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 States21060473
2China14687673
3Japan5040107
4Germany3889668
5United Kingdom2704609
6India2667687
7France2639008
8Italy1896755
9Canada1645423
10Korea, Rep.1644312
11Russian Federation1489362
12Brazil1448559
13Australia1326901
14Spain1276962
15Mexico1090515
16Indonesia1058688
17Netherlands909793
18Switzerland739913
19Saudi Arabia703367
20Poland599449
21Sweden547054
22Belgium525211
23Thailand499681
24Austria435225
25Nigeria432198
26Ireland425852
27Israel413267
28Argentina385540
29Bangladesh373902
30Egypt, Arab Rep.365252
31Norway362198
32Philippines361751
33Denmark355222
34United Arab Emirates349473
35Vietnam346615
36Singapore345295
37Hong Kong SAR, China344932
38South Africa337619
39Malaysia337337
40Pakistan300425
41Finland271891
42Colombia270299
43Chile252727
44Romania251362
45Iran, Islamic Rep.239735
46Portugal229031
47New Zealand211734
48Peru201705
49Greece188925
50Iraq184369
51Kazakhstan171082
52Hungary157182
53Ukraine156617
54Algeria145009
55Qatar144411
56Morocco121348
57Ethiopia107657
58Cuba107352
59Slovak Republic106696
60Kuwait105960
61Puerto Rico103020
62Kenya100666
63Ecuador99291
64Sri Lanka85349
65Myanmar78930
66Dominican Republic78844
67Guatemala77625
68Oman75909
69Luxembourg73992
70Bulgaria70240
71Ghana70043
72Tanzania62409
73Costa Rica62158
74Belarus61371
75Cote d'Ivoire61348
76Uzbekistan59894
77Croatia57472
78Lithuania56846
79Panama53977
80Slovenia53706
81Angola53619
82Uruguay53560
83Serbia53356
84Libya50357
85Congo, Dem. Rep.48716
86Jordan44182
87Azerbaijan42693
88Tunisia42537
89Cameroon40773
90Uganda37600
91Bolivia36629
92Paraguay35432
93Bahrain34723
94Latvia34601
95Nepal33433
96Lebanon31712
97Estonia31370
98Sudan27034
99Cambodia25872
100Macao SAR, China25459
101Cyprus25008
102El Salvador24563
103Senegal24493
104Papua New Guinea23848
105Honduras23827
106Iceland21694
107Zimbabwe21509
108Trinidad and Tobago21059
109Afghanistan20143
110Bosnia and Herzegovina19950
111Lao PDR18981
112Zambia18110
113Burkina Faso17933
114Mali17465
115Georgia15842
116Benin15651
117West Bank and Gaza15531
118Gabon15314
119Albania15131
120Malta14933
121Botswana14930
122Haiti14508
123Guinea14177
124Mozambique14028
125Jamaica13812
126Niger13744
127Mongolia13312
128Madagascar13051
129Armenia12641
130Nicaragua12586
131North Macedonia12363
132Malawi12182
133Brunei Darussalam12005
134Moldova11859
135Mauritius11401
136Syrian Arab Republic11079
137Chad10715
138Namibia10581
139Congo, Rep.10483
140Rwanda10184
141Equatorial Guinea10099
142Bahamas, The9699
143New Caledonia9435
144Mauritania8405
145Tajikistan8133
146Kyrgyz Republic7780
147Kosovo7716
148Togo7574
149Bermuda6887
150Somalia6883
151Monaco6739
152Liechtenstein6113
153Guam5886
154French Polynesia5709
155Cayman Islands5608
156Guyana5471
157Montenegro4769
158Barbados4671
159Fiji4477
160Virgin Islands (U.S.)4204
161Sierra Leone4063
162Eswatini3982
163Maldives3746
164Faroe Islands3248
165Djibouti3181
166Greenland3076
167Liberia3039
168Suriname2911
169Andorra2891
170Burundi2649
171Aruba2610
172Curacao2496
173Central African Republic2326
174Bhutan2325
175Lesotho2231
176Timor-Leste2158
177Belize2080
178Gambia, The1812
179Cabo Verde1703
180San Marino1541
181Solomon Islands1536
182St. Lucia1516
183Guinea-Bissau1431
184Antigua and Barbuda1370
185Seychelles1261
186Comoros1225
187Grenada1043
188Turks and Caicos Islands924
189Vanuatu896
190St. Kitts and Nevis884
191St. Vincent and the Grenadines872
192Samoa868
193American Samoa716
194Dominica504
195Tonga484
196Sao Tome and Principe472
197Micronesia, Fed. Sts.408
198Palau251
199Marshall Islands241
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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