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 2018 US$ Million

countryGDP
1United States20494099
2China13608151
3Japan4970915
4Germany3996759
5United Kingdom2825207
6France2777535
7India2726322
8Italy2073901
9Brazil1868626
10Canada1709327
11Russian Federation1657553
12Korea, Rep.1619423
13Australia1432195
14Spain1426189
15Mexico1223808
16Indonesia1042173
17Netherlands912872
18Saudi Arabia782483
19Turkey766509
20Switzerland705501
21Poland585782
22Sweden551031
23Belgium531766
24Argentina518475
25Thailand504992
26Austria455736
27Norway434750
28United Arab Emirates414178
29Nigeria397269
30Ireland375902
31Israel369690
32South Africa366298
33Singapore364156
34Hong Kong SAR, China362992
35Malaysia354348
36Denmark351299
37Philippines330910
38Colombia330227
39Pakistan312570
40Chile298231
41Finland275683
42Bangladesh274024
43Egypt, Arab Rep.250895
44Vietnam244948
45Czech Republic244105
46Romania239552
47Portugal237978
48Iraq225914
49Peru222237
50Greece218031
51New Zealand205024
52Qatar192009
53Algeria180689
54Kazakhstan170538
55Hungary155703
56Kuwait141677
57Ukraine130832
58Morocco118495
59Ecuador108398
60Slovak Republic106472
61Angola105750
62Puerto Rico101130
63Sri Lanka88900
64Kenya87908
65Ethiopia84355
66Dominican Republic81298
67Oman79294
68Guatemala78460
69Myanmar71214
70Luxembourg69487
71Ghana65556
72Bulgaria65132
73Panama65055
74Croatia60805
75Costa Rica60126
76Belarus59662
77Uruguay59596
78Tanzania57437
79Lebanon56639
80Macao SAR, China54545
81Slovenia54235
82Lithuania53251
83Serbia50508
84Uzbekistan50499
85Libya48319
86Congo, Dem. Rep.47227
87Azerbaijan46939
88Cote d'Ivoire43007
89Jordan42290
90Sudan40851
91Paraguay40842
92Turkmenistan40761
93Bolivia40287
94Tunisia39860
95Cameroon38502
96Bahrain37746
97Latvia34849
98Zimbabwe31000
99Estonia30284
100Nepal28812
101Uganda27476
102Yemen, Rep.26914
103Zambia26720
104El Salvador26056
105Iceland25878
106Cambodia24571
107Cyprus24469
108Senegal24129
109Honduras23803
110Papua New Guinea23431
111Trinidad and Tobago23410
112Bosnia and Herzegovina19781
113Afghanistan19362
114Botswana18616
115Lao PDR18130
116Mali17196
117Gabon17017
118Georgia16209
119Jamaica15717
120Albania15058
121West Bank and Gaza14615
122Malta14542
123Namibia14521
124Mozambique14457
125Burkina Faso14441
126Mauritius14220
127Brunei Darussalam13567
128Equatorial Guinea13317
129Nicaragua13117
130Mongolia13009
131North Macedonia12672
132Armenia12433
133Madagascar12100
134Moldova11309
135Chad11302
136Congo, Rep.11263
137Guinea10989
138Benin10358
139Haiti9658
140Rwanda9509
141Niger9239
142Kyrgyz Republic8092
143Kosovo7900
144Tajikistan7522
145Somalia7484
146Malawi7064
147Fiji5479
148Montenegro5452
149Mauritania5365
150Togo5300
151Maldives5272
152Eswatini4703
153Sierra Leone3999
154Guyana3610
155Suriname3427
156Liberia3249
157Andorra3236
158Burundi3078
159Lesotho2791
160Timor-Leste2581
161Bhutan2534
162Central African Republic2379
163Cabo Verde1986
164Djibouti1965
165Belize1925
166St. Lucia1876
167Gambia, The1624
168Antigua and Barbuda1623
169Seychelles1590
170Guinea-Bissau1458
171Solomon Islands1411
172Grenada1207
173Comoros1203
174St. Kitts and Nevis1039
175Turks and Caicos Islands1022
176Vanuatu887
177Samoa861
178St. Vincent and the Grenadines813
179Dominica503
180Tonga450
181Sao Tome and Principe422
182Micronesia, Fed. Sts.344
183Palau310
184Marshall Islands211
185Kiribati188
186Nauru114
187Tuvalu42

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 2018

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