Gr

ossv
sNetI
nvest
ment
:Depr
eci
ati
on

Recallt hatGROSSI nvest

mentwasi denti
fi
edasoneoft hepr i
ncipalcomponent sof
GDPbyexpendi tur eshar es.Iti
sdef i
nedast het ot
aladdit
iont ot hephy si
calcapi tal
stock.Neti nvestment ,ont heotherhandi sthedepr eci
ationdeduct edfrom gross
i
nv estment .Depreci ationist
hemeasur eofphy sicalcapi
talstockt hatresul
tfrom wear
and t earandobsol escence( Bautista,et.al,2013) .From t hosef actorstakenint o
consider ati
on,neti nv est
mentbecomesamor eaccur at
emeasur eofchange.Howev er,
wehav et olookathow accur at
elydepr eciati
oncanbemeasur ed.Depreciat
ioni s
neithercl ear
lyvisiblenoreasi l
ymeasur ed.Thati swhyev ent houghneti nvestmenti s
i
deal l
yamor ereliablecomponent ,
gr ossinvestmentismor ecommonl yusedthanthis.

Concept
ual
i
zingEconomi
cWel
far
e:GDPperCapi
ta

PerCapi t
al i
teral
lymeansf oreachper sonori nr el
ationtopeopl etakenindivi
dual
ly.
From thatdef ini
ti
on, GDPperCapi t
acanbedef inedameasur eofacount ryseconomic
outputthataccount sf orit
snumberofpeopl e.I tiscomput edasRealGDPdi v
idedby
populati
on.Whydo we need t olook atperCapi taFi
rstofal l
,GDP i s a general
assessmentofanat i
onseconomi cactivi
ty.Itt her
eforehasi tsli
mi t
ati
onsi ntel
li
ng
whetheracount ryi spr ogressi
veornot .Looki ng atGDP perCapi taanswer sthe
questi
on:Whyar ethewor l
dslargesteconomi esnott herichestcount
ries?I
fwewantt o
knowanat i
onsst andar doflivi
ng,wehav etol ookatt hewel far
eofeachci ti
zenofthe
country.Fur t
hermor e,GDPperCapi t
aal l
owsust ocompar etheprosperit
yofcountri
es
withdifferentpopulationsizes.Letstakealookatt hi
sexampl e:

I
fwebaseont heGDPofeachcount ry,youwi l
lseethatthePhil
ippi
nesandSingapor e
hasalmostt hesameGDP.Butconsi deri
ngt hesizeofeachcount r
yspopulation,y
ou
wil
lseewhySi ngaporeisar i
chercount r
ythant hePhili
ppinesbecauseofGDPper
Capit
a.Thatmakesi tagoodmeasur ementofacount r
y'
sstandardoflivi
ng.I
ttellsy
ou
howpr osperousacountr
yfeel
stoeachofi tscit
izens.
Sowhi chisabet t
ermeasurement?Ifyourelookingfortheprosperi
tyofanation,GDP
perCapitaisbett
er.I
fyour
elookingf
ort helar
gesteconomy ,GDPisbetter

OtherMeasuresofIncome
NetDomest i
cPr oductandNetNat i
onalPr oduct(NNP)NDPaccount sf orcapi
talthat
hasbeen consumed ov erthe y earint he f orm ofhousing,vehi
cle,ormachi nery
deter
ior
ati
on.The depr eci
ation account ed f or i
s oft
en r ef
err
ed to as " capit
al
consumptional
lowance"andr epresentstheamountofcapi t
althatwouldbeneededt o
repl
acethosedepreciat
edasset s(Kenton,W. ,2019).
Netnat i
onalproduct(NNP)i sgrossnat i
onalpr oduct(GNP),thetotalvalueof
fi
nished goodsand ser vi
cespr oduced byacount ry'
sciti
zensov erseasand
domest i
cal
ly,mi nus depr
eciat
ion.Furt
hermor e,t he netnati
onalpr oducthas
featur
edpr ominentl
yasameasur ei nenv ironmentaleconomicssuchaswi thi
n
model saccounti
ngf orthedepleti
onofnat uralandenv i
ronmentalresourcesor
asani ndi
catorofsustai
nabil
i
ty.(Hartwick,J.M.,1990)

Nat
ional
income

NationalIncomei sal soknownasNat ionalIncomeatf actorcostwhi chmeanst otal

i
ncome ear ned by r esources fort heircont r
ibuti
on ofl and,l abour,capit
aland
organisati
onal abil
i
ty.Hence, thesum oft heincomer eceivedbyf actorsofproducti
onin
theform ofrent ,wages, i
nterestandprofiti
scalledNat i
onalIncome.
PersonalincomePer sonalIncomei sthet ot
almoneyi ncomer eceivedbyi ndi
vidual
sand
householdsofacount ryfr
om al l
possibl
esour cesbeforedi r
ectt axes.
Disposableper sonal i
ncomeTot alincomet hathouseholdsanduni ncorporat
edbusiness
enterpri
sescanusef oreit
herconsumpt ionorsav ing.
GenuinePr ogressIndi cat
or

GPIisamet ricthathasbeensuggest edtor epl

ace,orsuppl ement,grossdomest i
c
product
(Kubi szewski,I.
,et.al
,2013).TheGPIi sdesignedt otakefull
eraccountofthe
well-
bei
ngofanat ion,onlyapartofwhichper t
ainstot hesizeofthenation'
seconomy ,
byincorporatingenv i
ronmentalandsocialf
actorswhi charenotmeasur edbyGDP.For
i
nstance,somemodel sofGPIdecreaseinvaluewhent hepovert
yrat
eincreases(
Benzel,
T.andTur k,J.,2011).