GDP, may be is, one of the most talked about parameter to assess the financial stability of a country.
One issue with GDP is that, it underestimates the value of free goods and services !
Consider free programming languages (open source) like Python and JavaScript, these contribute to more than 70% of job market.
These can be used by any company to develop products or provide various services either for free or for a price.
If a company hires someone to make changes to open-source libraries, then he/she would be paid and that contributes to GDP but if that person decides to contribute to open-source on his own, then that would miss GDP, even though both creates the same value !
A research led by Carol Robbins of the National Center for Science and Engineering Statistics, attempt to quantify a share of the value being created by these open-source languages.
They found that cost to develop the code for such open-source languages would be over USD 3 Billion !!
With values like these missing from GDP, it becomes very difficult to get an actual economic growth estimate.
What are your thoughts on this parameter missing from GDP ?
Link to research paper in comments.
Top comments (3)
Link:
iariw.org/copenhagen/robbins.pdf
What is GDP?
GDP - Gross Domestic Product, is a measure that estimates the value created through goods and services provided in a given time frame.
Since Open Source languages provides a whole lot of value but at almost zero cost, the article aims to project this concern of how an economist can look into this and explore different dimension to get more accurate estimate for GDP.