Examine the difficulties involved in making international GDP per head Essay

Examine the difficulties involved in making international GDP per head comparisons - Essay Example Substitute goods share similar type of effect on their demand and price (Sloman, Hinde and Garratt, 2010). For example, some countries use GDP per head while others use Gross National Product (GNP) per head. Within the economics context, both measures are used alternatively. Consequently, it will be very difficult to compare two economies in which one uses GDP per head while other employs GNP per head. Additionally, expenditure sources also hinder the process of carrying out an effective international GDP per head comparison. Many developed countries make expenditure on health, education and technology. On the other hand, developing countries prefer to spend on defence, security and other non-development sectors of economy. As a result, such difference also disallows a reasonable comparison between per head GDP of two international countries. Moreover, cost of living, particularly inflation, also makes it difficult to compare per head GDP of two countries. For example, Norway is known as the most expensive country because the rate of government taxes is considerably higher. On the other hand, small taxes are given in