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 2017 US$ Million

countryGDP
1United States19485394
2China12237700
3Japan4872415
4Germany3693204
5India2650725
6United Kingdom2637866
7France2582501
8Brazil2053594
9Italy1943835
10Canada1647120
11Russian Federation1578417
12Korea, Rep.1530750
13Australia1323421
14Spain1314314
15Mexico1150887
16Indonesia1015420
17Turkey851549
18Netherlands830572
19Saudi Arabia686738
20Switzerland678965
21Argentina637430
22Sweden535607
23Poland526465
24Belgium494763
25Thailand455302
26Iran, Islamic Rep.454012
27Austria416835
28Norway399488
29United Arab Emirates382575
30Nigeria375745
31Israel353268
32South Africa348871
33Hong Kong SAR, China341449
34Ireland331430
35Denmark329865
36Singapore323907
37Malaysia314710
38Colombia314457
39Philippines313595
40Pakistan304951
41Chile277075
42Finland252301
43Bangladesh249723
44Egypt, Arab Rep.235369
45Vietnam223779
46Portugal219308
47Czech Republic215913
48Romania211883
49Peru211389
50New Zealand204139
51Greece203085
52Iraq192060
53Algeria167555
54Qatar166928
55Kazakhstan162886
56Hungary139761
57Angola122123
58Kuwait120126
59Sudan117487
60Ukraine112154
61Morocco109708
62Ecuador104295
63Cuba96851
64Slovak Republic95617
65Sri Lanka87357
66Ethiopia80561
67Kenya79263
68Dominican Republic75931
69Guatemala75620
70Oman70783
71Myanmar67068
72Luxembourg62316
73Panama62283
74Ghana58996
75Bulgaria58220
76Costa Rica57285
77Uruguay56156
78Croatia55213
79Belarus54456
80Lebanon53576
81Tanzania53320
82Macao SAR, China50361
83Uzbekistan49677
84Slovenia48769
85Lithuania47544
86Serbia41431
87Azerbaijan40747
88Jordan40068
89Tunisia39952
90Paraguay39667
91Libya38107
92Turkmenistan37926
93Congo, Dem. Rep.37642
94Bolivia37508
95Cote d'Ivoire37353
96Bahrain35432
97Cameroon34922
98Yemen, Rep.31267
99Latvia30463
100Estonia26611
101Uganda25995
102Zambia25868
103Nepal24880
104El Salvador24805
105Iceland24488
106Honduras22978
107Cambodia22158
108Trinidad and Tobago22079
109Cyprus22054
110Zimbabwe22040
111Senegal21070
112Papua New Guinea20536
113Afghanistan19543
114Bosnia and Herzegovina18054
115Botswana17406
116Lao PDR16853
117Mali15334
118Georgia15081
119Gabon15013
120Jamaica14781
121West Bank and Gaza14498
122Nicaragua13814
123Mauritius13266
124Namibia13253
125Albania13038
126Mozambique12645
127Malta12518
128Burkina Faso12322
129Equatorial Guinea12293
130Bahamas, The12162
131Brunei Darussalam12128
132Armenia11536
133Madagascar11499
134Mongolia11433
135North Macedonia11279
136Guinea10472
137Chad9871
138Benin9246
139Rwanda9135
140Congo, Rep.8701
141Haiti8408
142Moldova8128
143Niger8119
144Kyrgyz Republic7564
145Kosovo7244
146Tajikistan7146
147Somalia7052
148Malawi6303
149Guam5859
150Fiji5061
151Mauritania5024
152Maldives4865
153Montenegro4844
154Togo4757
155Barbados4673
156Eswatini4433
157Sierra Leone3775
158Guyana3621
159Liberia3285
160Burundi3172
161Andorra3012
162Suriname2995
163Timor-Leste2954
164Aruba2700
165Lesotho2578
166Bhutan2528
167Central African Republic1949
168Belize1862
169Djibouti1844
170Cabo Verde1772
171St. Lucia1737
172San Marino1632
173Northern Mariana Islands1593
174Antigua and Barbuda1510
175Seychelles1497
176Gambia, The1489
177Guinea-Bissau1346
178Solomon Islands1303
179Grenada1126
180Comoros1068
181St. Kitts and Nevis992
182Vanuatu862
183Samoa840
184St. Vincent and the Grenadines785
185American Samoa634
186Dominica496
187Tonga427
188Sao Tome and Principe392
189Micronesia, Fed. Sts.336
190Palau289
191Marshall Islands204
192Kiribati185
193Nauru113
194Tuvalu39

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 2017

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