Comparison Program correct this problem by expressing Measuring Economic
Development

every nation’s GDP per capita in terms of a common What Can We Learn From
The Human Development

set of international prices. Index?

Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Economic Growth Around The World: A Brief Economic Growth
and Development
Overview Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems
I According to Maddison’s calculations, average world
Economic Growth
income in 1000 was virtually the same as it had been Around The
World: A Brief
1,000 years earlier. Overview
Economic Growth,

I The next 820 years (from 1000 to 1820) were barely 1970-2010

What Do We
any better, with world income per capita growing, on Mean By
Economic
average, by just 0.05 percent per year. Development?
Measuring Economic
I During those 820 years, world GDP grew by only Development
What Can We Learn From

slightly more than the growth in world population. The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Levels of GDP per Capita by Region: 1820–2008 Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems

Economic Growth
Around The
World: A Brief
Overview
Economic Growth,
1970-2010

What Do We
Mean By
Economic
Development?
Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Economic Growth Around The World: A Brief Economic Growth
and Development
Overview Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
I Maddison’s research suggests that rapid economic Problems

Economic Growth
growth as we know it really began around 1820, with Around The
the escalation of growth rates in western Europe and its World: A Brief
Overview
offshoots. Economic Growth,
1970-2010

I Rapid growth rates began to characterize other regions, What Do We

Mean By
especially in Asia, only in the decades after 1950. Economic
Development?
I As a result of these divergent patterns of economic Measuring Economic
Development

growth, there is much greater disparity in world incomes What Can We Learn From
The Human Development
Index?
today than in the past. Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Outline Economic Growth
and Development

Vo Tat Thang

Measuring Economic Growth Measuring

Economic Growth
Measuring GDP: What Is Left Out? Measuring GDP: What Is
Left Out?
Exchange-rate Conversion Problems Exchange-rate Conversion
Problems

Economic Growth
Economic Growth Around The World: A Brief Overview Around The
World: A Brief
Economic Growth, 1970-2010 Overview
Economic Growth,
1970-2010

What Do We Mean By Economic Development? What Do We

Mean By
Measuring Economic Development Economic
Development?
What Can We Learn From The Human Development Measuring Economic
Development

Index? What Can We Learn From

The Human Development
Index?
Sustainable Development Goals Sustainable Development
Goals

Is Economic
Is Economic Growth Desirable? Growth Desirable?
 Measuring
Economic Growth, 1970-2010 Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems

Economic Growth
Around The
World: A Brief
Overview
Economic Growth,
1970-2010

What Do We
Mean By
Economic
Development?
Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
What Do We Mean By Economic Development? Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems

I Economic growth is a necessary but not sufficient Economic Growth

Around The
condition for improving the living standards of large World: A Brief
Overview
numbers of people in countries with low levels of GDP Economic Growth,

per capita. 1970-2010

What Do We
I Economic development is a normative concept, must Mean By
Economic
include more than income levels. Development?
Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
What Do We Mean By Economic Development? Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems

I Economic growth is a necessary but not sufficient Economic Growth

Around The
condition for improving the living standards of large World: A Brief
Overview
numbers of people in countries with low levels of GDP Economic Growth,

per capita. 1970-2010

What Do We
I Economic development is a normative concept, must Mean By
Economic
include more than income levels. Development?
Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
What Do We Mean By Economic Development? Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?

According to Sen, four broad factors that beyond mere Exchange-rate Conversion
Problems

poverty, affecting how well income can be converted into Economic Growth
Around The
“the capability to live a minimally acceptable life” World: A Brief
Overview
I Personal heterogeneities Economic Growth,
1970-2010

I Environmental diversities What Do We

Mean By
I Variations in social climate Economic
Development?
I Differences in relative deprivation Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Outline Economic Growth
and Development

Vo Tat Thang

Measuring Economic Growth Measuring

Economic Growth
Measuring GDP: What Is Left Out? Measuring GDP: What Is
Left Out?
Exchange-rate Conversion Problems Exchange-rate Conversion
Problems

Economic Growth
Economic Growth Around The World: A Brief Overview Around The
World: A Brief
Economic Growth, 1970-2010 Overview
Economic Growth,
1970-2010

What Do We Mean By Economic Development? What Do We

Mean By
Measuring Economic Development Economic
Development?
What Can We Learn From The Human Development Measuring Economic
Development

Index? What Can We Learn From

The Human Development
Index?
Sustainable Development Goals Sustainable Development
Goals

Is Economic
Is Economic Growth Desirable? Growth Desirable?
 Measuring
Measuring Economic Development Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?

I The UNDP attempted to quantify what it saw as the Exchange-rate Conversion

Problems

essential determinants of human development: to live a Economic Growth

Around The
long and healthy life, acquire knowledge, and have World: A Brief
Overview
access to the resources needed for a decent standard of Economic Growth,
1970-2010
living.
What Do We
I The human development index (HDI), a composite Mean By
Economic
measure reflecting the goals of leading a long life, Development?
Measuring Economic

acquiring knowledge, and achieving material well-being. Development

What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Outline Economic Growth
and Development

Vo Tat Thang

Measuring Economic Growth Measuring

Economic Growth
Measuring GDP: What Is Left Out? Measuring GDP: What Is
Left Out?
Exchange-rate Conversion Problems Exchange-rate Conversion
Problems

Economic Growth
Economic Growth Around The World: A Brief Overview Around The
World: A Brief
Economic Growth, 1970-2010 Overview
Economic Growth,
1970-2010

What Do We Mean By Economic Development? What Do We

Mean By
Measuring Economic Development Economic
Development?
What Can We Learn From The Human Development Measuring Economic
Development

Index? What Can We Learn From

The Human Development
Index?
Sustainable Development Goals Sustainable Development
Goals

Is Economic
Is Economic Growth Desirable? Growth Desirable?
 Measuring
What Can We Learn From The Human Economic Growth
and Development
Development Index? Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems

Economic Growth
Around The
World: A Brief
Overview
Economic Growth,
1970-2010

What Do We
Mean By
Economic
Development?
Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Outline Economic Growth
and Development

Vo Tat Thang

Measuring Economic Growth Measuring

Economic Growth
Measuring GDP: What Is Left Out? Measuring GDP: What Is
Left Out?
Exchange-rate Conversion Problems Exchange-rate Conversion
Problems

Economic Growth
Economic Growth Around The World: A Brief Overview Around The
World: A Brief
Economic Growth, 1970-2010 Overview
Economic Growth,
1970-2010

What Do We Mean By Economic Development? What Do We

Mean By
Measuring Economic Development Economic
Development?
What Can We Learn From The Human Development Measuring Economic
Development

Index? What Can We Learn From

The Human Development
Index?
Sustainable Development Goals Sustainable Development
Goals

Is Economic
Is Economic Growth Desirable? Growth Desirable?
 Measuring
Sustainable Development Goals Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems

Economic Growth
Around The
World: A Brief
Overview
Economic Growth,
1970-2010

What Do We
Mean By
Economic
Development?
Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Life Satisfaction as a Measure of Well-Being Economic Growth
and Development
(2008) Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is
Left Out?
Exchange-rate Conversion
Problems

Economic Growth
Around The
World: A Brief
Overview
Economic Growth,
1970-2010

What Do We
Mean By
Economic
Development?
Measuring Economic
Development
What Can We Learn From
The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?
 Measuring
Is Economic Growth Desirable? Economic Growth
and Development

Vo Tat Thang

Measuring
Economic Growth
Measuring GDP: What Is

I Citizens of rich nations can engage in a debate over Left Out?

Exchange-rate Conversion
Problems
whether further economic growth will advance their
Economic Growth
well-being, but this is not a meaningful debate for poor Around The
World: A Brief
nations. Overview
Economic Growth,
I Even if rising per capita incomes are not perfectly 1970-2010

What Do We
correlated with perceptions of happiness, economic Mean By
Economic
growth and development are essential for poor nations Development?
as a means of increasing choices and advancing human Measuring Economic
Development
What Can We Learn From
capabilities and freedoms. The Human Development
Index?
Sustainable Development
Goals

Is Economic
Growth Desirable?