GDP includes services and goods for final consumers, savings and exports. Moreover, due to what factors these goods (services) were produced does not matter.
For internal use, GDP is usually expressed in national currency. To present data at the global level, the indicator is recalculated in foreign currency at the exchange rate. Recalculation according to PPP is also practiced (parity purchasing power) for more detailed comparisons.
GDP acquired the status of the main macroeconomic indicator in 1991. This was necessary for the indicator to be compatible with the System of National Accounts (SNA) used by the UN. Previously, the base indicator was GNP (gross national product).
Kinds
In economic practice, two types of GDP are distinguished:
- Nominal - the cost of all services and goods for consumption in market prices. As a consequence, it depends on the rise or fall of the price and income index. In conditions of inflation, nominal GDP always grows; in conditions of deflation, the direction is the opposite.
- Real - takes into account only real production growth, without taking into account price increases or decreases. It is calculated by dividing nominal GDP by the inflation rate (or deflation). In other words, real GDP is nominal GDP adjusted by the price index.
The ratio of nominal to real GDP is used as a GDP deflator.
Calculation
There are three methods for calculating gross domestic product.
By income
GDP by income is the sum of the following excluding subsidies and net factor income from abroad:
- national income;
- depreciation;
- indirect taxes;
- net factor income of foreign workers.
By expenses
GDP by expenditure is the sum of the following indicators:
- final consumption;
- gross capital formation (investments in corporations);
- government spending;
- net exports (exports minus imports).
By added value
GDP by value added in practice is more often called production method. It is calculated as the sum of the added values of all enterprises. Value added is found as the difference between the firm's income and the intermediate cost of production of the product/service. To obtain total value added, it is necessary to subtract the total value of intermediate products and indirect taxes from the total level of output.
Criticism of GDP as a macroeconomic indicator
At the dawn of the entry of the GDP indicator into research use, the community of authoritative economists warned that the use of this indicator could lead to errors when analyzing the economic situation. The author of the term himself, Simon Kuznets, said that GDP growth cannot be equated with economic growth and improved social well-being.
Despite warnings, most countries are now setting growth levels economic development through GDP, but the indicator only takes into account monetary transactions related to production and does not provide objective information.
Gross domestic product
(Gross domestic product, GDP)
Definition of GDP, history of origin and calculation methods
Information on the definition of GDP, history of origin and calculation methods
Gross domestic product is, definition
r — income And percent on property;
Factorial income(form national profit):
Wage, rent, profit, . Received from the sale of factors of production: labor - wage; capital- percent; entrepreneurship - profit; — rent.
By cost
GDP = C + I + G + Xn, where
C—household final consumption expenditures;
I - gross investments;
G - government procurement of goods and services;
Xn is net export (the difference between the cost of export and import).
Based on the amount of products produced
Only the value added by each company—the final product—is summed up. Final products are those products that are purchased during the year for consumption, accumulation, export and are not used for intermediate consumption.
Origin story
Works measuring the volume of national production began in the 30s of the 20th century by economist Simon Kuznets in the Department of Commerce USA.
The first estimates of national benefits were made by Kuznets in 1934. In this work, accounts of national profit and goods appeared for the first time. Kuznets recalculated the US national profit accounts up to 1869. For the first time, a report on national profit and production for period 1929–1935 was introduced to the US Congress in 1937. Before this, no one had a detailed understanding of economic activity countries. The term was not used in print until 1939. In 1971 Simon Kuznets received Nobel Prize.
Before 1991, the base rate in macroeconomic research was the Gross National Product. GDP has become the main indicator for compatibility with the System of National Accounts companies United Nations.
GDP per capita
GDP per capita and per person employed in production determines the level of economic development. GDP per capita cannot be considered an accurate characteristic, since it is of considerable importance sectoral structure production, quality of manufactured goods, efficiency of materials and energy consumption per unit of production. All indicators for comparability are expressed in a single currency — U.S. $ . Recalculations from national currencies in dollars, as is customary at the UN for international economic comparisons, are carried out not at market exchange rates, but at purchasing power parities. Incomes based on median wages may differ more sharply in underdeveloped countries.
Gross domestic product (GDP) - gross domestic product
Gross domestic product (GDP) is a long name, so the abbreviation gross domestic product (GDP) is usually used (in Russian - GDP). It is a form of the National income and commercial units Accounts, which is official name GDP report and attempt to provide a comprehensive accounting final demand. GDP is also the main indicator, reflecting the state national economy. The main form of measurement is the percentage change for the year per quarter, which calculates GDP growth relative to the same period last year's coverage - annual growth rate:
Detailed official reports can also be found data about the absolute value of US GDP, expressed in billions of dollars.
The GDP report can be presented in 2 GDP estimates, which should be equal: the 1st is based on the categories of final demand, the 2nd is based on an assessment of profit.
|
Product (commercial units) |
Profit (income) |
|
Personal consumption expenditures · durable goods · Non-durable goods Gross Private Domestic Investment Fixed Investment · Nonresidential Structures Producers" Durable Equipment Change in Inventories Net export of goods export -Import Government Purchases Federal National Defense Nondefense (State and Local) |
Compensation of Employees Wages and Salaries · Supplement to Wages and Salaries Proprietors" income (with Adjustments) Rental income of Persons (with Adjustment) Corporate Rrofits (with Adjustment) Profits before Taxes Inventory Valuation Adjustment Capital Consumption Adjustment Miscellaneous Adjustments Net National commercial units Adjustments Depreciation Adjustments Net Receipts of Factor income Adjustment |
Often gross domestic product is replaced by the real gross domestic product (GDP) indicator: Real gross domestic product = Final Sales + Inventories where: Inventories = Normal Inventories Final Sales = Consumption + Producers Durable Equipment + Nonresidential Structurers + Residential Structurers + Federal Government Spendig + State&Local Government Spendig + export - import
The report is published at 8:30 a.m. Washington time or 4:30 p.m. Moscow time, usually on the 20th business day of the month following the Bureau's reporting period economic analysis Department trade for the previous quarter. and data are published monthly: the first time preliminary data and then the report is revised.
Relationship with other indicators.
GDP is the final indicator of the health of the economy and it makes sense to first of all consider indicators that affect GDP. This includes expenses, costs for construction works and other indicators that, as you understand, in one way or another relate to the structural components of GDP. GDP has a significant impact on stock indices and monetary policy central bank and the Government. Based on this, its impact on the exchange rate is determined, which is both significant and diffuse over time. has a significant impact on. GDP growth leads to an increase in the exchange rate of the national currency.
Features of the indicator behavior.
Strong growth in real domestic consumption and weak growth in real GDP could mean it absorbs a larger share of demand. This leads to the question: are you satisfied with the fluctuations in the foreign exchange rate? dollar responsible for economic policy. Growth is determined by social or long-term factors such as the end of the Cold War, etc. and cyclical factors, such as temporary interruptions in growth due to shocks and other imbalances in the economy.
There is a fairly important relationship between the value of unemployment and the growth of real gross domestic product (GDP): real GDP must increase by 2.2% in order for unemployment has not changed. If GDP grows from this threshold value by 1%, then the value unemployment will decrease by 0.1% per quarter, and vice versa.
You should also take into account an important calculation indicator - potential real GDP. This is the maximum achievable level of money emission that could be issued without increasing pressure inflation. At the same time, the non-accelerating inflation rate of unemployment should be about 5.5%. When the actual unemployment rate becomes less, there is a danger of inflation.
Difference between GNP and GDP
Difference between GNP and GDP is as follows
By definition: gross domestic product - GDP is the total value of production of spheres material production and service sectors, regardless of nationality enterprises located on the territory of this country. GDP is calculated on a so-called territorial basis.
Gross national product - GNP is the total value of the entire volume of products and services in both spheres of the national economy, regardless of the location of national enterprises(in the country or abroad). GNP is calculated on a national basis.
Thus, GNP differs from GDP by the amount of income from the use of resources of a given country abroad (the profit of investments abroad transferred to the country capital, property available there, citizens working abroad minus similar income of foreigners exported from the country.
When calculating GNP, the difference between the profits and benefits received by enterprises and individuals is added to the GDP indicator. persons of a given country abroad, on the one hand, and profits and benefits received by foreign investors and foreign workers in a given country, on the other hand.
The main requirement when calculating GDP indicators and GNP means that all goods and services produced in a year are counted only once, i.e. so that the calculation takes into account only final products and does not take into account intermediate products that can be bought and resold many times.
Final products are goods and services that are purchased by consumers for end use and not for resale. Intermediate products are goods and services that are further processed or resold several times before reaching the final product. to the acquirer.
Therefore, to avoid repeated counting, GDP and GNP should act as the value of final goods and services and include only the value created (added) at each intermediate stage of processing.
The difference between GNP and GDP is within ± 1% of GDP.
One of the main macro economic indicators that measure the results of economic activity are gross domestic product (GDP) and gross national product (GNP).
GDP is the market value of all final goods and services produced in a country during the year, regardless of whether the factors of production are owned by residents of the country or owned by foreigners (non-residents).
GNP is the market value of all final goods and services produced in a country during the year. GNP measures the value of output created by factors of production owned by citizens of a given country ( residents), including on the territory of other countries - this is called net factor income.
GNP = GDP + net factor income.
Net factor income from abroad is equal to the difference between the benefits received by citizens of a given country abroad and the benefits of foreigners received in the territory of a given country.
Our country's GDP in 2003 was 9.3 trillion. rub.
By dividing GDP of countries s by the number of its citizens, we get an indicator called “GDP per capita”. The higher the GDP per capita, the higher the standard of living in the country.
Final goods and services are those that are purchased during the year for final consumption and are not used for intermediate consumption (that is, in the production of other goods and services).
In the very general view GDP represents the total value of all final products produced in the national economy of a given country for a year. Final products refer to those goods and services that are sold to the final purchaser for their own use and not for sale. For example, in 1998, the GDP of the Republic of Belarus amounted to 662,370 billion rubles at current prices. This included the cost of cars, children's toys, films, laundry services, houses built this year, schools, tanks, airplanes and thousands of other products produced using factors of production located in the country.
GDP is calculated using three methods: production, distribution and final use. These methods reflect the processes of production, distribution and use of national goods.
Production method
Based on the exclusion from the cost of all goods and services produced of that part of them that was spent in process production. The fact is that the production of goods and services covers several stages: at some enterprises it turns into an intermediate product (assemblies, parts, components), which is then transferred to other enterprises that produce finished goods. Therefore, calculating the cost of all final products and services consists of summing up the value added at each stage of production.
As for foreign investments in Estonia (93.9 billion kroons), half of them are direct investments (46.9 billion kroons). These investments were mainly from Sweden (37 percent) and Finland (29 percent), but also from the United States and Holland, Denmark and Norway. They were directed primarily to finance (23 percent), industry(22 percent), transport, warehousing and communications (19 percent), wholesale and retail trade (16 percent). It is known that at the end of the first quarter of 2001, net foreign exchange amounted to approximately 7.0 billion kroons, or 8% of expected GDP, and decreased by 1.1 billion kroons during the quarter. Net-external duty, since 1997, has not increased, but remains within 8 billion crowns.
As for Estonia’s international net investment position at the end of the first quarter of 2001, it was negative in the amount of -46.6 billion kroons and has changed little over Lately. This represents approximately 54 percent of expected GDP.
5. Republic of Germany
8. Russia
9. Denmark
10. Austria
Rest
Foreign interest investors to the Baltic market continues to grow. This was stated at the forum on private capital management in the CIS and Eastern countries held in Riga. Europe Parex organizations asset management Robert Idelsons. There are no long-standing traditions of capital management in the Baltics, since this began to develop only in the 90s. After joining the European Union, activity in all Baltic countries has increased significantly, but Estonia remains the leader in private wealth management. From a historical point of view, the Baltic countries offered not only local, but also international services thanks to profitable geographical location, liberal tax regime, capital flow, professionalism and reliability of banks, noted.
IN total amount foreign investment in the Estonian economy during the years of independence amounted to 7.6 billion dollars. The main investor countries were Finland, Sweden, USA, Federal Republic of Germany. Foreigners invested most of their money in finance, then in trade and industry.
Today, the Baltics have created attractive conditions for foreign investors. Estonia, according to a study conducted by the magazine, ranks 8th in the world in terms of attractiveness for foreign investors, while Latvia is in 22nd and Lithuania in 29th place.
Currently, the majority of large and medium-sized companies in Estonia are owned in whole or in part by foreigners. Today, foreign owners have more than 85 percent of the shares of Estonian banks; the leading ones (Hansabank, Juhisbank, Sampo) became part of the giant financial associations of Scandinavian enterprises.
With a GDP growth of 9.8% in 2005, Estonia is the country with the most fast growing economy in the region. Since 1995, Estonia's economic growth has averaged 6% annually. Export growth continues. Some data on exports and imports are shown in Table 4.
Table 4 Main trading partners and items of export and import in 2005 (composite of all exports or imports, %)
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1.Finland |
1. Finland |
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|
2. Federal Republic (FRG) |
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|
3. Russia |
||||
|
5. Republic of Germany |
||||
|
7. Britannia |
||||
|
8. Denmark |
8. Netherlands |
|||
|
10. Norway |
||||
|
Rest |
Rest |
|||
Also, institutional and functional reforms created a stable basis for significant economic growth. Economic growth is projected to be (Table 5):
Economy Table 5: Economic growth and related factors 2004-2010
|
Main economic indicators |
||||||||
|
Change in GDP over the year (%) |
||||||||
|
GDP at current prices (billion. EUR) |
||||||||
|
Deflator GDP |
||||||||
|
Index consumer prices (%) |
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|
Employment (ages 15-74) |
||||||||
|
Employment growth |
||||||||
|
Productivity growth (per unit of employment) |
||||||||
|
Unemployment rate (ILO) |
||||||||
|
Average monthly salary (EUR) |
||||||||
|
Increase in wages |
||||||||
|
Current account balance (% of GDP) |
||||||||
Estonia occupies a leading place among the bloc's newcomers both in terms of foreign investment per capita and in terms of reformed monetary system, and in terms of favorable conditions for entrepreneurship. Exports of goods and services are growing very quickly, and Estonia's total export volume in relation to GDP is one of the highest in Europe. Estonia's proximity to the rapidly developing regions of Scandinavia and Russian Federation- an essential factor that serves as the basis for the successful development of foreign trade.
The main sectors of the country's economy showed enviable growth: manufacturing, which contributed 18.3% to GDP, commercial services - 16.5%, transport - 14.6%. The influx of tourists that followed accession to the European Union caused the development of the hotel and restaurant business.
Estonia, Latvia and, to a somewhat lesser extent, Lithuania have not taken the steps taken by Russian financial institutions in recent years. authorities to revive the economy - growth is mainly achieved by taking advantage of the opening of European Union markets and liberalization of economies. Thus, Estonia was the first country in the world to switch to a flat scale income tax, - only later this idea was picked up by other countries of Eastern Europe and the Russian Federation. Large-scale government projects in the field of industrial politicians not noted in the Baltic countries: economic growth in the Baltic countries is based on private investment and increased labor efficiency.
This seems to be the main growth potential of these countries: labor efficiency in Lithuania is 44% of the European average, in Estonia - 41%, and in Latvia - 35%.
In 2007 - 2008, the European Union forecasts Baltic GDP growth in these countries at the level of 7 - 8%, this will allow them to realize another doubling of GDP in the next decade.
Thus, GDP is the value of final material goods and services produced in the country over a certain period. Products and services are produced on the territory of the country with the help of national and foreign factors of production.
In order to find out what volume of goods to produce national factors production, the gross national product (GNP) indicator is used. In this case, the income that foreigners receive is subtracted from the national product and the income that the national economy receives abroad is added. GDP and GNP are calculated in the same way. GDP, like GNP, takes into account only the market value of end-use goods and services.
GDP is used to characterize production results, the level of economic development, economic growth rates, and analyze labor efficiency in the economy.
There are three key points in the concept of GDP:
GDP is a measure of goods produced;
GDP is a domestic good;
GDP is gross goods.
There are also three methods for calculating GDP:
GDP - as the sum of gross value added (when calculated by this method, GDP is calculated by summing the gross value added of all resident production units, grouped by industry or sector);
GDP as the sum of final use components (according to this method, GDP is defined as the sum of the costs of final consumption of goods and services, gross capital formation, the balance of exports and imports of goods and services).
GDP as the sum of primary income (when determined by this method, GDP includes the following types of primary income: wages of employees, net taxes on production and imports (taxes on production and imports minus subsidies on production and imports), gross profit and gross mixed income).
GDP has two forms:
Nominal GDP, which is equal to the volume of final production of goods and services, measured in current year prices.
GDP is real, which represents the same quantity of goods and services measured at constant base year prices.
If we divide nominal GDP by real GDP, we get gross domestic product. It measures the change in the average price level compared to the base year, i.e. the amount of inflation in the country for a given period.
We can conclude that the Estonian economy is growing, and growing quite rapidly. Estonia has one of the highest GDP rates in Europe. Such productive growth of GDP was influenced by the productivity and working capacity of the population, the rapid development of export and import growth, the flow of foreign direct investment; about 30% of GDP in recent years is made up of capital-based investments. And this allows the economy to respond very quickly to demand.
According to forecasts for the future, GDP growth in Estonia will reach 7 - 8%.
It can be said that the analysis of macroeconomic indicators such as GDP has vital importance, since it allows you to predict economic development, identify trends, reasons for their changes and develop economic policy in accordance with the intended goals.
Gross national product (gross domestic product)
Gross National Product (GDP) is a useful economic indicator of the performance of an economy in a given country or economic area. It is useful not only for yearly comparisons of a country's economic situation but also facilitates comparisons with other countries or regions.
The indicator shows domestic production including the service sector, imports and exports, total consumption and government expenditure. The entry of a large investor or the willingness on the part of consumers to spend are positive economic incentives.
Between 1993 and 2006, the Czech economy as a whole changed little structurally. In general, a decrease in proportion Agriculture and industry in the country's gross domestic product reduced to that of the service sector was seen. This phenomenon occurred, with varying degrees of intensity, in all regions of the country. One of the main economic indicators used to measure economic work of a given country is the gross domestic product per capita.
Over the past few years, the gross domestic product in the Czech Republic has been very satisfactory and there are preconditions for growth in the future.
2005 estimate
2005 was an exceptionally favorable year for the Czech Republic. Gross domestic product reached CZK 2,931.1 billion, which grew by 6.0% over the previous year. In addition to the increased growth rate, there have also been significant changes in the composition of the country's gross domestic product, while inflation has been maintained at low levels. Expenditures for gross capital formation were slower than household expenditures, while exports outweighed imports.
Key indicators of gross domestic product
Gross domestic product growth for 2005 + 6%
Expenses for gross capital creation + 0%
Expenses for household consumption + 2.6%
Expenses for gross creation of fixed capital + 3.7%
Total exports + 11.1%
Other positive developments affecting gross domestic product in 2005 were an increase work force and a decrease in unemployment, a sharp fall in the budget deficit relative to gross domestic product, a downward slope in domestic supply and demand, growth in gross national savings and a decrease in total capital financing from external sources. The reduction in the balance of the payment gap relative to gross domestic product and in foreign borrowing also contributed to the overall improvement in the international investment position of the Czech Republic.
While higher oil and gas prices in 2005 had an effect on the Czech economy in 2005, these external factors really slowed down the industry's performance throughout the year.
Gross domestic product growth up to 2005 was marked by a faster growth rate, which ranged from 5.3% in the first quarter to 6.9% in the fourth quarter. This was due to significant structural reforms.
Net exports had the greatest impact on year-on-year growth in gross domestic product. This was due to expanded foreign trade and reduced imports. Net exports accounted for three-quarters of gross domestic product growth, while total exports increased 11.1% during the year.
A look back to 2006
This favorable economic situation should continue. Annualized growth in the second quarter of 2006 was 6.2%, while the EU average was 2.8%.
As a result, the Czech Republic currently has the fastest growing economy in the European Union and has further established its economic position on the international stage.
Sources
S. Yu. Glazyev, S. A. Batchikov. White paper. Economic reforms in the Russian Federation 1991—2001. Introduction.
Blaug M. Economic thought in retrospect / Transl. from English - M.: Delo LTD, 1995.
Galperin V.M. and others, macroeconomics: Textbook / Ed. ed. L.S. Tarasevich. - SPb.: Econ. school, 2004.
Dolan E. J., Lindsay D. Rishok: microeconomic model / Transl. from English - St. Petersburg, 1992.
Keynes J.M. General theory of employment, interest and money / Transl. from English - M.: Progress, 1978.
Kireev A.P. World Economy : Textbook. manual for universities. At 2 o'clock - M.: International relationships, 2007.
Well transition economy: Textbook for universities / Ed. L.I. Abalkina. - M.: Finstatinform, 2007.
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Greetings, dear readers. Ruslan Miftakhov is with you, and now I will try to tell you what GDP is in economics in simple words.
Surely each of you, watching the news on TV, when it comes to the level of income of citizens of any country, or the results of its social and economic development, reading them on the Internet or listening to a news block on the radio, have repeatedly heard or seen this definition.
I think that today's topic will be useful to each of you, without exception. Regardless of what you do, whether you are an ordinary employee of a certain plant that produces products or provides some services, or you are the head of a business entity, each of you is a participant in creating the volume of this indicator.
I, in turn, think that it will be interesting and useful for you to understand what GDP is, what the difference is between it and GNP, what is the role and participation of each person involved in the creation of products and services in providing these indicators. And in general, everyone who considers himself more or less literate should have an idea about this.
So, let's begin…
Gross domestic product, and this is how this abbreviation should be deciphered, is the main indicator characterizing the final cost of all services provided and products produced in the country.
Its level is a determining economic value for each country. In this case, the cost of produced products and services is determined for calendar year and quarter.
It should be noted that this macroeconomic indicator has nothing to do with nationality or geography and is applicable for any state, for example Russia.
Thus, economists, by defining this indicator, have the opportunity to objectively assess the entire volume of production aimed at investment or current consumption, at the domestic level or in the context of each sector.
When calculating gross domestic product you can understand:
- what is the national income of the state as a whole;
- how successfully the business activity is carried out;
- how active business entities are in their activities;
- analyze the economy by industry, assessing the effectiveness of each of them. This will make it possible to understand what the structure of the state’s economy is, and which industries are the source of income to the state treasury;
- determine the potential volume of goods and services that can be produced in the near future;
- and what are the trends and forecasts of macroeconomic processes.
Thus, calculating the value of the gross domestic product allows us to assess the social - economic condition any individual state and at what stage of development the world economy is currently located.
If we analyze this from the point of view of changes in the value of the gross domestic product, then we should take into account that its actual volume is influenced by the number of employees in the state or the value of the unemployment rate, that is, unemployment plays an important role in ensuring national well-being.
Difference between GDP and GNP
If we talk about gross domestic product, it characterizes the size and speed of socio-economic development of the state. A high value of the indicator indicates his well-being and wealth, and a low value, in turn, indicates the opposite.
And in a situation where economists and financiers, as well as the leaders of a country, talk about its economic growth or decline, they operate precisely with indicators of the volume of GDP in dynamics, i.e. for a certain period of time.
Gross national product determines the value of the national economy, without taking into account the location of the enterprise or citizens, while GDP determines the value of goods and services produced within the state, i.e. on its territory.
Now let's talk about what types of this indicator exist.
Types of indicator
In order to determine the value of the indicator, experts use different approaches. The choice of each of them will depend on what processes in the country need to be assessed.
Experts identify the following types of indicators:
- nominal;
- real;
- and purchasing power parity (PPP).
When nominal GDP is calculated, it is determined in current prices. The disadvantage of this approach is that it does not take into account the rate of inflation, as a result of which the calculated nominal value may be increased at a time when the volume of production in the country decreases.
Thus, the nominal value shows only the increase or decrease in the value of goods produced, and not the dynamics of production.
In turn, real GDP takes into account the level of inflation and characterizes the dynamics of production volume. The advantage of this approach is that it reflects the increase in trade turnover in the state, if this occurs. It does not depend in any way on changes in the exchange rate or other factors.
Of great interest, both for specialists in the field of finance and economics, and for ordinary people, is the calculation value expression produced material goods, adjusted for purchasing power.
To do this, calculate the per capita value by dividing the resulting value of the macroeconomic indicator by the population size. With this approach, the solvency of the country's population is assessed.
In general, the value of the indicator allows us to assess the level of material condition of society.
I hope that today's topic was interesting and allowed us to better understand what GDP is. If this is true, then share it with your friends in public and subscribe to me.
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Gross Domestic Product (GDP) is the sum total of goods and services produced in a state and ready for any use, be it consumption, export or accumulation. This macroeconomic indicator reflects the market value of products, regardless of the ownership of the actual means of production. Explanation:
- gross – denotes the totality of values;
- internal indicates territoriality, that is, the creation of goods within the borders of a certain country
If we explain what GDP is in economics in simple words, it is necessary to clarify that GDP collects the results of the functioning of all industries in the state, even if they belong to residents of foreign countries or are a branch foreign company, are under the control of foreign capital.
GDP is one of the key indicators that quantitatively expresses economic development. He's at his most general form illustrates how the economy grows as well as how it develops. The reporting period is most often taken to be a year.
The GDP of countries is indicated in national currency and is recalculated at the exchange rate. However, in order to more accurately compare the development of the economies of world states, it is often expressed in terms of purchasing power parity.
The structure of each state's GDP is unique and depends on what part of the income, for example, industry brought to the state in the reporting year. Also, the structure can be characterized in different ways: in terms of production, use and income generation.
In the database World Bank contains information about the GDP of all countries in the world, expressed in dollars. Statistics of changes are recorded there throughout the year and updated annually, after which they are published.
GDP per capita
To determine the general level and speed of economic development, they use the GDP of the population, expressed in US dollars. States with a different national currency this indicator recalculated according to the market exchange rate. GDP has certain disadvantages. Firstly, this is average. Secondly, it does not take into account other criteria for indicators of living standards, which may be better in a country with a lower GDP. Example - level of education, medicine, crime, etc. Thirdly, this indicator does not take into account that the dollar in different countries has different purchasing power. And fourthly, it does not take into account the consequences of increasing economic growth rates, for example, the emergence of environmental problems.
GDP calculation
GDP consists of the final costs of production. The prices of items needed during the production of the final product are not taken into account. For example, in the production of watches, the cost of the strap and glass, which are intermediate goods (necessary for the production of the final one), is not taken into account separately. Otherwise, double counting will occur - some goods will be counted twice and GDP will be greater than actual.
When making calculations, the costs of intermediate goods (purchased for manufacturing) are subtracted from the cost of the final product. The resulting result will be added value (arising during production). Therefore, to calculate GDP, you need to sum up all added values of all producers in the country. It is also correct to add the cost of household services to the amount, but in reality this is impossible to ensure.
To determine GDP, 3 methods are used:
- Find the sum of all incomes in the state: salaries, interest payments, rents, imports, then subtract gross subsidies.
- An end-use method that invests all consumer costs plus investor costs and government purchases. The net export figure is also summed up there. It is calculated by subtracting imports from exports.
- Calculation of GDP using the production method (added values of goods from all industries are added up and net taxes are added to them).
Regardless of the method used, there should be a single digit at the end, since economic relations one participant's expense is another's income.
GDP does not include certain income. In return for receiving such funds individual or the organization produces nothing. These are transfer payments. These include pension payments, any social security payments. insurance, any benefits.
Does not apply to GDP and income received shadow economy, since it is impossible to determine its level. Although statisticians are trying to indirectly estimate at least some part of them.
In each specific situation it is necessary to determine whether transactions with securities, because, on the one hand, this does not affect production, however, if the funds transferred to borrowers were invested in industry, this will affect GDP. Determining GDP is necessary for subsequent calculation of the rate of increase/decrease in production and other macroeconomic indicators.
What is the GDP deflator?
The gross domestic product deflator is an index, expressed as a percentage, required to calculate the price level of the consumer basket for a specific time period. When calculating it, you need to sum up the prices of all goods and services created in the country. excluding imports. The GDP deflator shows changes in economic output over the course of a year. denotes the approximate inflation rate.
To find the GDP deflator, according to the formula, you need to determine the ratio nominal GDP, in current prices, to real GDP expressed in prices of the base period. The result obtained is converted into percentages. When the indicator exceeds one (100%), we can talk about an increase in the inflation rate; when the deflator is less than 100%, inflation decreases.
Difference between GDP and GNP
These indicators are similar, but have one fundamental difference. GDP is the total value of products manufactured within a state, while GNP or gross national product is the total value of all goods and services produced by national enterprises, regardless of their location.
Therefore, to find out GDP, you need to subtract from GNP the difference in profits received by the state from abroad and those that foreign resident investors received in the state.
GDP indicators by country for 2019
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Gross domestic product
Gross domestic product(English) Gross Domestic Product), the generally accepted abbreviation is GDP(English) GDP) - the market value of all final goods and services (that is, intended for direct consumption) produced during the year in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used.
Gross domestic product varies:
- nominal(English) nominal GDP) (absolute) - expressed in current prices of the year of its calculation.
- real(English) real GDP) (adjusted for inflation) - expressed in prices of the previous or any other base year. Real GDP takes into account the extent to which GDP growth is driven by real output growth rather than price increases.
A country's GDP can be expressed both in national currency and, if necessary, recalculated for reference at the exchange rate in foreign currency, and can be presented in Purchasing Power Parity (PPP) (for more accurate international comparisons).
Nominal and real GDP
Due to constant dynamics in production volumes, each country's GDP tends to change over time. If the volume of per capita GDP increases, then this indicates an increase in the standard of living of citizens of a given society. On the contrary, negative GDP dynamics indicate economic crisis. Therefore, by comparing the GDP of two different years, you can find out in which of them the standard of living of citizens was higher.
However, the following problem arises with such comparisons. The fact is that GDP is measured in monetary units (rubles, dollars, euros, etc.), which in different years may have different purchasing power due to price changes. For example, if GDP was 1000 monetary units in 2000 and 2005, and the price level rose during this period of time, then in reality the standard of living has decreased, since the same amount can buy less goods at the end of the period than at the beginning. Therefore, in order to be able to make comparisons of GDP in different years, it is necessary to take into account price dynamics. For this purpose, the concepts of nominal and real GDP are introduced.
To illustrate, consider the following example. Let the economy produce only two goods in 2000: product 1 and product 2. Moreover, in 2000, 80 units were produced. product 1, the price of which was 5 monetary units, and 50 pcs. 2 goods at a price of 12 monetary units per piece. Therefore, nominal GDP in 2000 was: 80 x 5 + 50 x 12 = 1000 monetary units. Let, further, in 2005, 60 units were produced. 1 product at a price of 6 monetary units and 40 pcs. 2 goods at a price of 16 monetary units. Nominal GDP in 2005 is equal to: 60 x 6 + 40 x 16 = 1000 monetary units. Thus, nominal GDP has not changed over these years. However, due to rising prices, real GDP in 2005, i.e. the volume of output in 2005 in 2000 prices decreased: 60 x 5 + 40 x 12 = 780 monetary units.
The ratio of nominal GDP to real GDP is called the GDP deflator. For our example, the GDP deflator in 2005 is equal to 1000 / 780 = 1.282. The GDP deflator shows how much the general price level in the economy has increased (in this example, by 28.2%).
Calculation methods
GDP calculated by 3 methods:
- Methods for calculating GDP
By income. =w+r+R+p+A+T w - wages, r - income and interest on property R - rental payments p - profit A - depreciation, or the cost of restoring worn-out capital T - indirect taxes (it is assumed that all straight lines are already taken into account)
By expenses. =C+I+G+X C - household final consumption expenditure I - gross investment G - government purchases of goods and services Xn - net exports (the difference in the value of exports and imports)
Based on the amount of products produced - only the value added by each company - the final product - is summed up. Final products are those products that are purchased during the year for consumption, accumulation, export and are not used for intermediate consumption.
Origin story
Work on measuring the volume of national production began in the 30s of the 20th century by economist Simon Kuznets at the US Department of Commerce.
The first estimates of national income were made by Kuznets in 1934. In this work, national income and product accounts appeared for the first time. Kuznets recalculated the US national income accounts back to 1869. The first report on national income and production for the period was presented to the US Congress in 1937. Before this, no one had a detailed idea of the country's economic activity. The term macroeconomics was not used in print until 1939. In 1971, Simon Kuznets received the Nobel Prize.
GDP (PPP) of world economic leaders
In terms of GDP, the United States ranks first in the world, but Qatar leads in terms of GDP per capita. Russia occupies, according to various estimates, from 6 to 10 places in the world in terms of volume, but only 38 place in per capita terms. Russia's GDP in 2005 amounted to $766.2 billion in market terms exchange rate and $1,723 billion at purchasing power parity. GDP in Russia per capita and per person employed in production in 2007 amounted to $14,704,987
Countries are sorted in descending order of GDP (PPP):
| International Monetary Fund list (2008) | World Bank List (2007) | List of CIA (2008) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Russia's GDPRussia's GDP in 2007 was in current prices 32988,6 billion rubles, and amounts to 232 thousand rubles per capita. The growth rate of its real volume relative to 2006 was 108,1 % . The GDP deflator index for 2007 relative to 2006 prices was 113,5 % . There is an opinion that as a result of economic reforms in Russia in the early 1990s, the period of which was characterized by a sharp stratification of society by income level and general economic decline, Russia's GDP by 1992 amounted to three-quarters, and by 1997 - half of the 1990 GDP. On September 22, Russian Finance Minister Alexei Kudrin said during a State Duma meeting that Russia would restore its 1990 nominal GDP per capita ($2,456) by 2007. Doubling GDP in ten years is considered one of the main directions Russian politics. This task was announced in the Address of Russian President Vladimir Putin to the Federal Assembly dated May 16, 2003. Growth is enough to double GDP in 10 years Real GDP by 7.2% per year, which is currently being fulfilled, and growth over these years has averaged 7.3% per year. Since then, over 5 years (relative to 2002 and the beginning of 2008), the increase has already amounted to 42%. Dynamics of changeThe table below shows the dynamics of annual changes in the Russian Federation's GDP, from 1995 to 2007. The table is based on data on Russia's GDP as of January 31, 2008, from the Federal State Statistics Service. All amounts are indicated in billions of rubles.
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