With reference to Figure 1, Extract A and your own economic knowledge, discuss the limitations of using Gross National Income (GNI) per capita data to compare living standards between France and emerging South-East Asian economies.
| 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|
| France | -7.8% | 6.2% | 2.5% | 0.8% |
| ASEAN-4 economies (average) | -3.4% | 4.8% | 5.3% | 4.2% |
The post-crisis economic recovery in France has been highly uneven across different regions and economic sectors. Some development economists argue that focusing solely on national output growth fails to capture the day-to-day welfare of households, particularly as real household disposable incomes have been eroded by global inflationary shocks. There is a growing consensus that international comparisons must evaluate the quality of life, rather than merely the volume of economic growth.
Standard national income metrics like GNI per capita fail to account for deep-seated disparities in income distribution, nor do they record the value of unpaid domestic labour and community-based support systems. Furthermore, official accounts fail to capture substantial parts of economic activity. Current estimates indicate that the informal (or shadow) economy in emerging South-East Asian nations is approximately 42% of total official GDP, compared to around 12% in France. Additionally, rapid industrialisation in South-East Asia has led to severe negative externalities, such as toxic air quality index (AQI) readings and river pollution, which significantly reduce public health and human well-being.
