Gross Domestic Product (GDP), according to Kapoor and Dibroy, mostly indicates the standard of living for a given society and measures the total output of the economy of a given country, but it does not focus on other essential factors that happen outside the market such as education, health, levels of unemployment, leisure, and quality of the environment. The positive and negative effects that the community or society has on some of these outputs is also not mentioned by how GDP may affect a higher quality of life.
In the case of Qatar which had a GDP of $ 127, 000 in 2018 and South Sudan which had a GDP of just $275, only considers the official GDP figures and has failed to consider other some of the external factors. In a country such as Qatar most people are employed in the formal sector and specific working hours including normal wages are guaranteed due to the assurance of the job. Employees, therefore, work for licensed organization that are recognized by the government and hence pay taxes or are liable to paying taxes. Through this, a nation like Qatar will have a higher GDP as the income of workers is reflected in the GDP report even though health, environmental and living standards are not mentioned or considered (Kapoor and Dibroy).
A country like Southern Sudan is amongst the poorest countries in the world hence the number of formal sectors is lower than informal sectors. Informal sector is not guaranteed and the incomes of those working in these informal sectors will not be reflected in the GDP of that country; this makes such a country like South Sudan to seem more poorer than it is while in the real sense, external factors such as unemployment levels, health, education, and environmental factors haven’t been considered. Through these considerations, it’s evident that a higher GDP does not always mean a higher quality of life since; different external factors must be considered in relation to a nations’ GDP to ascertain the fact that the standard of living correlations with the GDP of a nation as stated by (Kapoor and Dibroy).
Reference
Kapoor, Amit, and Bibek Dibroy. “GDP Is Not a Measure of Human Well-Being.” Harvard Business Review. Harvard Business Review, 2019. Web.