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Gnp, Gdp, Hdi

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Submitted By KASMAN94
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Firstly define the three key measures of development which are GDP, GNP, and HDI?
Then I will compare and contrast the two economic approaches (GDP/GNP) and then compare and contrast these two to the human development approach (HDI) DEFINATIONS:
GDP- The monitory value of goods and services produced by residents of a country (both citizens & non-citizens) in a given period of time usually a year. GDP can either be Real or Nominal GDP.
GNP- This is the monitory value of goods and services produced by citizens of a country in a given period of time usually a year. GNP can either be Real or nominal.
HDI-Since 1990 the UNDP has been publishing an annual report called the Human development report & the centre core of this report is the human development report (HDI). The HDI ranks countries according to their level of human development.
It is for this reason therefore that the HDI focuses on three main variables & these include. Per capital income, life expectancy & educational attainment.

SIMILARITIES 1. Both represent an attempt to measure the total economic output of a nation during a given period (usually one year) in sense they both measure development from an economic perspective 2. It measures both the size and direction of economic activity (growth, stagnation or contraction) – expansions and recessions are based on changes in GDP 3. Shows the relative strength of the nation’s economy compared to that of other nations; provides a base from which to measure economic changes. 4. GDP and GNP is often used to measure economic strength from one country to another. 5. GDP/GNP can either be real or nominal GDP meaning when calculating real GDP/GNP constant market prices are used and when calculation nominal GDP/GNP prevailing market prices are used and thee prevailing market prices usually are affected by inflation & usually real GNP/GDP is used cause it gives a true value of a countries economy compared to nominal which tends to exaggerate the size of an economy. 6. The per capita income of GDP/GNP of country is calculated by dividing a countries population in the GDP/GNP value


Production of goods and services
With GDP it is the production of goods and services by the residents of a country -meaning in its measure includes goods and services produced by both citizens & non-citizens of a that country
With GNP it measures goods and services produced only by citizens of a country-and some of these may be living in foreign countries but it still includes them. How GDP/GNP IS CALUCULATED

. The key difference can be seen in the names

GDP calculated by measuring all income earned within a country or the total value of final goods and services produced within a given country's borders it can also be said it measures all of the sales of final goods and services domestically, by evaluating the value of goods and services produced in a given period.

GNP is calculated by GDP of a country plus income from foreign sources, less income paid to foreign citizens and entities, GNP includes the value of all goods and services produced by nationals whether in the country or not.
GNP = GDP + Net property income from abroad. This net income from abroad includes, dividends, interest and profit
If a Japanese multinational produces cars in Zambia. This production will be counted towards Zambia’s GDP. However, if the Japanese firm sends US$500m in profits back to shareholders in Japan. Then this outflow of profit is subtracted from Zambia’s GNP. Zambian nationals don’t benefit from this profit.
If a Zambian firms makes profit from insurance companies located abroad, then if this profit is sent back to Zambia nationals, then this net income from overseas assets will be added to GNP.
Of the two economic measures of development GNP is widely used than GDP because it show the actual resources available in a country.


The major similarities of the HDI to the GNP/GDP is that it also measures development from an economic approaches.
This is seen from one variable of the HDI, which is per capita income or output-per capita- income here represents the amount of resources that are available to an individual in a society-income therefore is used as a measure of human well-being because it allows human beings to peruse social and economic freedom.
Hence just like GDP/GNP, HDI recognises the fact that with an increase income levels there is increased human freedom- freedom to purchase goods and services leading to improved well-being and one being able to express their capabilities in what they value doing thus leading to development. Differences
Unlike GDP/GNP not only does the HDI measure development from an economic approach but also from a social aspect and this is seen from the other two variables of the HDI which are education & life expectancy. And it’s from this that the difference comes about.
From this it can be said that unlike GNP/GNP, HDI takes not of the fact that even with some level of economic wealth, difference in the life expectancy and basic education tend to reflect significant variations in the quality of human life.
With GDP/GNP income is the only thing that gives it relevance but the income component of HDI unlike GDP has specific and constrained role 1. It is not the only influence on HDI 2. This income can enhance the quality of the other two variables which are education & life expectancy.
So HDI is aimed at broadening the limited view of GNP/GDP it emphases the fact that success of a society including its economy is not only in terms of national wealth or GNP but rather in terms of freedom of and the capabilities that people enjoy, these include, access to education, healthcare, equality, housing etc
The human development index has emerged as a major alternative of measuring development because it involves both the economic and non-economic measures of development and for this reason it is widely used as a measure of development…...

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