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The role of supply and use/input output tables in the perspective analysis of economic development of Rwanda with example

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par Jean Baptiste HABYARIMANA
National University of Rwanda - Bachelors degree in Applied Statistics  2010
  

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4.5.2. GDP and economic well-being

Even though, GDP is an imperfect measure of economic well-being. Among other factors affecting well being omitted by the real GDP are the availability of leisure time, non-market services such as unpaid homemaking and volunteer services, environmental quality and resource conservation, and quality of life indicators such as low crime rate. The GDP also does not reflect the degree of economic inequality in country; because real GDP is not the same as economic well-being, therefore proposed policy should not be evaluated strictly in terms of whether or not they increase the GDP. But this gap may be fulfilled using SUT and IO-T.

Although the GDP is not the same as economic well-being, it is positively associated with many things that people value: better homes , better life, better health, higher life expectancy, higher rate of literacy. This relationship between real GDP and economic well-being tend to evaluate economic development of Rwanda and this relationship has led Rwanda to the improvement of their way of producing, saving and consuming, health and education in search of better life and has motivated policymakers in Rwanda to try to increase the rate of economic growth oriented to economic development of Rwanda through out many strategic policies such as EDPRS, RSSP.

Obviously, as the model of production and expenditure improve and that the GDP increases, Rwandans are likely to possess more and better goods and services. On average, like the GDP of Rwanda is increasing, Rwandans tend to enjoy larger, better constructed, and more comfortable homes, higher quality food and clothing, a greater variety of entertainment and cultural opportunities, better access to transportation and travel, better communications and sanitation, and other advantages.

Through 10 years ago, Rwandans have made tremendous sacrifices and taken great risks to secure a high standard of living themselves and their families. In fact this initiative may be better viewed in SUT structure year by year and improvement of satellite accounts data which their improvement may ameliorate Rwanda's economic development indicators such as HDI, Life expectancy, people living in good hygienic conditions.

Beyond an abundance of consumer goods, the increase of GDP brings other basic advantages. Those advantages include some important indicators of well-being, including life expectancy, reduce in infant and child mortality rates, number of doctors, measures of nutrition and education opportunity, but all those factors may be captured in satellites accounts in order to perform further analysis with STU and IO-T in SAM «education account, Health account, Environmental account» and compiled with GDP from SUT. One may conclude from the list of important factors omitted from the official figures that GDP is useless as a measure of income welfare. But as explained above GDP has a closer relationship with Socio-Economic Well-being of Population.

Clearly, in evaluating the effects a proposed economic policy, considering only the likely effects on GDP is not sufficient. Planer must also ask whether the policy will affect aspect of economic well-being that is not captured in GDP. Environmental regulations may reduce the production of some products as wood, fish, and pottery for example, consequently decrease of GDP; but that factor is not sufficient basis on which to decide whether such regulations are good or bad. The right way to decide on that question is to apply cost benefit principle. Therefore to promote Economic development, Rwanda policymakers have to think about how to introduce SUT and IO frameworks in order to complete necessary information rather than focusing only on the output from Production and Expenditure Approaches due to its deficiency as a measure of Economic Development.

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