Economic activity RWE

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Last updated 9:56 AM on 5/19/26
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13 Terms

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example for effective comparison over time (of GDP/GNI for economic well-being)

South Korea 1960s to present

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GDP South Korea 1960s to present

  • 1960s comparable to poor nations in Sub-Saharan Africa

  • today is high-income and highly developed (“miracle on the Han river”)

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why effective South Korea 1960s to present

  • infrastructure and health

    • improvement in sanitation

    • surge in life expectancy (55 → 83 years)

  • education

    • low literacy rates → highly educated

  • purchasing power

    • modern housing, electronics, healthcare

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South Korea life expectancy surge

55 years to 83 years

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ineffective use of GDP/GNI for economic well-being example

US 1980s to present

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US 1980s to present GDP

real GDP growth did not reflect stagnant median wages, rising inequality

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why is GDP ineffective for economic well-being in the US

  • wealth concentration

    • GDP growth wealth went to top 10% of earners

  • hidden costs

    • costs of housing, higher education, healthcare outpaced median wage growth

  • externalities

    • increased defence/security included in GDP growth but do not necessarily increase quality of life

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example for effective use of GDP/GNI for comparison between countries

Germany vs India (using GNI per capita at PPP)

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Germany vs India - Germany

much higher GDP per capita translates to observable well-being (healthcare, social security, infrastructure, environment, high disposable income)

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Germany vs India - India

high total GDP but per capita is much lower

  • citizens still lack access to sanitation, electricity, healthcare

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example for ineffective use of GNI/GDP for comparison between countries

Ireland vs. UK

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Ireland GDP vs UK

distorted due to multinational corporate tax strategies (Leprechaun economics) → seems significantly wealthier than UK

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why is Ireland GDP not accurate

  • inflated by foreign multinational corporations (Apple, Google) due to favorable corporate tax rates in Ireland

  • GDP figures do not go to Irish citizens, only foreign shareholders

    • can even drive up housing and living costs, decreasing well-being