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 States20953030
2China14722730
3Japan5057758
4Germany3846413
5United Kingdom2759804
6India2660245
7France2630317
8Italy1888709
9Canada1645423
10Korea, Rep.1637895
11Russian Federation1483497
12Brazil1444733
13Australia1327836
14Spain1281484
15Mexico1073915
16Indonesia1058423
17Netherlands913865
18Switzerland752248
19Turkey719954
20Saudi Arabia700117
21Poland596624
22Sweden541220
23Belgium521861
24Thailand501643
25Austria433258
26Nigeria432293
27Ireland425888
28Israel407100
29Argentina389288
30Egypt, Arab Rep.365252
31Norway362198
32Philippines361489
33United Arab Emirates358868
34Denmark356084
35Hong Kong SAR, China346585
36Singapore339998
37Malaysia337006
38South Africa335442
39Bangladesh323056
40Colombia271437
41Vietnam271158
42Finland269594
43Pakistan262610
44Chile252940
45Romania248715
46Czech Republic245339
47Portugal228539
48New Zealand210700
49Iran, Islamic Rep.203471
50Peru202014
51Greece188835
52Kazakhstan171082
53Iraq166756
54Hungary155808
55Ukraine155498
56Algeria145009
57Qatar144411
58Morocco114725
59Ethiopia107645
60Cuba107352
61Kuwait105960
62Slovak Republic105172
63Puerto Rico103138
64Kenya101013
65Ecuador98808
66Sri Lanka80676
67Myanmar79852
68Dominican Republic78844
69Guatemala77604
70Oman73971
71Luxembourg73353
72Bulgaria69889
73Ghana68532
74Tanzania62409
75Costa Rica61846
76Cote d'Ivoire61348
77Belarus60258
78Uzbekistan59929
79Angola58375
80Croatia57203
81Lithuania56546
82Panama53977
83Uruguay53628
84Slovenia53589
85Serbia53335
86Congo, Dem. Rep.48716
87Jordan43697
88Azerbaijan42607
89Tunisia41620
90Cameroon40804
91Uganda37600
92Bolivia36572
93Paraguay35670
94Bahrain34729
95Latvia33707
96Nepal33657
97Lebanon31735
98Estonia30650
99Cambodia25808
100Macao SAR, China25586
101Libya25418
102Papua New Guinea24668
103Senegal24644
104El Salvador24638
105Cyprus24612
106Honduras23662
107Iceland21718
108Trinidad and Tobago21588
109Sudan21329
110Afghanistan20116
111Bosnia and Herzegovina19946
112Lao PDR19132
113Zambia18110
114Zimbabwe18051
115Burkina Faso17933
116Mali17465
117Georgia15846
118Guinea15681
119Benin15651
120West Bank and Gaza15561
121Gabon15316
122Botswana15061
123Albania14887
124Malta14647
125Haiti14508
126Mozambique14019
127Jamaica13812
128Niger13741
129Mongolia13312
130Madagascar13056
131Armenia12641
132Nicaragua12621
133North Macedonia12263
134Malawi12182
135Brunei Darussalam12005
136Moldova11915
137Mauritius10920
138Chad10829
139Namibia10619
140Rwanda10333
141Congo, Rep.10187
142Equatorial Guinea10021
143Bahamas, The9907
144Tajikistan8194
145Mauritania7913
146Kyrgyz Republic7735
147Kosovo7716
148Togo7574
149Somalia6965
150Bermuda6842
151Monaco6816
152Guam5844
153Cayman Islands5591
154Guyana5471
155Montenegro4769
156Fiji4533
157Barbados4418
158Sierra Leone4063
159Eswatini3972
160Maldives3742
161Djibouti3384
162Liberia3201
163Suriname2884
164Burundi2841
165Curacao2595
166Central African Republic2380
167Bhutan2315
168Timor-Leste1902
169Lesotho1875
170Gambia, The1868
171Cabo Verde1703
172Belize1636
173St. Lucia1616
174Solomon Islands1545
175Guinea-Bissau1431
176Antigua and Barbuda1370
177Comoros1235
178Seychelles1059
179Grenada1042
180St. Kitts and Nevis980
181Turks and Caicos Islands924
182Vanuatu881
183St. Vincent and the Grenadines807
184Samoa807
185American Samoa709
186Dominica504
187Tonga488
188Sao Tome and Principe472
189Micronesia, Fed. Sts.410
190Palau257
191Marshall Islands244
192Kiribati197
193Nauru114
194Tuvalu48

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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