International Business Question Answer 2022

Running head: INTERNATIONAL BUSINESS
International Business
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INTERNATIONAL BUSINESS Table of Contents
Answer 1..........................................................................................................................................2
Answer 2..........................................................................................................................................4
Answer 3..........................................................................................................................................6
References........................................................................................................................................8

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INTERNATIONAL BUSINESS
Answer 1
GDP or Gross Domestic Product refers to the total value of the goods and services
produced within the geographic boundary of a country in a given period of time, such as, in a
financial year. GDP per capita represents GDP per person in a nation. It is obtained by dividing
the GDP by the total population of a country (Mankiw). GDP measures the economic growth of
a nation. Hence, GDP per capita indicates the prosperity of an economy, as it indicates how
much of the production value can be allotted to each of the individual citizens of a nation. Higher
GDP per capita implies higher economic growth level and thus, the developed industrial
countries tend to have higher GDP per capita. However, it is highly dependent on the population
size of the nation. Higher is the population, lower is the GDP per capita. Thus, it indicates
natural wellbeing of an average individual (Mankiw). Countries with very high GDP level does
not indicate that they would have very high GDP per capita as it is dependent on the population
size.
However, similar to GDP, the GDP per capita is a measure of only economic growth per
person, and it does not measure the overall development of a nation, which also includes the
quality of life. GDP per capita relies heavily on the monetary values, and not on the aspects
required for better quality of life. There is a difference between economic growth and
development. While economic growth refers to the increase in the total output of a nation,
economic development addresses improvement in overall quality of life of people, through better
health and education, lifespan, mortality rate, better environment to live, cost and standard of
living etc. (Nnadozie and Jerome). The Human Development Index (HDI) measures multi-

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INTERNATIONAL BUSINESS
dimensional aspects of development of a nation through education, health and standard of living,
measured by Gross National Income (GNI) per capita (Hdr.undp.org).
Therefore, it can be said that while GDP per capita indicates the level of wealth per
person in a nation, which is definitely a measure of economic growth, it does not address the
other development indicators, like, education, health and standard of living. These are measured
by HDI. When the GDP per capita of an economy grows with a steady population, it may be
attributed to the technological progress, which is again an outcome of better education. Thus, it
can be said that neither GDP per capita nor quality of life is the single true measure of economic
development of nation.