Gross Domestic Product

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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 States20893743
2China14687673
3Japan5040107
4Germany3846413
5United Kingdom2756900
6India2667687
7France2630317
8Italy1892574
9Canada1645423
10Korea, Rep.1637895
11Russian Federation1488321
12Brazil1448565
13Australia1327836
14Spain1281484
15Mexico1087117
16Indonesia1058688
17Netherlands913865
18Switzerland752248
19Saudi Arabia703367
20Poland596624
21Sweden541487
22Belgium521676
23Thailand499681
24Austria433258
25Nigeria432293
26Ireland425888
27Israel407100
28Argentina389591
29Bangladesh373902
30Egypt, Arab Rep.365252
31Norway362198
32Philippines361751
33United Arab Emirates358868
34Denmark356084
35Singapore345295
36Hong Kong SAR, China344881
37Vietnam343242
38Malaysia337006
39South Africa335442
40Pakistan300306
41Finland271836
42Colombia270299
43Chile252727
44Romania249511
45Czech Republic245339
46Iran, Islamic Rep.231547
47Portugal228539
48New Zealand211734
49Peru201705
50Greece188835
51Iraq184369
52Kazakhstan171082
53Hungary156743
54Ukraine156617
55Algeria145009
56Qatar144411
57Morocco114725
58Ethiopia107657
59Cuba107352
60Kuwait105960
61Slovak Republic105172
62Puerto Rico103138
63Kenya100666
64Ecuador99291
65Sri Lanka80969
66Myanmar78930
67Dominican Republic78844
68Guatemala77604
69Oman73971
70Luxembourg73353
71Ghana70043
72Bulgaria69889
73Tanzania62409
74Costa Rica62158
75Belarus61489
76Cote d'Ivoire61348
77Uzbekistan59894
78Croatia57203
79Lithuania56546
80Panama53977
81Angola53619
82Slovenia53589
83Uruguay53560
84Serbia53335
85Libya52320
86Congo, Dem. Rep.48716
87Jordan43697
88Azerbaijan42693
89Tunisia42514
90Cameroon40804
91Uganda37600
92Bolivia36629
93Paraguay35432
94Bahrain34723
95Latvia33645
96Nepal33433
97Estonia30650
98Sudan26987
99Lebanon25948
100Cambodia25872
101Macao SAR, China25586
102Cyprus24692
103Papua New Guinea24667
104El Salvador24638
105Senegal24493
106Honduras23827
107Iceland21718
108Trinidad and Tobago21392
109Afghanistan20116
110Bosnia and Herzegovina19955
111Lao PDR18981
112Yemen, Rep.18840
113Zambia18110
114Zimbabwe18051
115Burkina Faso17933
116Mali17465
117Georgia15842
118Benin15651
119West Bank and Gaza15531
120Gabon15316
121Albania15131
122Botswana14930
123Malta14917
124Haiti14508
125Guinea14169
126Mozambique14028
127Jamaica13812
128Niger13741
129Mongolia13312
130Madagascar13225
131Armenia12641
132Nicaragua12586
133Malawi12172
134North Macedonia12116
135Brunei Darussalam12005
136Moldova11859
137Mauritius10926
138Chad10715
139Namibia10562
140Congo, Rep.10483
141Rwanda10184
142Equatorial Guinea10099
143Bahamas, The9699
144New Caledonia9435
145Tajikistan8133
146Mauritania7915
147Kyrgyz Republic7780
148Kosovo7716
149Togo7574
150Somalia6965
151Bermuda6881
152Monaco6816
153Guam5844
154French Polynesia5669
155Cayman Islands5608
156Guyana5471
157Montenegro4780
158Barbados4689
159Fiji4574
160Virgin Islands (U.S.)4204
161Sierra Leone4063
162Eswatini3984
163Maldives3742
164Faroe Islands3240
165Djibouti3181
166Greenland3075
167Liberia3039
168Andorra2891
169Suriname2884
170Burundi2780
171Aruba2496
172Curacao2496
173Central African Republic2326
174Bhutan2315
175Lesotho2250
176Timor-Leste1902
177Gambia, The1830
178Cabo Verde1703
179St. Lucia1616
180Belize1585
181Solomon Islands1545
182San Marino1544
183Guinea-Bissau1431
184Antigua and Barbuda1370
185Comoros1223
186Seychelles1200
187Grenada1043
188St. Kitts and Nevis980
189Turks and Caicos Islands924
190Vanuatu896
191St. Vincent and the Grenadines872
192Samoa807
193American Samoa709
194Dominica504
195Tonga488
196Sao Tome and Principe472
197Micronesia, Fed. Sts.407
198Palau257
199Marshall Islands244
200Kiribati180
201Nauru114
202Tuvalu55

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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