Examples of GDP expressed as an allegory of trade between a fisherman from Kiribati, a cacao grower in Nicaragua, and a tea farmer in Fujian province, China.
(This allegorical primer on GDP was an annex to a previous article, “Economic Integrations and its Discontents“)
In the very near future, when maritime trade between China and Latin America routes through Pacific Islands along the equatorial currents, representatives from Kiribati, Nicaragua, and Fujian, meet at an investment and trade conference in Fiji and discuss their unique goods. The future conference on interregional trade will highlight the interconnectedness of the regions and promote sustainable growth and transport, mutual cooperation, and the development of local economies in vital new regional supply chains.
At this meeting, Tui, representing a fisher family from a remote island in Kiribati, is known for his bountiful catches of snapper and tuna; Amaru, a cacao farmer from Nicaragua, is known for the finest cacao beans in the lush highlands of Matagalpa; and Mei, a tea merchant from Fujian province, cultivates the most aromatic teas on the terraced hillsides of the Wuyi mountains. Each year, they travel to Fiji to present their goods.
True value is found in what we can achieve, not just in what we possess.
–GDP Current at Purchasing Power Parity (PPP)
GDP measured as Purchasing Power Parity (PPP) at Current prices
At the Pacific Interregional Trade Conference, the three traders began to discuss their prosperity. Mei, the tea merchant from China, spoke first. “With 10 kgs of my tea,” she boasted, “I can trade for two baskets of your fish, Tui, or half a sack of your cacao, Amaru. Surely, my business is the wealthiest, for our tea is valued highly everywhere!”
Tui, the fisherman, replied, “Perhaps in your market, Mei, but in my islands, I can trade my fish for nearly all that I need to sustain my family throughout the year. The price of tea might be high, but with just a few baskets of fish, I can acquire all the goods and services I require.”
Amaru, the cacao farmer, nodded in agreement and added, “And in my province, though cacao might trade for less than your tea, Mei, it provides us with a rich life. With a single sack of cacao, I can buy not just fish or tea, but also tools, clothing, and other necessities for my village. Our currency may seem smaller in value, but it stretches far in our daily lives.”
Mei was puzzled. “How can it be,” she asked, “that with less money, you live just as well?”
Amaru explained, “It is not the exchange value or the market price of our goods that determines our wealth, but what those goods can achieve in our own lands. The cost of living varies; what is considered expensive in Fujian may be affordable in mine. True wealth is not measured by how much we possess, but in how well it meets our needs.”
Tui nodded in agreement, “Indeed, in Kiribati, our wealth is in the ocean’s bounty and the simplicity of our needs. Market prices may rise and fall, but our way of life remains steady. We trade not for riches, but for balance and sustenance.”
Realizing the wisdom in their words, Mei saw that true prosperity wasn’t just about the commodity price of her tea, but rather in what it could buy in the context of her own life and those of her trading partners. She understood that the value of goods could not be measured solely by the wealth they bring in the market, but by their ability to provide a fulfilling life, considering the cost of goods in each community.
And so, the three traders returned to their homes with a new understanding: that true wealth lay not in the fluctuations of market prices, but in the everyday realities of life, balanced by what each could provide within their own homes.
Wise investments create lasting value, benefiting all who navigate their waters.
—GDP nominal
Nominal GDP as a measurement for debt and investment.
As maritime trade between China and Latin America expanded, ships carrying tea, fish, and cacao increasingly passed through the Pacific Islands, guided by the Equatorial currents. Sensing an opportunity, the businesses of Tui, Amaru, and Mei decided to invest in building a modern port on one of the central islands in Kiribati, envisioning it as a gateway for greater interregional trade.
At their annual meeting in Fiji, the three traders—Tui, the fisherman from Kiribati; Amaru, the cacao farmer from Matagalpa; and Mei, the tea merchant from the Wuyi Mountains in Fujian—gathered to discuss the implications of this new development.
Mei, the tea merchant, began, “Our families have decided to invest in this new port, believing it will become a critical hub for our trade routes. The investment is substantial—equivalent to ten thousand chests of tea alone! But we believe that it will also bring new opportunities and markets for trade.”
Amaru, the cacao farmer, nodded in agreement. “In my village, the cost is calculated in terms of five thousand sacks of cacao. While this is a heavy price, our families argue that the port will not only increase our trading capacity but also attract new infrastructure for transporting our goods.”
Tui, the fisherman, added, “On our islands, the investment is worth twenty thousand baskets of fish, a significant amount for us. But the port will provide greater access to infrastructure, attracting ships and tourists alike. With this new port, we will be better equipped to develop our own technologies to mitigate against climate change, allowing us to stay in our homes. Visitors will come to see how we’ve adapted to climate change. This will create new jobs in research, particularly since we will be owning our environmental ocean data and technologies and working with a reliable manufacturing industry to provide new radar surveillance networks that will allow us to manage our own vast territory, protecting our resources, and bringing more prosperity to our islands.”
The traders saw that while the cost of building the port was high, the potential benefits could be far-reaching. Mei noted, “If the port attracts more ships, it will raise the value of all our goods—tea, cacao, and fish. But more than that, the port is a fixed asset. It represents a long-term investment in our infrastructure. By having a modern port, our communities will not only facilitate greater trade but also enhance our economies by enabling more sectors to thrive.”
Amaru reflected, “Indeed, with better access to markets, we can sell our cacao at better prices. And as tourists come to our shores, they will not only buy our goods but also pay for services—staying in inns, eating in our taverns, and learning our crafts. This will diversify our economies, reducing our dependence on just one type of trade.”
Tui agreed, “Yes, the port will be more than just a gateway for goods. It will be a bridge to new opportunities. Our islands can offer more than just fish—we can become a destination, a place where trade and culture meet. This fixed asset will raise our GDP by supporting not just the flow of goods but the growth of new industries.”
However, Mei raised a cautionary point, “But remember, my friends, with this great investment comes great responsibility. We have also taken on new debts—debts measured in our valuable goods. For our families, the debt is equivalent to fifteen thousand chests of tea. We must ensure the port brings enough economic activity to repay this debt.”
Amaru concurred, “In our village, the debt is five thousand sacks of cacao. We must be prudent and ensure that the port does indeed attract the trade and tourism our leaders anticipate. If the port fails, the debt will remain a burden on our people.”
Tui concluded, “And for us, the debt is thirty thousand baskets of fish—a heavy burden if the port does not succeed. But if managed well, the port can increase our wealth, not just in terms of goods but in the quality of life and opportunity for all our people.”
With this understanding, the three traders returned home, determined to support the success of the new port. They knew that while the investment was significant and the debt substantial, the potential benefits could transform their economies—creating jobs, fostering new technologies, and providing a stable foundation for future growth.
They realized that a well-planned port was more than just a place for ships to dock; it was a catalyst for economic development, raising GDP by enhancing access to infrastructure, enabling new sectors to flourish, and allowing families in remote low-lying atolls to remain in their traditional homes.
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