According living, as well as having the lowest GNI

According to Fig
2, there is an indication that Germany has the highest human development and
therefore hints that it would have the highest standard of living, as it’s HDI
(which includes factors such as education level, life expectancy) is at 0.905. This
contrasts to this Ethiopia’s HDI which is low at 0.363, indicating poorer
standards of living, as well as having the lowest GNI of 971. However this may
prove to be an inaccurate statement as we come to see issues associated with
comparing living standards.

 

GNI is a
measurement of a country’s income. It includes all the income earned by a country’s
residents and businesses. However, GNI does not count illegal, and
undocumented income. Some countries may have large ‘black market’ or economic
activity that isn’t measured by official statistics. LEDC’S like Ghana are more
likely to be exposed to this way of life, which although is not calculated in
their GNI (making GNI relatively inaccurate) is a large portion of many
people’s earnings and therefore, standards of living are likely to better as it
is still a source of income. This information can be misleading, for example,
if undocumented income was higher in Spain rather than Germany, Spain’s GNI of
26508, may even be larger than Germany’s GNI of 34854, showing us that although
Germany is meant to have the highest standards of living from the data, it may
not be the case realistically.

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The
externalities of growth are other issues that complicate living standards
further. Higher GNI suggests higher living standards, but higher economic
growth may result in increased (industrial) pollution. This may lead to a
decline in living standards (poor health from pollution) therefore overestimating
the living standards. This has been an issue for countries like China
especially, Chinas HDI is 0.687, but due to the pollution may increase health
issues (breathing problems, lung cancer) and in turn result in shorter life expectancy,
meaning that the HDI should theoretically be lower. This makes comparing living
standards more difficult.

 

GNI and HDI can
be used as measures to compare standards of living in different countries,
however this is not always an accurate representative. Therefore, before
creating a judgment from only two figures, more information (that can be
measured) should be taken into account, like both positive and negative
externalities.