ELEMENTS OF ECONOMIC ENVIRONMENT

1-GNI

2-GNP

3-GDP

1-Gross national income:

One common measure of economic development is a countrys GNI per head of population. GNI
is regarded as a yardstick for the economic activity of country, it measures a total annual income
received by resident of a nation.

2-Gross national product

It is a market value of all the product n services produce in one year by labor and property
supplied by the citizens of a country. GNP indicates allocated production based on location of
ownership. In fact it calculates income by the location of ownership and resident.

3-Gross domestic product

GDP is a monetary measures of the market value of all final goods and services produced in a
period. GDP is an aggregate measure of production equal to the sum of the gross values added of
all resident and institutional units engaged production.

IMPROVING POWER OF GNI

Per capita conversion:

Per capita GNI is taking GNI of a country and converting it into a standard currency say at US
Dollars at prevailing market rates and then dividing this sum by its population leads to a per
capita conversion estimator. It helps to explain an economys performance in terms of people
who live in that country.
Rate of change:

GDP growth rate indicates a countrys economic potential. High GDP rate means rising standard
of living business opportunities. The developing countries like china and India have a higher
growth rate the US.

Purchasing power parity:

PPP is an economic technique used to determine the relative value of two currencies.

The purchasing power in terms of foreign exchange. (Exchange rate tell how many units of
currency it takes to buy one US dollar)

Degree of human development:

HDI is a composite statistic of

Life expectancy
Education
Per capita income indicators

Which are used to rank countries into four tiers of human development. A country scores higher
HDI when the lifespan is higher, the educational level is higher, and the GDP per capita is
higher.

HDI was developed by the Pakistani economist MUHBUB UL HAQ working alongside Indian
economist AMARTYA SEN.