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National income represent the economic performance of an economy, but most of the developing countries unable...

National income represent the economic performance of an economy, but most of the developing countries unable to estimate the national income accurately due to some problems, what are the problems in the estimation of national income of Afghanistan?

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Answer #1

Ans. The persistence of underground economy and large scale corruption in Afghanistan pose challenges in the measurement of national income. This is because underground economy’s activities includes prostitution, drug deals etc. in which transaction occurs in cash which is very difficult trace and measure the size of the transaction to add to national income and corruption will lead to underreported income of the people, thus, national income will also be underreported. It has been estimated that underground economy’s size is about 1/3rd of the GDP in the developing country.

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