Wednesday, March 2, 2016

What are the components of the GNP in regard to Third World countries' economic production and distribution of income measured per capita (PCI).

You are trying to relate measurements of economic activity
that are not directly correlated. Gross national product (GNP) is a measurement of the
total output of finished products from a country. The critical term is "finished"
products - Third World countries may have and export large amounts of raw materials but
do not have the resources to manufacture goods from those
materials.


Per capita income (PCI) divides the amount of
income realized in a country by the population of that country. PCI gives an average
figure which may provide a rough means of comparison between countries, but doesn't
recognize variables such as income from sources other than sales of goods. Comparing PCI
levels also doesn't recognize the differences in the cost of living between
countries.


The percentage of a country's population
involved in producing finished goods could impact the PCI, depending on wages paid for
the labor, and the production of those goods would be reflected in the country's GNP.
There are too many variables, however, to draw any reliable relationships between
components.

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