Does Social Issues Impact on GDP?

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For the purpose of this essay GDP stand for gross domestic product is defined as the value of all goods and services produced in an economy in a year, according to Professor Jeffry Frankel of Harvard University. This paper will argue whether countries that face social issues affect positively or negatively on the economy. The three main arguments to be presented are war in the Arabic world, unemployment rate, and finally poverty.

I would like to start with civil wars and their impact on GDP. Civil wars have huge humanity and economic costs. According to the Watson Institute, the money that been spent on wars in countries like Iraq, Afghanistan, and Syria is around $5.9 trillion. For example, as it cited on OPEC (Organization of the Petroleum Exporting Countries), Syria’s energy sector had declined from start of the civil war from producing approximately 400000barrels/day in 2010 to zero production on 2015 on the mineral sector. Due to the huge losses resulting from the war, the total GDP of Syria was estimated at 226 billion US dollars, according to a study by the United Nations. Furthermore, UNOCHA evaluates that around 22 million of Yemenis population have infected by many diseases like cholera, diphtheria due to the lack of healthcare. As consequence, Yemenis have lost the access to health infrastructure due the war, according to WHO. This indicate that wars have massive impact on GDP of the country, as it effects its production and healthcare of the individual.

Secondly, the increase in unemployment can be another impact on GDP, which is a concern on both developed and developing countries. Oaks Law have demonstrated the relationship between the unemployment and GDP between 1949-2011, which shows an inverse relationship between them, as been mention on the Economy Research article. For instance, UK have faced overstock on the number of jobless below 24 years old people, which indicate less growth productivity, as cited on the Guardian. Moreover, according to Kingdon and Knight (2007), unemployment on South Africa caused by the lack of the power to control an regulate the unemployment condition, which lead to increase in crime rates and inequality between the people as the rich get richer and the poor get poorer. Furthermore, their research demonstrates the unemployment rates in 1994 and 2016, as it was published during high levels of employment rate were recorded. This evidence shows that the rise of unemployment impact on the GDP negatively and increase social issues.

Final impact on economic growth is poverty. The Organization for Economic Co-operation and Development, also referred as OECD, states that poverty is the inequality of the income across individuals. According to the Center for American Progress, children who raised from poverty has more chance to do a crime by 1.3% and not obey the justice. Furthermore, according to the Center of American Progress, the economic growth got affected by 1.3% decrease on GDP due to low labor force. In light of this poverty in Yemen have been estimated around 76%, as these people live with 3.20$ per day due to the civil war. Furthermore, the Italian Institute for International Politics Studies point out that Yemenis need around $80 billion to retrieve the damages caused from the war. This emphasizes that increase rate of poor people results to decline on GDP as simple swan model, according to findings from the Australian National University.

In conclusion, this essay examined whether social problems affect GDP by examining a number of important arguments, such as civil war, unemployment rate, and poverty. Therefore, in answer to the question whether social issues affect the economic growth it can be concluded that they certainly impact in the economy of the country. Thus, economic issues can lead to serious disasters.

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