The importance of GDP indicator for assessing the effectiveness of the Essay

The importance of GDP indicator for assessing the effectiveness of the economic policies - Essay Example This essay provides critical analysis of the usage of GDP indicator in the role of reliable criterion of estimation of economic policies of a government. It is argued, that the improvement of GDP per capita is useful for measuring the performance of the society. GDP is considered as an important indicator for determining the progress of the economy. The governments of the world regarded it as one of the statistical tool which can determine whether the economy is progressing or deteriorating. It is an economic index of the entire economic output of the country. It establishes relationship among many other things which includes the shipments of the manufacturers, construction spending, farmers’ harvest and retail sales. It is a figure that converts the national economy into a single data by surpassing the density. The conventional approach of GDP explains that more it grows, the better the country or the citizens of the country are performing. But it is creating a problem in its implementation in the recent years since the economist observed that it provides misleading and inaccurate gauge of prosperity. Increasing GDP is considered as an important objective of the economic policy of the nation but it cannot be considered as the ultimate objective because it has to consider various other indicators for determining the growth and development of the economy. There are various advantages or benefits provided by using GDP as an indicator in determining the health or performance of the nation.