The Importance of National Income Studies

Ahmed Majed Badawi Hamza
Supervisor: Prof. Dr. Abd Ali Kazim Al-Fatlawi

National income studies result in many benefits and essential matters, the most prominent of which are the following:
• Economic policy: National income data are a tool for analyzing the macroeconomy, as they help measure economic activity in the country and thus develop future economic development policies.
• Economic planning: National income statistics are essential for long- and short-term economic planning.
• Economic structure: National income statistics help understand the structure of the economy and its contribution to national income for different sectors, and thus know the methods of income production and how to distribute and spend it.
• Deflationary and inflationary gaps: National income data help predict, estimate, and develop accurate policies to combat inflation and economic contraction in the country.
• Budget policy: Modern governments prepare the state budget based on national income data to take the necessary precautions, including tax and borrowing policies, to avoid fluctuations in national income.
• National spending: National income statistics show how national spending is divided between consumption expenditures and investment expenditures, which contributes to determining the value of consumption in which the capital stock of the local community is preserved.
• Distribution of grants within the aid framework: National income estimates help in the fair distribution of grants and assistance provided by federal governments to other governments.
• Comparing the standard of living: National income statistics help compare individuals’ living standards in the same country and between individuals in different countries.
• Regulating international payments: National income studies contribute to reforming the burden of international payments and determining contributions and special shares between different countries in international organizations, such as the United Nations.
• Defense and development: National income estimates are essential in dividing the national product between defense and development purposes.
• Understanding the roles of different sectors: National income statistics enable us to understand the economic roles of the public and private sectors. (Al-Muslih, 2008: 188)