Proceedings of 29th International Business Research Conference
24 - 25 November 2014, Novotel Hotel Sydney Central, Sydney, Australia, ISBN: 978-1-922069-64-1
Accounting Income as an Alternative Measure of Economy
Zarina Abdul Salam
Gross Domestic Product (GDP) is the key summary statistic of economic activity
and is the most important variable in economic growth analysis. GDP is
measured by the annual aggregate production of goods and services in a
country. If GDP is rising, the economy of the country is believed to be good and
vice versa. However the current approach of measuring GDP has been
criticized for its weakness. The existing measures of GDP (i.e. income and
expenditure approaches) can be misleading and may not actually represent the
true economy of a country as it has some crucial flaws such as they exclude
production of goods and services that are not sold on markets, excluding the
debt that a country has, including estimation of rental for the house owners,
ignoring the reduction price if the goods or services are sold in high quantities,
ignoring the differ price due to quality of the goods and services, etc. Therefore,
Gross Progress Indicator (GPI) was introduced to improve the approach to
measure the economy of a country. Apart from GPI, there are many researches
done to improve measuring GDP. Despite the various measurements
introduced, none has been accepted as accurate by the worldwide. Therefore,
this study will investigate an alternative method of measuring and forecast the
economy by using accounting income of public listed companies as the
variable. Secondary data will be used for this study and the period will be from
2000 to 2013 to see the impact before and after recession. The data will be
analyzed quantitatively. The significance of this research is to provide an
alternative measure of economy of a country and to construct an equation
model that can be used globally.
Keywords: Gross Domestic Product, income, economic growth
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Zarina Abdul Salam, University Technology Malaysia, Malaysia.