Tag Archives | GDP

EU Countries To Include Drugs, Sex & Other Illegal Activities In GDP

Red Light District, Amsterdam (2168145535)Well that’s one way to boost your country’s reported economic output. One wonders whether or not each European Union nation will break down the vice trade by component so that we can see growth trends in, say, prostitution. From Bloomberg News:

Europe has a new source of economic growth. In the next few months all European Union countries that do not already include drugs, prostitution, and other illegal and gray-market businesses in their gross domestic product calculations will have to do so.

The 2010 version of the European System of Accounts becomes obligatory for GDP reporting by EU member states in September. It states unequivocally that “illegal economic actions shall be considered as transactions when all units involved enter the actions by mutual agreement. Thus, purchases, sales or barters of illegal drugs or stolen property are transactions, while theft is not.”

The ostensible goal is to make countries’ economic data comparable.

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Recolonization of Africa, a Symptom of Our Addiction to Growth: Differential Accumulation, Why GDP Growth Rates Influence Foreign Policy

via chycho

The name of the game when it comes to investing in the markets is that you must not only be ahead of inflation but you must also beat the averages, exceeding the normal rate of return. If you don’t do both then you are neither protecting nor accumulating capital, i.e., in the limit you will lose your wealth. This principle also applies to nations.

Ignoring our need to rely on different economic measures (pdf) other than the Gross Domestic Product (GDP) of a nation to indicate progress, wealth and well-being, if a countries GDP growth rate is below the global average, then over time that country will lose influence and be subject to an unstable economy. In essence, how a countries economy performs is relative to how other countries perform – there is a “growth imperative in capitalist economies” (pdf).

But why do capitalist economies need to grow?

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