Thursday, September 4, 2014

Can a nation have a negative GDP

As used in economics GDP is an abbreviation of the term
Gross Domestic Product. It refers to the total goods and services produced by country.
GDP provides the country with the basic means of subsistence such as essential food and
shelter.  GDP also provides additional goods and services used in raising the standard
of living above the minimum subsistence level.


A zero
standard of living would mean that an economy generates no food or shelter at all. In
absence of these, they can not survive for long. While we can think of individuals
generating no useful output, and still managing to survive on borrowed money or charity.
However, if no one in the economy produces anything, there will be no one left with
anything to give to other as loan or charity. For this reason each and every country in
the world has a positive GDP. It is not possible for a country to survive as a country
or an economy without some minimum positive GDP. Thus no country can have a negative
GDP.


Negative GDP would mean that the accumulated wealth of
people in the economy, for some reason, is destroyed by an amount that exceeds the net
goods and services produced . We can conceive a situation of this kind on a temporary
and limited scale, due to natural disasters like floods and earthquakes. But these are
never widespread enough to completely wipe out the GDP of a whole
country.

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