Global Business Environment
...any goods and services are for self-consumption which governments do not record. Also, subculture economies (SCEs) often include indigenous peoples who do not participate in the official economy (ie. Producers of hand-made clothing). Also, consumption of illegal goods is not reported to government. 2) Problem arises when GNI is compared to other countries. Measures are given in local currency which is then converted at the prevailing exchange rate for comparison. Unless the exchange rate is maintained at its long-run equilibrium value, the conversion can give misleading results. 3) Prices for the same product may not be the same when expressed in a common currency. This could then raise for lower the GNI for one country vs another. This problem can be addressed by restating GNI figures of each country with the same prices for all goods and services. This is called the PPP (Purchasing Power Parity) PPP – if it’s...