What are the limitations of using national

income statistics for third world countries

OUTLINE

 INTRODUCTION

 LIMITATIONS OF USING NATIONAL INCOME STATS

 CONTROL MEASURES

 CONCLUSION
INTRODUCTION

What is national income statistics?

Are set of rules , techniques and calculations to measure the total value of final
goods and services produced by a country in a year.

 Third world countries – these are developing countries. (Zimbabwe, Mozambique)

Limitations of using national income statistics

 Non-market transactions
 Income distribution and poverty levels
 Environmental cost and benefits
 Data availability and reliability
 Quality of life indicators
 Non monetary transaction
 Limited range of economic activities
Non market transaction

 As non-market goods and

services are those not bought
or sold directly on markets and
therefore do not have an
associated market price, they
tend to fall into the categories
of public goods or common
goods.
 For example, food, and other
supplies needed to meet family
shortages.
Income distribution and poverty levels

Inequality Distribution
 Provide a total measure of economic
activities but may not review the
distribution of income within the country.
 high inflation, and stagnant wages
Data availability and reliability

 Often face challenges in accurately collecting and reporting national income

statistics.

 Due to limited resources, inadequate statistical infrastructure and lack of

comprehensive data collection system can result in incomplete or unreliable data
Limited range of economic activities

 Third world countries often relies heavily on a few sector or industries e.g.
agriculture or extractive industries

 This limited economic diversification can lead to an overemphasis on certain

activities and incomplete representation of the overall economc land scape
Environmental cost and benefits
Environmental cost-benefit analysis, or CBA, refers to the economic appraisal of
policies and projects that have the deliberate aim of improving the provision of
environmental services or actions that might affect (sometimes adversely) the
environment as an indirect consequence

Examples include the costs of cleaning up oil spills or cleaning a polluted river. A
company may also incur fines or other penalties or lose sales if it acquires a poor
environmental reputation.
Thank you