Production, Income, and Economic Growth

The most commonly used way in which economists and the general public evaluate economic outcomes is with accounting measures of income and production, that is, their levels and their growth rate. The levels of production and income per person – using Gross Domestic Product (GDP), Net Domestic Product (NDP), Gross National Product (GNP), and National Income (NI) – are some of the most widely available economic statistics for any country.1 These figures typically measure the market value of all final goods and services produced in a country divided by total population. The statistic is used to rank countries in terms of how well they are doing in comparison to other countries. Countries which have high levels of production and income per capita are usually described as rich countries or developed countries while those with low levels of income per capita are called poor or less-developed or underdeveloped countries or, to put a positive spin on it, developing countries. Countries which experience high rates of increase in per capita income and product are praised as doing well, while low-growth countries are not.2 Policies that supposedly result in high rates of growth of per capita income are often praised. Income and production are also used to examine how well individual people are doing. For instance, a person is usually called poor if his or her income falls below an amount or level called the poverty line, which is determined – often by the government – to be necessary to purchase some socially acceptable minimum amount of goods and services. Public programs are often called successful if they reduce the number of people who are considered poor according to this definition, or the percentage of total population that fall below the poverty line.