As per the UN system, presentation of statistical record of GDP is the basic requirement for receiving financial loan or World Bank aid. The positive change in the GDP level, after consuming such loan is an indication that the financial aid has really helped the country.
Around a few decades back, the military might was an indicator that displayed the country’s superiority and well-being perfection. However, now it is the economic independence and power, which has taken this place. Hence, an administrator or chief executive of any country is judged by the change in GDP levels that the person could manage, while heading the affairs of the country. During 1930s and 1940s, Gross National Product (GNP) became the tool to measure the country’s progress and prosperity level. GDP has carried this legacy to measure the nation’s living standard in terms of Gross Domestic Product.
GDP is a good tool to analyze any country’s output and consumption data. This gives an indication of the goods produced in that country along with the rate of consumption of these goods by the people of specific country. However, this measurement was more accurate during the days when different nations had closed economy. With globalization, the world trade has received new boost, which encourages almost all nations to throw open its economy. This has resulted in synchronization of world economies. Hence, GDP can now be seen as a tool that measures economic prosperity of any nation in terms of change in the volume of trade conducted by the country within a specific period.
However, GDP does not take into consideration the amount of domestic work for calculating the figures. The early inventors of GDP like Simon Kuznets and John Maynard Keynes did not take into account the amount of work done for doing different domestic chores like dish washing or laundry and