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Student name: Nguyễn Minh Trang Student ID number: 31221020389

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Unit name: Academic English Unit number:

Tutorial/Lecture: Class day and time:
Lecturer or Tutor name: Mr. John Bayarong – Ms. Gabriel Adderley
ASSIGNMENT DETAILS

Title: Individual Essay Draft

Length: Due date: Date submitted:

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signed.
Topic: The GDP growth and rising incomes in Asia will bring prosperity to the region. To what
extent do you agree with this statement?

1. Introduction
This essay will show that the expansion in GDP and growing salary in Asia are not adequate
measures of wealth in this region. A number of reasons and evidence will be presented to support
this argument. Firstly, a growth in GDP does not always come with an improvement in standard
of living – the key aspect of prosperity. Secondly, since the informal economy and household
production, which GDP excludes, is still predominant in Asia, the extension of GDP abandons
the contribution of this aspect to the economy; therefore, it fails to measure the total well-being
of the economy. Thirdly, the rise of income resulting from GDP rise can lead to income
inequality, as only those who generated the income can benefit, and others still suffer from
poverty. There is a counter-argument that GDP measures the total amount of final goods and
services produced; therefore, if GDP increases, it also means that the economy is growing in
welfare and living standard. A response to this is that even though GDP measures the total
expenditure of a country, it fails to measure health, education or the quality of the environment
and other factors of economic well-being.
 
2. Background and definition
(1)  Gross Domestic Product (GDP) is the total value of all final goods and services (or salary)
produced in a country within a year (Drudy, 2009).
(2)  According to the Prosperity Index by the Legatum Institute of Prosperity, the economic well-
being or prosperity is the composition of economic wealth and standard of living. (Bate,
2009).
(3)  Asia and Pacific’s economy is expected to grow by 4.0 percent in 2022, and 4.3 percent in
2023, after a powerful bounce to 6.5 percent in 2021 (IMF, 2022).  
 
3. First argument
-   GDP is now not the optimum measurement of prosperity in today’s economy, because an
increase in GDP does not necessarily mean that the country is experiencing prosperity.
 
+ High GDP is not equivalent to high living standard – the key to prosperity. According
to the World Bank data, in 2021, India’s GDP account for $3.17 trillion, while
Singapore’s GDP in 2021 is only $396.99 billion, much smaller. However, the standards
of living in India are much poorer compared to Singapore. The housing development in
India has left the country with an increasing number of urban poor, specifically those who
live in shanties (Goli & Arokiasamy, 2011). Healthcare is also an issue within the Indian
society. Only less than 20 percent of Indians are protected by a health insurance, 86 and
82 percent of the rural and urban population are not insured, respectively (Joseph, 2019).
While Singapore ranks sixth in the world in terms of healthcare result, above many
developed countries like the United States, even though this country spends less on
healthcare than other big nations (Haseltine, 2013). Singapore is also considered to be one
of the best place to live in Asia, and most Singaporeans are contented with their lives,
with a comfortable home, stable healthcare, and job (Tambyah et al., 2009).
 
 
+ Furthermore, growth in GDP could be accompanied with a number of problems, and
cannot improve the living standard. According to a research by James, director of the
Global Cities Research Institute at RMIT University in Melbourne, China has
 experienced an average GDP growth of 10 percent in over three decades, but the growth
has left this country with tremendous consequences accompanied with the rapid growth,
such as rising carbon emissions, prolonged air pollution and semi-occupied or abandoned
residential area (Balch, 2013). Therefore, the growth in GDP rate cannot be a barometer
for an economic’s prosperity because the faster the country wants to accelerate its GDP,
the higher level of production it has to achieve, which can lead to serious consequences
such as the degradation of environmental quality and social wellness, and eventually
deducts the quality of living.

4. Second argument
-   GDP does not count production in the informal sector, and household production, while
this segment is still relevant within the Asia region.
+ According to ILO, more than 68 percent of the employed population in Asia-Pacific are
in the informal economy, and family workers and own-account workers account for a
significant amount within this sector. In some Nepal, Laos and Cambodia, the informal
economy accounts for more than 90 percent of the economy, at 94.3, 93.6 and 93.1
percent respectively (ILO, 2018). Informal employment also contributes hugely to the
country’s economy by lifting up the GDP. Taking statistics from ILOSTAT, in 2017,
Bangladesh generated 91.3 percent of employment from the informal economy, and
experienced a GDP growth rate of 7.7 percent (Islam & Alam, 2019). GDP excludes the
contribution of the informal in its formula, it ignores the money of the informal economy
– a dominant segment in Asia’s economy. GDP is also an inappropriate measurement for
countries where a remarkable amount of goods and services are produced in households
or consumed on farms rather than being sold in the market (Drudy, 2009).

5. Third argument
-   The growth in GDP and rise in salary create an inequality in income, when only workers
capable of generating high income can gain benefit from it.
 
+ The GDP growth in the past two or three decades has been associated with income
discrepancies (OECD, n.d.). According to IMF, since 1990 in China, the rapid growth of
economy has been accompanied by a large increase in income inequality, and high levels
of imbalance in salary can have negatives impact on the sustainability of growth (Jain-
Chandra et al., 2016).
 
+ As wealthy families generate more income than lower-class or middle-class families,
they benefit more, and have easier access to education, healthcare, and other utilities.
Higher inequality can also result in larger social costs and also weakens a person’s
opportunities for education and job search (Dabla-Norris et al., 2015).
 

6. Counter argument
-   GDP includes all of the total goods and services produced domestically in a year, if it
increases, which means that the country is able to produce more, and is experiencing
prosperity.
·  Response:
-   GDP does not measure what is really necessary for society growth. The GDP measures
pollution and cigarette advertising, but does not count quality of health for children,
quality of their education (Kennedy, 1968).
 -   When GDP rises, it does not always mean that the economy is experiencing prosperity.
GDP could grow during a car crash, or a terrorist attack, or when the country is rebuilding
from demolitions, because it is very susceptible to the broken window fallacy – false
signs of growing welfare when there are destructions (Smith, 2021). Since GDP only
measures monetary settlements, it is based on an incomplete scenario of the human
economy (Costanza et al., 2009). Therefore, a better measure needs to be established in
order to estimate prosperity.

7. Conclusion
-   This essay has shown that the expansion in GDP and rise in income are not equivalent to
economic welfare. The main arguments given were that GDP cannot be used to indicate
prosperity, since high GDP does not always result in better living qualities, the informal
economy generates a significant amount of income, but GDP excludes this segment, so it
cannot determine a country’s well-being, and finally, rising GDP and income comes with
higher inequality that affects the growth of economy. A counter argument given is that
GDP measures all the goods and services produced in a nation within a year, so if it
increases, it means that the economy is experiencing prosperity. However, GDP does not
capture all of the requirements to indicate prosperity; therefore, it cannot be the barometer
for society welfare. For these given reasons, GDP is a flawed measurement of economic
well-being, so rising GDP and income in Asia does not necessarily bring prosperity to
this region.
 
 
References:

Bate, R. (2009). What is prosperity and how do we measure it? SSRN Electronic Journal.

doi:10.2139/ssrn.2342844

Costanza, R., Hart, M., Talberth, J., & Posner, S. (2009). Beyond GDP: The need for new measures
of progress. The pardee papers.

Dabla-Norris, M. E., Kochhar, M. K., Suphaphiphat, M. N., Ricka, M. F., & Tsounta, M. E. (2015).
Causes and consequences of income inequality: A global perspective. International Monetary Fund.

 
Drudy, P. J. (2009). Problems with Economic Growth: towards a better measure of progress?.
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https://www.theguardian.com/sustainable-business/forget-economic-growth-real-prosperity-instead

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Growth and inequality: A close relationship? (n.d.). Retrieved December 18, 2022, from
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Haseltine, W. A. (2013). Affordable excellence: the Singapore healthcare story: how to create and
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Islam, M. T., & Alam, M. J. (2019). The relationship between informal economy and GDP growth: a
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