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The Gross National Product (Gnp) Is Commonly Used as a Measure of the Performance of the Economy. Discuss the Advantages and Disadvantages of Using It to Measure the Economy of Kenya

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Submitted By regisn
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The Gross National Product (GNP) is commonly used as a measure of the performance of the economy. Discuss the advantages and disadvantages of using it to measure the economy of Kenya

The Gross National Product (GNP) is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens including income of those located abroad. It does not include income of non-residents located in that country.

Therefore, GNP measures the value of goods and services that the country's citizens produced regardless of their location. GNP is one measure of the economic condition of a country, under the assumption that a higher GNP leads to a higher quality of living, all other things being equal.

But this notion has been challenged in recent years given the failure of the traditional measures of countries’ economic health to take into account non-monetary and informal nature of the economies, especially in the developing world.

This paper looks at the advantages and the disadvantages of using the GNP to measure the health of the Kenya economy.

The advantages of using GNP to measure the economy of Kenya are that GNP is not subjective so you can evaluate Kenya’s economic performance scientifically and without bias. It is easier to measure than other things- such as output per worker which would be a nightmare to collate for all the different jobs in an economy.

GNP is universal. You can use it to examine all economies of the world, from Kenya to the United States. This measure is especially helpful considering how different economies around the world are in terms of the goods and services they produce, and the way they reinvest their income, pay back debts or invest in industry sectors.

GNP helps in comparing Kenya’s economic performance with the other countries in the communities of nations or in…...

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