Gross Domestic Product

The Gross Domestic Product is the monetary value of final goods and services produced by an economy in a given period of time.

The word gross means that certain values are not calculated; these values are: variation in inventories and capital depreciations or appreciations.

The word domestic indicates production within the geographical boundaries of a given economy and

The word product refers to an added value.

How is the Gross Domestic Product calculated?

Three equivalent theoretical methods are used to calculate GDP: (1) Expenditure Method, (2) Income Method, and (3) Added Value Method.

Expenditure Method

The GDP is the sum of all expenditures made for the acquisition of end product goods or services produced within a given economy; this means that the acquisition of intermediate goods and services is excluded, as are imported goods or services.

Added Value Method

The GDP is the sum of the added values in the different production stages in every sector of the economy. The added value created by a business in the production process is equal to the value of its production minus the value of the intermediate goods.

Income Method

The GDP is the sum of the earnings of salaried employees, profits made by businesses, and taxes minus any grants. The difference between the value of a company’s outputs and the intermediate goods ends up in one of the three following categories: workers; in the form of labor income, businesses; in the form of benefits, or the State; in the form of indirect taxes, such as the VAT (Value Added Tax).

Nominal GDP versus real GDP

It must be kept in mind that production is measured in monetary terms; because of this, inflation can cause the nominal measurement of the GDP to be bigger from one year to the next, while at the same time the real GDP is unchanged. To solve this problem, the real GDP is calculated by deflating the nominal GDP through a price index, or, to be more exact, a GDP deflator is applied. A GDP deflator is a price index that includes every produced good.

To make international comparisons, the GDP can be expressed in US dollars. Since exchange rates tend to be very unstable, this measurement is affected by the exchange rate fluctuations. To solve this problem, economists use another method to conduct international comparisons, which consists of deflating the GDP by using the purchasing power parity (better known as PPP).

Domestic Product versus National Product

In the case of the Gross Domestic Product (GDP), the added value within a country is calculated. In the case of the Gross National Product (GNP), the value added by the nationally owned production factors is calculated.

Gross Product versus Net Product

The difference between the gross product and national product is the depreciation of the capital. Gross Product does not consider the depreciation of the capital, while the Net Product does, in fact, use it for calculating the total.

Product Per Capita

The GDP per capita is the average amount of Gross Product per person. It is calculated by dividing the total GDP by the number of people living in a given economy.

What is wrong with the GDP?

The use of the GDP per capita as a measurement of well being is generalized, but the Gross Domestic product might not be the best way to measure well-being. Here is why:

  • The GDP does not take capital depreciation into account (this includes machinery, factories, etc. as well as natural resources; and “human capital” could also be included). For instance, a country can increase its GDP by intensively exploiting its natural resources, but the countries´ capital will diminish, leaving decreased capital for future generations.
  • It does not consider negative externalities generated by some production activities, for instance: environmental pollution.
  • The distribution of income is not taken into account. The inhabitants of a country with the same per capita GDP as another country but with a more equitable distribution of its income will enjoy an increased level of well being.
  • The GDP does not take into consideration productive activities that affect well being but do not generate transactions, for instance, volunteer work or stay-home parents.
  • Some activities that negatively affect well being can actually increase the GDP, for instance, divorces, crimes and war.
  • The GDP ignores external debt. The GDP of a country will increase if the government or the businesses within its boundaries take on loans from foreign entities. Obviously, this would cause a diminished GDP in future periods.

Gross Domestic Product: Data by Cuntry

Current 2020 US$ Million

countryGDP
1United States21354105
2China14996414
3Japan5054068
4Germany3940142
5United Kingdom2696778
6India2674851
7France2647926
8Italy1907481
9Canada1655684
10Korea, Rep.1644312
11Russian Federation1493075
12Brazil1476107
13Australia1328414
14Spain1289783
15Mexico1121064
16Indonesia1059054
17Netherlands932560
18Saudi Arabia767951
19Switzerland741999
20Poland605914
21Sweden545147
22Belgium529694
23Thailand500461
24Ireland436555
25Austria434397
26Nigeria432198
27Israel410768
28Argentina385740
29Egypt, Arab Rep.383817
30Bangladesh373979
31Norway367633
32Philippines361751
33Denmark355631
34United Arab Emirates349473
35Singapore349165
36Hong Kong SAR, China344943
37South Africa337974
38Malaysia337456
39Pakistan300425
40Colombia270348
41Finland270000
42Iran, Islamic Rep.262186
43Chile254042
44Romania252033
45Portugal229618
46New Zealand213029
47Peru201409
48Greece191362
49Iraq180898
50Kazakhstan171082
51Algeria164873
52Hungary158468
53Ukraine156617
54Qatar144411
55Morocco121353
56Kuwait111045
57Slovak Republic107732
58Ethiopia107657
59Cuba107351
60Kenya100657
61Ecuador95865
62Sri Lanka84335
63Myanmar79006
64Dominican Republic78546
65Guatemala77719
66Oman75909
67Luxembourg73670
68Bulgaria70550
69Ghana70008
70Uzbekistan66443
71Tanzania66068
72Cote d'Ivoire63027
73Costa Rica62395
74Belarus61371
75Croatia57963
76Lithuania57412
77Panama57059
78Serbia55874
79Uruguay53559
80Slovenia53384
81Congo, Dem. Rep.48716
82Angola48501
83Libya46854
84Turkmenistan45818
85Jordan43700
86Azerbaijan42693
87Tunisia42491
88Cameroon40773
89Uganda37600
90Bolivia36629
91Bahrain35837
92Paraguay35432
93Cambodia34818
94Nepal33433
95Latvia33379
96Estonia31820
97Lebanon31712
98Sudan27034
99Zimbabwe26868
100Cyprus25555
101Macao SAR, China25343
102El Salvador24921
103Senegal24530
104Papua New Guinea23848
105Honduras23352
106Iceland21629
107Trinidad and Tobago20991
108Mali20698
109Bosnia and Herzegovina20226
110Afghanistan19955
111Lao PDR18981
112Zambia18137
113Burkina Faso17725
114Malta16409
115Georgia16010
116Benin15686
117West Bank and Gaza15531
118Gabon15342
119Albania15241
120Botswana14960
121Chad14932
122Haiti14508
123Mozambique14235
124Guinea14088
125Jamaica13812
126Niger13744
127Mongolia13312
128Madagascar13051
129Nicaragua12726
130Armenia12641
131North Macedonia12361
132Syrian Arab Republic12047
133Brunei Darussalam12005
134Malawi11769
135Moldova11530
136Congo, Rep.11468
137Mauritius11408
138Namibia10583
139Bahamas, The10363
140Rwanda10174
141Equatorial Guinea9893
142New Caledonia9454
143Channel Islands9439
144Somalia8628
145Kyrgyz Republic8270
146Mauritania8260
147Tajikistan8133
148Kosovo7717
149Togo7400
150Bermuda6887
151Monaco6730
152Sierra Leone6693
153Isle of Man6684
154Liechtenstein6405
155Guam5916
156Cayman Islands5655
157French Polynesia5574
158Guyana5471
159Barbados5168
160Montenegro4769
161Fiji4432
162Virgin Islands (U.S.)4229
163Eswatini4120
164Maldives3712
165Faroe Islands3271
166Liberia3176
167Djibouti3144
168Greenland3089
169Suriname2911
170Andorra2891
171Burundi2649
172Curacao2534
173Aruba2481
174Bhutan2457
175Central African Republic2326
176Timor-Leste2162
177Lesotho2053
178Belize2042
179Cabo Verde1821
180Gambia, The1812
181Guinea-Bissau1683
182San Marino1544
183Solomon Islands1536
184St. Lucia1499
185Antigua and Barbuda1411
186Seychelles1382
187Sint Maarten (Dutch part)1236
188Comoros1225
189Grenada1043
190Turks and Caicos Islands918
191Vanuatu909
192St. Kitts and Nevis883
193Samoa868
194Northern Mariana Islands866
195St. Vincent and the Grenadines864
196American Samoa721
197Dominica528
198Tonga496
199Sao Tome and Principe471
200Micronesia, Fed. Sts.372
201Palau258
202Marshall Islands241
203Kiribati220
204Nauru124
205Tuvalu51

Source: World Bank national accounts data, and OECD National Accounts data files.
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD

GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in current U.S. dollars. Dollar figures for GDP are converted from domestic currencies using single year official exchange rates. For a few countries where the official exchange rate does not reflect the rate effectively applied to actual foreign exchange transactions, an alternative conversion factor is used.

Top 10 Countries by Gross Domestic Product

Gross Domestic Product

Source: World Bank 2020

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