This problem is usually encountered in Asia and Africa where most nations are poor and don't have the means or resources plus expertise to calculate the national income accurately.

One of the main problems in measuring National Income is that there is shortage of statistical data. Furthermore, there is also an absence of statistical and technical procedures which are not generally adopted and people generally do not keep up to date on their earnings, expenditure etc.

There is always a shortage of manpower to be employed to collect the data regarding national income, for example, in poor and third world countries statistical division is unable to provide reliable data on all aspects of the economy. Furthermore there exists inadequate personal to do the job. Also they are not properly qualified for the job.

Generally in third countries a great majority is either jobless or involved in old jobs to make both ends meat. This means that they will be doing any kind of job so long as it generates income. The fact that they do different jobs and their sources or incomes are many and versatile, it becomes difficult to calculate national income properly. In developed countries specialized jobs are permanent which makes the measurement of national income easier.

In order to measure national income money value of all the final goods and services produced in a country in one year is added up. However, certain services/goods as those rendered by house-wives are not calculated in the national income despite the fact that these services are produced in the country and are like the ones which are rewarded. A method must be involved to estimate the money value of these services.

Demonetized goods are those goods which are directly consumed by the producers themselves. These goods are not purchased at price determined through the forces of demand and supply and hence they do not constitute part of the national income e.g. farmers consuming part of their own produce. In western countries strict regulations have discouraged such uses so as to arrive at a more accurate calculation of national income.

People are generally ignorant of their national responsibilities and hence they do not maintain a record of their income/expenditures. Furthermore, Illiteracy is a common factor. Thus, the fact that keeping records of their income and expenditure for the purposes of calculation national income is just out of question.

Another factor adding to the difficulties in the measurement of national income is that the sense of responsibility in the minds of individuals is very low. They conceal their actual income from the income tax department. Income tax officers are easily bribed which clearly adds to the lack of sense of responsibility. Thus when this occurs the actual data received by the higher authorities, who implement the policies, becomes inaccurate. As a result, national income accounts become inaccurate.

Mainly as a result of unstable forces of demand and supply in a country, prices of the commodities tend to fluctuate. As a result of this national income becomes unstable and thereby proper policies cannot be implemented to benefit the nation.

A great number of foreign firms, e.g. Coca-Cola Company, invest in the third world countries. This phenomenon leads to a question: Whether the earning of these firms should be counted in the national income of the host country or should it be a part of the national income of the parent country?

However, to a certain extent this problem has been solved. The solution is that a certain portion of the earning of these firms is to be counted as a part of the national income of the host country and the remaining portion which is remitted to the parent country should be counted as part of the national income there.