How should we judge a government?

In Malaysia, if you don't watch television or read newspapers, you are uninformed; but if you do, you are misinformed!

"If you're not careful, the newspapers will have you hating the people who are being oppressed, and loving the people who are doing the oppressing." - Malcolm X

Never argue with stupid people, they will drag you down to their level and then beat you with experience - Mark Twain

Why we should be against censorship in a court of law: Publicity is the very soul of justice … it keeps the judge himself, while trying, under trial. - Jeremy Bentham

"Our government is like a baby's alimentary canal, with a happy appetite at one end and no
responsibility at the other. " - Ronald Reagan

Government fed by the people

Government fed by the people

Career options

Career options
I suggest government... because nobody has ever been caught.

Corruption so prevalent it affects English language?

Corruption so prevalent it affects English language?
Corruption is so prevalent it affects English language?

When there's too much dirt...

When there's too much dirt...
We need better tools... to cover up mega corruptions.

Prevent bullying now!

Prevent bullying now!
If you're not going to speak up, how is the world supposed to know you exist? “Orang boleh pandai setinggi langit, tapi selama ia tidak menulis, ia akan hilang di dalam masyarakat dan dari sejarah.” - Ananta Prameodya Toer (Your intellect may soar to the sky but if you do not write, you will be lost from society and to history.)

Tuesday, November 27, 2012

GDP: Gross Distortion of Production statistics?

GDP or Gross Domestic Product, is one of the universally accepted statistical standards for measuring a nation's economy for a year; for comparing year on year; for comparing with other nations' to evaluate its standing among others, and so on.

For ordinary folks like you and me, we take GDP figures for granted. We often hear political leaders quoting projected GDP growth at a certain percentage. Obviously, a higher percentage compared to previous year's is a good sign that the economy is improving. But then again, how good are those statistics from which the GDP are calculated? There are so many assumptions and estimates required before any meaningful statistics can be used that it is another case of 'the more you know, the more you feel you don't know'!

The following highlights of an article by Morten Jerven show how unreliable some statistics could be...

Lies, damn lies and GDP
Or, how Ghana went from being one of the poorest countries in the world one day to an aspiring middle-income one the next

Two years ago Ghana's statistical service announced it was revising its GDP estimates upwards by over 60%, suggesting that in the previous estimates about US$13bn worth's of economic activity had been missed. As a result, Ghana was suddenly upgraded from a low to lower-middle-income country. In response, Todd Moss, the development scholar and blogger at the Center of Global Development in Washington DC, exclaimed: "Boy, we really don't know anything!"

How good are these numbers?

...All of the central questions in development revolve around the measure of the production and consumption of goods and services. This is expressed in an aggregate composite metric called the Gross Domestic Product, which is used to rank and rate the wealth and progress of nations. It is the most widely used measure of economic activity, yet little is known about how this metric is produced and misused in debates about African economic development.
...This is not just a matter of technical accuracy – the arbitrariness of the quantification process produces observations with very large errors and levels of uncertainty. This "numbers game" has taken on a dangerously misleading air of accuracy, and the resulting figures are used to make critical decisions that allocate scarce resources. International development actors are making judgments based on erroneous statistics. Governments are not able to make informed decisions because existing data are too weak or the data they need do not exist.

The importance of the base year

The base year is very important in three respects. Firstly, the GDP estimates will be expressed in constant prices for the base year. Second, the index number applies, so that a sector that was very economically important in the base year will continue to appear very important despite structural changes that may have occurred since the last base year...

...What about the comparisons with other countries? How should we compare the income and growth of Ghana with Nigeria, Kenya or other economies in the region? The lack of comparability of data and methods in national accounting practices in Sub-Saharan Africa is disturbing. According to my own survey, only 10 of these countries have a base year that is less than a decade old. When I compared statistics available from the World Bank and those published by the national statistical agencies that actually compile the GDP statistics there was an alarming level of discrepancy. A comparison of the data published in other sources further added support to the conclusion that with the current uneven application of methods and poor availability of data, any ranking of countries according to GDP is misleading.



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