National Income Analysis and Measurement Methods

National Income Analysis

• The value of goods and service produced by a country's private and public enterprises within a year.
• National income is lower in developing countries like PNG compared to developed nations like Australia.
• Recent years have seen a rise in PNG's national income due to increased investment in sectors like mining.

Methods of Measuring National Income

• Production/Value Added Method: Summing the value of all final goods and services produced in the economy.
• Income Method: Adding all the incomes received during the production process (rent, wages, interest, and profit).
• Expenditure (Outlay) Method: Adding the expenditures incurred to produce all final goods.

The Eight Aims and National Goals

• National Sovereignty and Self-reliance: Achieving political and economic independence, with self-reliance in the economy.
• National Resources and Environment: Using natural resources for collective benefit and replenishing them for future generations.
• Papua New Guinean Ways: Achieving development through Papua New Guinean social, political, and economic structures.

Specific Learning Outcomes

• Identify and explain the economic goals of the government.
• Analyze economic conditions in relation to the government’s economic goals.
• Propose measures to solve economic problems.

Economic Growth and Fair Distribution

• Economic growth is defined as an increase in a country's per capita income.
• Income per capita is calculated by dividing national income (GDP/GNP) by the population.
• PNG aimed to achieve growth by increasing its income per capita.
• The government strives for fair wealth distribution amongst the population.
• Redistribution of income occurs through annual national budgets allocating funds to various sectors.
• Corruption can hinder fair distribution, leading to inequality between the rich and the poor.

Economic Independence and Self-Reliance

• The government aims for economic independence and a self-reliant economy.
• This involves meeting most needs within the country (goods, services, finance, capital, and expertise).
• Policies like import-substitution, export-oriented manufacturing, and downstream processing aim to achieve self-reliance.

Examples of National Goals and Aims

• Examples demonstrating success in achieving the aims include:
  • The DSIP fund, providing K10 million to each district.
  • The government's allocation of funds to the Rural Development Bank.
  • The government providing subsidies to reduce production costs for local producers.
• Examples demonstrating challenges in achieving the aims include:
  • Corruption in the public sector hindering fair distribution of wealth.
  • PNG citizens investing in foreign countries.
  • Over-concentration of development in Port Moresby, neglecting rural areas.

Conclusion

• A decline in income per capita leads to a decrease in economic growth and living standards, increasing vulnerability to poverty.
• Unequal distribution of wealth benefits those in key positions, while the poor become poorer, widening the gap between rich and poor.
• PNG has experienced economic growth due to increased investments in sectors like mining.
• Dependency on foreign countries is still a concern, as PNG remains a developing nation.

Explore the key concepts of national income, its measurement methods, and the implications for developing countries like Papua New Guinea. This quiz covers the production, income, and expenditure methods for assessing national income, as well as the eight national goals related to economic sovereignty and resource management.