Did+India+grow+faster+than+China+in+2010?+-+Kenny

he **Article:** Did India grow faster than China in 2010? **Date:** April 18th, 2011
 * Source:** Times of India - []

The article states that China's GDP grew by 10.3% last year, "comfortably outpacing India's estimate of 8.6%." However, the IMF's latest World Economic Outlook stated that India's GDP in fact grew by 10.4% in 2010, being higher than China's. So, there is a 1.8% dispute in India's GDP growth between the two sources. Why is this? Because there are differences in the measuring of GDP: India's GDP is "at factor cost", meaning it takes into account of all income earned. This, in other words, is the income method in measuring GDP. The other two methods of measuring GDP are the output method and expenditure method. China uses the expenditure method and measures the value of all spending on goods. The article explains that India's income method takes taxes and subsidies into account, whereas China's expenditure method does not include subsidies. The article also explains other possible factors for the dispute in India's GDP report, such as indirect taxes and appreciation. However, the article mainly centers around the ambiguity of the term GDP.
 * Summary:**

Vertical Integration- a single firm that is involved in all aspects of a product's manufac Economic growth - Country's economic progress strictly in terms of monetary value Economic development - Country's economic progress with welfare taken into account Output method - Actual value of the goods and services produced Income method - Value of all the incomes earned in the economy Expenditure method - Value of all spending on good and services in the economy GDP - the total value of all final goods and services produced in a economy in a year HDI - Measure of a country's welfare based on education, health, and GDP per capita
 * Vocabulary**

Macroeconomics-The study of interrelations between individual components of economics

 * Graph 1: China and India's GDP Growth per Capita Measured Against the US**


 * Evaluation:**

The blue book states that NATIONAL OUTPUT=NATIONAL EXPENDITURE=NATIONAL INCOME. However, the blue book states that this is IN THEORY, because "accounting will result in the same final figure, whether we call it national output, national income, or national expenditure." In REALITY, this is not the case, as explored by this article. A possible solution to solve this problem is to standardize the measure of GDP and use only one method. The article states that most countries use the expenditure method (such as China), and so if India used that method there would be more accurate comparisons. However, GDP itself, as we learned in class, is to a very large extent unreliable and not a true reflection of a country's welfare and development. As seen from Graph 1, though China and India have GDP/capita growth rates surpassing the US's and higher ranked GDPs than many countries (aka China's GDP > Australia, Norway), this does not mean that the people of the country are necessarily better off. Norway and Australia's HDI are the highest in the world, where as China's HDI rank is at #82. GDP is a great tool to measure monetary estimates of a country, but should not be the prime tool used in order to compare how well off a country is. A great alternative to measure economic development would be the genuine progress indicator, which is GDP + nonmonetary benefits - environmental and social costs. This would show that though China and India are rising in economic growth, they are in fact not necessarily rising in economic development. Personally, I believe a country can only be proud of itself if the welfare of the people improves and not just its GDP. Overall, this article does a great job explaining that even an economic measuring tool such as GDP may not be standard across countries. I feel it would be a better article if it incorporated/compared China and India's welfare statistics and not just GDP.