What are the problem arises while calculating gdp
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GDP doesn't take into account the level of debt a country has. For example, Japan has the fourth highest GDP in the world behind the EU, US and China (in that order) and yet it has the highest debt to GDP ration in the world, higher than Zimbabwe and many other countries
GDP also doesn't take into account the cost a country pays to service their debt. This morning the Italian government is paying over 5.5% interest on 10 year bonds and Italy is 8th by GDP. Canada ranks 9th by GDP and has to pay just over 2% to borrow money for 10 years.
GDP also doesn't take into account the risk of public policy changing to make foreign investment more risky e.g. government seizing private property or funds. It also doesn't take into account the level of poverty (e.g. India, 10th by GDP) or oppression and lack of freedom (e.g. China 3rd by GDP) the country has.
It also doesn't take into account the level of corruption in a country e.g. Russia is 11th by GDP and in the top 20 most corrupt countries in the world
GDP also doesn't take into account the cost a country pays to service their debt. This morning the Italian government is paying over 5.5% interest on 10 year bonds and Italy is 8th by GDP. Canada ranks 9th by GDP and has to pay just over 2% to borrow money for 10 years.
GDP also doesn't take into account the risk of public policy changing to make foreign investment more risky e.g. government seizing private property or funds. It also doesn't take into account the level of poverty (e.g. India, 10th by GDP) or oppression and lack of freedom (e.g. China 3rd by GDP) the country has.
It also doesn't take into account the level of corruption in a country e.g. Russia is 11th by GDP and in the top 20 most corrupt countries in the world
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