Is GDP a good measure of economic activity and well being? (ePub)

Essay from the year 2012 in the subject Economics - Macro-economics, general, grade: 2, Heriot-Watt University Edinburgh (School of Language and Management), language: English, abstract: The business world offers numerous examples of corporations benefiting from competition, as they have to increase their productivity, economise their cost, and need to strive for innovations. It is generally agreed, that from a microeconomics' view firms seek to win this competition, which can be determined by parameters such as revenue, profit, or customer satisfaction. Ancillary, competition does not only prevail between companies on a microeconomics level but also among country's economies on a macroeconomic level. This competition received a lot of attention in recent years, which is also biased by the shift towards a more integrated and interdependent world economy that can be referred to as the term globalisation (Hill, 2011, p.24). However, it needs to be questioned, how to contrast the performance of one economy with the performance of another. How can we assess national income or output? The measure that is widely accepted and used is called gross domestic product (GDP) (Sloman and Wride, 2009, p.393). The purpose of this paper is to briefly outline what exactly incorporates in GDP and mainly to examine whether GDP is a good measure of economic activity and well being.