Identify a limitation of using gross domestic product (GDP) as a measure for development.
It overemphasizes health indictors such as life expectancy.
It doesn’t account for the value of services in the economy.
It doesn’t account for income distribution.
It overemphasizes environmental sustainability.
One limitation of using GDP as a measure for development is that it overemphasizes health indicators such as life expectancy. GDP focuses on economic output and does not adequately capture the overall well-being of a population. While a high GDP may indicate economic growth, it does not necessarily mean that the population has access to quality healthcare, education, or other essential services. Thus, GDP alone lacks a comprehensive assessment of development in terms of human development and quality of life.
Another limitation is that GDP does not account for the value of services in the economy. GDP primarily measures the value of goods produced within a country's borders, but it often neglects services such as healthcare, education, and social work. As services play an increasingly significant role in modern economies, relying solely on GDP fails to capture the full economic contribution of the service sector.
Furthermore, GDP does not account for income distribution. Even if a country has a high GDP, the benefits of that economic growth may not be equally distributed among the population. GDP does not reflect the extent of income inequality within a country, which is an essential factor in measuring development. A high GDP can mask significant disparities in wealth and income, leading to misleading conclusions about development and the well-being of a society.
Lastly, GDP overemphasizes environmental sustainability. As GDP focuses on economic growth, it tends to incentivize production and consumption without considering the environmental costs. Policies that prioritize GDP growth may lead to the depletion of natural resources, increased pollution, and environmental degradation. For a more accurate measure of development, sustainability indicators that account for the long-term well-being of both the economy and the environment should be considered.