What can be done to eliminate the problems of measuring national income in developing countries?

The only real way to eliminate the problems of measuring
national income in developing countries is for those countries to do a better job of
making sure that all of the transactions in their economy are done on an official
basis.  In other words, the countries have to keep better records--they have to have
good records concerning the number of businesses, how much they pay their employees, how
much they produce, etc.

The reason for this is that these
sorts of statistics are the ones that are used to measure national income.  If too much
of the national economy is conducted off the books or on a cash basis, the country's
government can not have any idea as to what its national income is; it also cannot
really tax the transactions since they are not on the official
economy.

National income is measured by
adding

• compensation of
  employees


• net
  interest


• rental
  incomes


• corporate
  profits


• proprietors'
  incomes

If too much of the economy is conducted
off the books, the government will not have accurate figures for most of these
measures.  Because of this, better record keeping is essential to eliminate the problems
of measuring national income.