Explain the differences between national income or gross domestic Essay

Explain the differences between national income or gross domestic product and what the state of bhutan in the himalayas calls gr - Essay Example More recently the King of Bhutan has promoted a policy of Gross National Happiness (GNH) in opposition to GDP, arguing that the latter did not reflect the important intangible aspects of society and culture such as religious belief, harmony with nature, spiritual peace, and transcendent wisdom. In using GDP only as a measure of national worth and as a guide for planning risks the deterioration of these important intangible aspects globally, and this is most harshly reflected in the destruction of indigenous cultures with philosophical foundations and beliefs different from Western capitalism. II. National Income & GDP Institutions such as the World Bank, IMF, and UN agencies frequently use GDP statistics to determine international aid, finance for development projects, and in the calculation of the distribution of wealth within a society for analysis. These records are drawn from tax accounts primarily as recorded income, leading to the question of differences in accounting standards between nations and the variance of business standards between cultures. Yet, a larger question has developed as to whether GDP as calculated includes the subtle economic and social factors that are important to community welfare. â€Å"Simon Kuznets is best known for his studies of national income and its components. Prior to World War I, measures of GNP were rough guesses, at best. No government agency collected data to compute GNP, and no private economic researcher did so systematically, either. Kuznets changed all that. With work that began in the 1930s and stretched over decades, Kuznets computed national income back to 1869. He broke it down by industry, by final product, and by use. He also measured the distribution of income between rich and poor.† (Econlib, 2011) GDP provides a portrait of the economic activity of a nation by measuring the sum of all economic activity within the sovereign during a given time frame, generally annually. Weight is given to each sector by the total amount of commercial activity involved, but this does not inherently coincide with the hierarchy of values within a society. Instead, it promotes the economic and commercial criteria to the determinant force of national development by defining material prosperity, ever increasing, as the key to a higher standard of living. While in most instances this correlation of economic activity does reflect advanced technological development, improvements in medicine, architecture, public utilities, and the comfort level of society, some critics claim it is not complete or balanced in reflecting the overall values of a culture empirically. Whether or not this can be done is reflected in the debate around Gross National Happiness (GNH), a term instituted by the Bhutanese King Jigme Singye Wangchuck in his coronation address in 1972. III. Gross National Happiness Gross National Happiness is developed from a Buddhist view of the interconnectedness of all life and the need for renunc iation of selfishness and ego in order to cultivate enlightenment. The Buddha taught an Eightfold Path that included interrelated tenets on awareness, morality, behavior, etc. intended to bring about the perfection