national incom canot be a perfect Indicator of a country's development why ?
Answers
Answer:
National income refers to the monetary value of goods and services produced in a country. The key word is monetary. Money is only a claim to wealth , medium of exchange and a method of calculating value. It does not take into consideration inflation( cost of living), distribution of income and the exchange rate of the local currency. All of these affect the standard of living.
once the national income is “produced,” the indicator tells us nothing about what its producers have spent it on, nor in exchange for what.
If 75% of the national income, for example, is paid by producers to landowners in exchange for access to land — which they would have had anyway, without landowners — that would probably be sufficient to impoverish anyone who doesn’t own valuable land.
Economic development is not even because of uneven development and distribution of infrastructure, market access, geographical factors, access to education etc. Per capita income indicator may not be accurate as one has to consider the value of local currency against others.
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