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 States21060473
2China14687744
3Japan5048789
4Germany3887727
5United Kingdom2697806
6India2671595
7France2647418
8Italy1897461
9Canada1647598
10Korea, Rep.1644312
11Russian Federation1493075
12Brazil1476107
13Australia1330381
14Spain1278128
15Mexico1120741
16Indonesia1059054
17Netherlands909793
18Switzerland741999
19Saudi Arabia734271
20Poland599442
21Sweden547054
22Belgium526264
23Thailand500457
24Austria435049
25Nigeria432198
26Ireland428608
27Israel413267
28Argentina385740
29Egypt, Arab Rep.383817
30Bangladesh373902
31Norway367633
32Philippines361751
33Denmark354762
34United Arab Emirates349473
35Singapore348392
36Hong Kong SAR, China344943
37South Africa338291
38Malaysia337456
39Pakistan300425
40Finland271886
41Colombia270150
42Chile254258
43Romania251362
44Iran, Islamic Rep.239735
45Portugal229031
46New Zealand212569
47Peru201947
48Greece188480
49Iraq180924
50Kazakhstan171082
51Hungary157227
52Ukraine156617
53Algeria145743
54Qatar144411
55Morocco121353
56Ethiopia107657
57Cuba107351
58Slovak Republic106731
59Kuwait105948
60Puerto Rico103130
61Kenya100657
62Ecuador99291
63Sri Lanka84440
64Myanmar79045
65Dominican Republic78844
66Guatemala77715
67Oman75909
68Luxembourg73699
69Bulgaria70368
70Ghana70043
71Tanzania66068
72Cote d'Ivoire62982
73Costa Rica62395
74Belarus61371
75Uzbekistan60224
76Croatia57760
77Panama57086
78Lithuania56964
79Slovenia53734
80Uruguay53666
81Serbia53356
82Congo, Dem. Rep.48716
83Angola48501
84Libya46808
85Turkmenistan45818
86Jordan43700
87Azerbaijan42693
88Tunisia42538
89Cameroon40773
90Uganda37605
91Bolivia36629
92Paraguay35432
93Bahrain34621
94Latvia34390
95Nepal33433
96Lebanon31712
97Estonia31370
98Sudan27034
99Cambodia25872
100Macao SAR, China25343
101Cyprus25227
102El Salvador24930
103Senegal24530
104Papua New Guinea23848
105Honduras23827
106Iceland21565
107Zimbabwe21509
108Trinidad and Tobago20807
109Bosnia and Herzegovina20226
110Afghanistan19955
111Lao PDR18981
112Zambia18110
113Burkina Faso17725
114Mali17465
115Georgia15842
116Benin15686
117West Bank and Gaza15531
118Gabon15314
119Malta15252
120Albania15162
121Botswana14960
122Haiti14508
123Mozambique14235
124Guinea14177
125Jamaica13812
126Niger13744
127Mongolia13312
128Madagascar13051
129Nicaragua12678
130Armenia12641
131North Macedonia12363
132Malawi12056
133Brunei Darussalam12005
134Moldova11531
135Congo, Rep.11468
136Mauritius11408
137Syrian Arab Republic11156
138Chad10715
139Namibia10583
140Rwanda10172
141Equatorial Guinea9893
142Channel Islands9811
143Bahamas, The9754
144New Caledonia9454
145Somalia9204
146Kyrgyz Republic8270
147Mauritania8260
148Tajikistan8133
149Kosovo7717
150Togo7486
151Bermuda6887
152Monaco6739
153Isle of Man6684
154Liechtenstein6405
155Guam5886
156French Polynesia5792
157Cayman Islands5647
158Guyana5471
159Montenegro4769
160Barbados4738
161Fiji4432
162Virgin Islands (U.S.)4189
163Sierra Leone4062
164Eswatini3982
165Maldives3712
166Faroe Islands3262
167Djibouti3185
168Greenland3082
169Liberia3039
170Suriname2911
171Andorra2891
172Burundi2649
173Aruba2558
174Curacao2534
175Bhutan2457
176Central African Republic2326
177Timor-Leste2162
178Lesotho2067
179Belize2047
180Cabo Verde1821
181Gambia, The1812
182St. Lucia1604
183San Marino1541
184Solomon Islands1536
185Guinea-Bissau1431
186Antigua and Barbuda1410
187Sint Maarten (Dutch part)1236
188Comoros1225
189Seychelles1183
190Grenada1043
191Turks and Caicos Islands924
192Vanuatu909
193St. Kitts and Nevis883
194St. Vincent and the Grenadines869
195Samoa868
196Northern Mariana Islands858
197American Samoa721
198Dominica504
199Tonga484
200Sao Tome and Principe471
201Micronesia, Fed. Sts.408
202Palau257
203Marshall Islands240
204Kiribati177
205Nauru124
206Tuvalu51

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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