Gross domestic product

(Gross domestic product, GDP)

Definition of GDP, history of origin and calculation methods

Information on the definition of GDP, history of origin and calculation methods

Gross domestic product is, definition

r — income And percent on property;

Factorial income(form national profit):

Wage, rent, profit, . Received from the sale of factors of production: labor - wage; capital- percent; entrepreneurship - profit; — rent.

By cost

GDP = C + I + G + Xn, where

C—household final consumption expenditures;

I - gross investments;

G - government procurement of goods and services;

Xn is net export (the difference between the cost of export and import).

Based on the amount of products produced

Only the value added by each company—the final product—is summed up. Final products are those products that are purchased during the year for consumption, accumulation, export and are not used for intermediate consumption.

Origin story

Works measuring the volume of national production began in the 30s of the 20th century by economist Simon Kuznets in the Department of Commerce USA.

The first estimates of national benefits were made by Kuznets in 1934. In this work, accounts of national profit and goods appeared for the first time. Kuznets recalculated the US national profit accounts up to 1869. For the first time, a report on national profit and production for period 1929–1935 was introduced to the US Congress in 1937. Before this, no one had a detailed idea of ​​the country's economic activity. The term was not used in print until 1939. In 1971, Simon Kuznets received the Nobel Prize.

Until 1991, the basic indicator in macroeconomic studies was the Gross National Product. GDP has become the main indicator for compatibility with the System of National Accounts companies United Nations.

GDP per capita

GDP per capita and per person employed in production determines the level of economic development. GDP per capita cannot be considered an accurate characteristic, since the sectoral structure of production, the quality of manufactured goods, and the efficiency of materials and energy consumption per unit of production are of considerable importance. All indicators for comparability are expressed in a single currency — U.S. $. Recalculations from national currencies in dollars, as is customary at the UN for international economic comparisons, are carried out not at market exchange rates, but at purchasing power parities. Incomes based on median wages may differ more sharply in underdeveloped countries.

Gross domestic product (GDP) - gross domestic product

Gross domestic product (GDP) is a long name, so the abbreviation gross domestic product (GDP) is usually used (in Russian - GDP). This is a form of the National income and commercial units Accounts, which is the official name of the GDP report and an attempt to provide a comprehensive accounting final demand. GDP is also the main indicator, reflecting the state of the national economy. The main form of measurement is the percentage change for the year per quarter, which calculates GDP growth relative to the same period last year's coverage - annual growth rate:

Detailed official reports can also be found data about the absolute value of US GDP, expressed in billions of dollars.

The GDP report can be presented in 2 GDP estimates, which should be equal: the 1st is based on the categories of final demand, the 2nd is based on an assessment of profit.

Product (commercial units)

Profit (income)

Personal consumption expenditures · durable goods · Non-durable goods Gross Private Domestic Investment Fixed Investment · Nonresidential Structures Producers" Durable Equipment Change in Inventories Net export of goods export -Import Government Purchases Federal National Defense Nondefense (State and Local)

Compensation of Employees Wages and Salaries · Supplement to Wages and Salaries Proprietors" income (with Adjustments) Rental income of Persons (with Adjustment) Corporate Rrofits (with Adjustment) Profits before Taxes Inventory Valuation Adjustment Capital Consumption Adjustment Miscellaneous Adjustments Net National commercial units Adjustments Depreciation Adjustments Net Receipts of Factor income Adjustment

Often gross domestic product is replaced by the real gross domestic product (GDP) indicator: Real gross domestic product = Final Sales + Inventories where: Inventories = Normal Inventories Final Sales = Consumption + Producers Durable Equipment + Nonresidential Structurers + Residential Structurers + Federal Government Spendig + State&Local Government Spendig + export - import

The report is published at 8:30 a.m. Washington time or 4:30 p.m. Moscow time, usually on the 20th business day of the month following the reporting period of the Bureau of Economic Analysis Division trade for the previous quarter. and data are published monthly: the first time preliminary data and then the report is revised.

Relationship with other indicators.

GDP is the final indicator of the health of the economy and it makes sense to first of all consider indicators that affect GDP. This includes expenses, costs of construction work and other indicators, which, as you understand, are one way or another related to the structural components of GDP. GDP has a significant impact on stock indices and monetary policy central bank and the Government. Based on this, its impact on the exchange rate is determined, which is both significant and diffuse over time. has a significant impact on. GDP growth leads to an increase in the exchange rate of the national currency.

Features of the indicator behavior.

Strong growth in real domestic consumption and weak growth in real GDP could mean it absorbs a larger share of demand. This leads to the question: are you satisfied with the fluctuations in the foreign exchange rate? dollar responsible for economic policy. Growth is determined by social or long-term factors such as the end of the Cold War, etc. and cyclical factors, such as temporary interruptions in growth due to shocks and other imbalances in the economy.

There is a fairly important relationship between the value of unemployment and the growth of real gross domestic product (GDP): real GDP must increase by 2.2% in order for unemployment has not changed. If GDP grows from this threshold value by 1%, then the value unemployment will decrease by 0.1% per quarter, and vice versa.

You should also take into account an important calculation indicator - potential real GDP. This is the maximum achievable level of money emission that could be issued without increasing pressure inflation. At the same time, the non-accelerating inflation rate of unemployment should be about 5.5%. When the actual unemployment rate becomes less, there is a danger of inflation.

Difference between GNP and GDP

Difference between GNP and GDP is as follows

By definition: gross domestic product - GDP is the total cost of production in the spheres of material production and services, regardless of nationality enterprises located on the territory of this country. GDP is calculated on a so-called territorial basis.

Gross national product - GNP is the total value of the entire volume of products and services in both spheres of the national economy, regardless of the location of national enterprises(in the country or abroad). GNP is calculated on a national basis.

Thus, GNP differs from GDP by the amount of income from the use of resources of a given country abroad (the profit of investments abroad transferred to the country capital, property available there, citizens working abroad minus similar income of foreigners exported from the country.

When calculating GNP, the difference between the profits and benefits received by enterprises and individuals is added to the GDP indicator. persons of a given country abroad, on the one hand, and profits and benefits received by foreign investors and foreign workers in a given country, on the other hand.

The main requirement when calculating GDP and GNP indicators is that all goods and services produced during the year are counted only once, i.e. so that the calculation takes into account only final products and does not take into account intermediate products that can be bought and resold many times.

Final products are goods and services that are purchased by consumers for final use rather than for resale. Intermediate products are goods and services that are further processed or resold several times before reaching the final product. to the acquirer.

Therefore, to avoid repeated counting, GDP and GNP should act as the value of final goods and services and include only the value created (added) at each intermediate stage of processing.

The difference between GNP and GDP is within ± 1% of GDP.

One of the main macroeconomic indicators that evaluate the results of economic activity is gross domestic product (GDP) and gross national product (GNP).

GDP is the market value of all final goods and services produced in a country during the year, regardless of whether the factors of production are owned by residents of the country or owned by foreigners (non-residents).

GNP is the market value of all final goods and services produced in a country during the year. GNP measures the value of output created by factors of production owned by citizens of a given country ( residents), including on the territory of other countries - this is called net factor income.

GNP = GDP + net factor income.

Net factor income from abroad is equal to the difference between the benefits received by citizens of a given country abroad and the benefits of foreigners received in the territory of a given country.

Our country's GDP in 2003 was 9.3 trillion. rub.

Dividing a country's GDP by the number of its citizens yields an indicator called “GDP per capita.” The higher the GDP per capita, the higher the standard of living in the country.

Final goods and services are those that are purchased during the year for final consumption and are not used for intermediate consumption (that is, in the production of other goods and services).

In its most general form, GDP represents the total value of all final products produced in the national economy of a given country for a year. Final products refer to those goods and services that are sold to the final purchaser for their own use and not for sale. For example, in 1998, the GDP of the Republic of Belarus amounted to 662,370 billion rubles at current prices. This included the cost of cars, children's toys, films, laundry services, houses built this year, schools, tanks, airplanes and thousands of other products produced using factors of production located in the country.

GDP is calculated using three methods: production, distribution and final use. These methods reflect the processes of production, distribution and use of national goods.

Production method

Based on the exclusion from the cost of all goods and services produced of that part of them that was spent in process production. The fact is that the production of goods and services covers several stages: at some enterprises it is transformed into an intermediate product (assemblies, parts, components), which is then transferred to other enterprises that produce finished goods. Therefore, calculating the cost of all final products and services consists of summing up the value added at each stage of production.

As for foreign investments in Estonia (93.9 billion kroons), half of them are direct investments (46.9 billion kroons). These investments were mainly from Sweden (37 percent) and Finland (29 percent), but also from the United States and Holland, Denmark and Norway. They were directed primarily to finance (23 percent), industry(22 percent), transport, warehousing and communications (19 percent), wholesale and retail trade(16 percent). It is known that at the end of the first quarter of 2001, net foreign exchange amounted to approximately 7.0 billion kroons, or 8% of expected GDP, and decreased by 1.1 billion kroons during the quarter. Net-external duty, since 1997, has not increased, but remains within 8 billion crowns.

As for Estonia's international net investment position at the end of the first quarter of 2001, it was negative in the amount of -46.6 billion kroons and has changed little recently. This represents approximately 54 percent of expected GDP.

5. Republic of Germany

8. Russia

9. Denmark

10. Austria

Rest

Foreign interest investors to the Baltic market continues to grow. This was stated at the forum on private capital management in the CIS and Eastern countries held in Riga. Europe Parex asset management Robert Idelsons. There are no long-standing traditions of capital management in the Baltics, since this began to develop only in the 90s. After joining the European Union, activity in all Baltic countries has increased significantly, but Estonia remains the leader in private wealth management. From a historical point of view, the Baltic countries offered not only local, but also international services due to their favorable geographical location, liberal tax regime, capital flow, professionalism and reliability of banks, noted.

In total, foreign investments in the Estonian economy during the years of independence amounted to 7.6 billion dollars. The main investor countries were Finland, Sweden, USA, Federal Republic of Germany. Foreigners invested most of their money in finance, then in trade and industry.

Today, the Baltics have created attractive conditions for foreign investors. Estonia, according to a study conducted by the magazine, is in 8th place in the world in terms of attractiveness for foreign investors, while Latvia is in 22nd place and Lithuania is in 29th place.

Currently, the majority of large and medium-sized companies in Estonia are owned in whole or in part by foreigners. Today, foreign owners have more than 85 percent of the shares of Estonian banks; the leading ones (Hansabank, Juhisbank, Sampo) became part of the giant financial associations of Scandinavian enterprises.

With a GDP growth of 9.8% in 2005, Estonia is the fastest growing economy in the region. Since 1995, Estonia's economic growth has averaged 6% annually. Export growth continues. Some data on exports and imports are shown in Table 4.

Table 4 Main trading partners and items of export and import in 2005 (composite of all exports or imports, %)

1.Finland		1. Finland
		2. Federal Republic (FRG)
		3. Russia
5. Republic of Germany
7. Britannia
8. Denmark		8. Netherlands
10. Norway
Rest		Rest

Also, institutional and functional reforms created a stable basis for significant economic growth. Economic growth is projected to be (Table 5):

Economy Table 5: Economic growth and related factors 2004-2010

Main economic indicators
Change in GDP over the year (%)
GDP at current prices (billion. EUR)
Deflator GDP
Consumer price index (%)
Employment (ages 15-74)
Employment growth
Productivity growth (per unit of employment)
Unemployment rate (ILO)
Average monthly salary ( EUR)
Increase in wages
Current account balance (% of GDP)

Estonia occupies a leading place among the bloc's newcomers both in terms of foreign investment per capita, and in terms of a reformed monetary system, and in terms of favorable conditions for entrepreneurship. Exports of goods and services are growing very quickly, and Estonia's total export volume in relation to GDP is one of the highest in Europe. Estonia's proximity to the rapidly developing regions of Scandinavia and the Russian Federation is a significant factor that serves as the basis for the successful development of foreign trade.

The main sectors of the country's economy showed enviable growth: manufacturing, which contributed 18.3% to GDP, commercial services - 16.5%, transport - 14.6%. The influx of tourists that followed accession to the European Union caused the development of the hotel and restaurant business.

Estonia, Latvia and, to a somewhat lesser extent, Lithuania have not taken the steps taken by Russian financial institutions in recent years. authorities to revive the economy - growth is mainly achieved by taking advantage of the opening of European Union markets and liberalization of economies. Thus, Estonia was the first country in the world to switch to a flat income tax scale, only later this idea was picked up by other countries in Eastern Europe and the Russian Federation. Large-scale government projects in the field of industrial politicians not noted in the Baltic countries: economic growth in the Baltic countries is based on private investment and increased labor efficiency.

This seems to be the main growth potential of these countries: labor efficiency in Lithuania is 44% of the European average, in Estonia - 41%, and in Latvia - 35%.

In 2007 - 2008, the European Union forecasts Baltic GDP growth in these countries at the level of 7 - 8%, this will allow them to realize another doubling of GDP in the next decade.

Thus, GDP is the value of final material goods and services produced in the country over a certain period. Products and services are produced on the territory of the country with the help of national and foreign factors of production.

In order to find out what volume of goods is produced by national factors of production, the gross national product (GNP) indicator is used. In this case, the income that foreigners receive is subtracted from the national product and the income that the national economy receives abroad is added. GDP and GNP are calculated in the same way. GDP, like GNP, takes into account only the market value of end-use goods and services.

GDP is used to characterize production results, the level of economic development, economic growth rates, and analyze labor efficiency in the economy.

There are three key points in the concept of GDP:

GDP is a measure of goods produced;

GDP is a domestic good;

GDP is gross goods.

There are also three methods for calculating GDP:

GDP - as the sum of gross value added (when calculated by this method, GDP is calculated by summing the gross value added of all resident production units, grouped by industry or sector);

GDP as the sum of final use components (according to this method, GDP is defined as the sum of the costs of final consumption of goods and services, gross capital formation, the balance of exports and imports of goods and services).

GDP as the sum of primary income (when determined by this method, GDP includes the following types of primary income: wages of employees, net taxes on production and imports (taxes on production and imports minus subsidies on production and imports), gross profit and gross mixed income).

GDP has two forms:

Nominal GDP, which is equal to the volume of final production of goods and services, measured in current year prices.

GDP is real, which represents the same quantity of goods and services measured at constant base year prices.

If we divide nominal GDP by real GDP, we get gross domestic product. It measures the change in the average price level compared to the base year, i.e. the amount of inflation in the country for a given period.

We can conclude that the Estonian economy is growing, and growing quite rapidly. Estonia has one of the highest GDP rates in Europe. Such productive growth of GDP was influenced by the productivity and working capacity of the population, the rapid development of export and import growth, the flow of foreign direct investment; about 30% of GDP in recent years is made up of capital-based investments. And this allows the economy to respond very quickly to demand.

According to forecasts for the future, GDP growth in Estonia will reach 7 - 8%.

It can be said that the analysis of macroeconomic indicators, such as GDP, is of utmost importance, since it allows one to predict the development of the economy, identify trends, reasons for their changes and develop economic policy in accordance with the intended goals.

Gross national product (gross domestic product)

Gross National Product (GDP) is a useful economic indicator of the performance of an economy in a given country or economic area. It is useful not only for yearly comparisons of a country's economic situation but also facilitates comparisons with other countries or regions.

The indicator shows domestic production including the service sector, imports and exports, total consumption and government expenditure. The entry of a large investor or the willingness on the part of consumers to spend are positive economic incentives.

Between 1993 and 2006, the Czech economy as a whole changed little structurally. In general, a decrease in the proportion of agriculture and industry in the country's gross domestic product, reduced to that of the service sector, has been noticed. This phenomenon occurred, with varying degrees of intensity, in all regions of the country. One of the main economic indicators used to measure the economic performance of a given country is gross domestic product per capita.

Over the past few years, the gross domestic product in the Czech Republic has been very satisfactory and there are preconditions for growth in the future.

2005 estimate

2005 was an exceptionally favorable year for the Czech Republic. Gross domestic product reached CZK 2,931.1 billion, which grew by 6.0% over the previous year. In addition to the increased growth rate, there were also significant changes in the composition of the country's gross domestic product, while inflation was kept at low levels. Expenditures for gross capital formation were slower than household expenditures, while exports outweighed imports.

Key indicators of gross domestic product

Gross domestic product growth for 2005 + 6%

Expenses for gross capital creation + 0%

Expenses for household consumption + 2.6%

Expenses for gross creation of fixed capital + 3.7%

Total exports + 11.1%

Other positive developments affecting gross domestic product in 2005 were an increase in the labor force and a decrease in unemployment, a sharp fall in the budget deficit relative to gross domestic product, a downward slope in domestic supply and demand, a rise in gross national saving and a decrease in capital financing total from external sources. The reduction in the balance of the payment gap relative to gross domestic product and in foreign borrowing also contributed to the overall improvement in the international investment position of the Czech Republic.

While higher oil and gas prices in 2005 had an effect on the Czech economy in 2005, these external factors did dampen industry performance during the year.

Gross domestic product growth up to 2005 was marked by a faster growth rate, which ranged from 5.3% in the first quarter to 6.9% in the fourth quarter. This was due to significant structural reforms.

Net exports had the greatest impact on year-on-year growth in gross domestic product. This was due to expanded foreign trade and reduced imports. Net exports accounted for three-quarters of gross domestic product growth, while total exports increased 11.1% during the year.

A look back to 2006

This favorable economic situation should continue. Annualized growth in the second quarter of 2006 was 6.2%, while the EU average was 2.8%.

As a result, the Czech Republic currently has the fastest growing economy in the European Union and has further established its economic position on the international stage.

Sources

S. Yu. Glazyev, S. A. Batchikov. White paper. Economic reforms in the Russian Federation 1991—2001. Introduction.

Blaug M. Economic thought in retrospect / Transl. from English - M.: Delo LTD, 1995.

Galperin V.M. and others, macroeconomics: Textbook / Ed. ed. L.S. Tarasevich. - SPb.: Econ. school, 2004.

Dolan E. J., Lindsay D. Rishok: microeconomic model / Transl. from English - St. Petersburg, 1992.

Keynes J.M. General theory of employment, interest and money / Transl. from English - M.: Progress, 1978.

Kireev A.P. World Economy: Textbook. manual for universities. In 2 parts - M.: International Relations, 2007.

Course in transition economics: Textbook for universities / Ed. L.I. Abalkina. - M.: Finstatinform, 2007.

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Abbreviations are widely used in many professions. For doctors, accountants, and baseball players, the letters MRI (Magnetic Resonance Imaging), GAAP (Generally Accepted Accounting Principles), and RBI (Run Average), respectively, are self-explanatory. However, for those unfamiliar with these areas, such abbreviations without explanation become a stumbling block that prevents a better understanding of the issue at hand.

The same is true for the economy. Economists use many acronyms. One of the most common is GDP, which stands for gross domestic product. This indicator is often mentioned in newspapers, television news reports and reports from governments, central banks and business circles. It is widely used as a benchmark for assessing the state of national and global economies. When GDP increases, especially if there is no inflation problem, workers and firms usually do better than when it does not increase.

Measuring GDP
GDP measures the monetary value of final products and services, that is, those purchased by the final consumer, produced in a country over a given period of time (for example, a quarter or a year). It takes into account the entire output of products created within the country. GDP consists of goods and services produced for sale on the market, and also includes some non-market products, such as defense or education services provided by the government. An alternative concept, gross national product, or GNP, takes into account all output produced by a country's residents. Thus, if a company owned by a German owner has a facility in the United States, that company's output will be included in the U.S. GDP but in the German GNP.

Not all productive activity is taken into account in GDP. For example, it does not include unpaid work (such as work done at home or on a voluntary basis) and black market activities, as these activities are difficult to accurately measure and value. This means, for example, that a baker who produces a loaf of bread for a customer contributes to GDP, but if he baked the same loaf for his family, it would not be counted in GDP.

In addition, the gross domestic product takes into account depreciation of equipment, buildings, etc. (the so-called fixed assets) that are used in the production of products. If this wear and tear on capital assets, called depreciation, is subtracted from GDP, we get net domestic product.

Theoretically, GDP can be viewed in three different ways:

The production method involves the summation of "value added" at each stage of production, where value added is defined as total sales minus the cost of intermediate inputs in the production process. For example, flour is an intermediate input resource, and bread is a final product, or the services of an architect are an intermediate input resource, and a building is a final product.

The expenditure method is to add up the cost of purchases made by end users, such as household consumption of food, televisions, and medical services; investments in machinery and equipment produced by companies; and purchases of goods and services by government and foreigners.

The revenue method adds together the revenues generated by production, such as wages received by workers, and companies' operating profits (which are approximately equal to sales minus costs).

A country's GDP is usually calculated by the national statistical office, which compiles this information using a large number of sources. However, when carrying out calculations, most countries follow established international standards. International standards for measuring GDP are contained in the 1993 System of National Accounts, developed by the International Monetary Fund, the European Commission, the Organization for Economic Co-operation and Development, the United Nations and the World Bank.

Real GDP
Because GDP data is collected at current, or nominal, prices, it is not possible to compare two periods without adjusting for inflation. To determine "real" GDP, we need to adjust its nominal value to account for changes in prices, which allows us to see whether the value of output has increased due to increased production or simply due to higher prices. A statistical tool called a price deflator is used to adjust GDP from nominal to constant prices.

GDP is important because it provides information about the size of the economy and its performance. The growth rate of real GDP is often used as an indicator of the overall health of the economy. Broadly speaking, an increase in real GDP is taken as a sign that the economy is performing well. When real GDP growth is sustained, employment tends to rise as companies hire more workers and people have more money. The situation is currently the opposite, which is a cause for concern. After years of exceptional real GDP growth, many countries are experiencing a slowdown, with a number of industrialized countries estimated to have contracted real GDP in recent quarters. But the growth rate of real GDP goes through cyclical fluctuations over time. The economy is sometimes booming and sometimes in slow growth or even recession (the latter sometimes defined as two consecutive quarters during which output declines). For example, the United States experienced six recessions of varying duration and depth between 1950 and 2007. The dates of economic cycles in the United States are determined by the National Bureau of Economic Research.

Cosupplying the GDP of two countries
GDP is measured in the monetary units of the country in question. This requires adjustment if it is necessary to compare the value of output in two countries using different currencies. The usual way is to convert the value of each country's GDP into US dollars and then compare them. Conversion to dollars can be made either using market exchange rates, those prevailing in the foreign exchange market, or exchange rates based on purchasing power parity (PPP). The PPP exchange rate is the rate at which it would be necessary to convert one country's currency into another's to purchase the same quantity of goods and services in each country. In emerging market and developing countries, there is a large gap between the market exchange rate and the PPP exchange rate. In most of these countries, the ratio of the market exchange rate to the PPP dollar exchange rate is between 2 and 4. This is because non-tradable goods and services tend to be cheaper in low-income countries than in high-income countries. high incomes, for example, it costs more to get a haircut in New York than in Bishkek, even if the cost of producing tradable goods such as cars is the same in the two countries. In advanced economies, market exchange rates and PPP exchange rates tend to be much closer. Such differences mean that emerging market and developing countries have larger GDP when valued in US dollars when the PPP exchange rate is applied.

The IMF publishes a variety of GDP data on its website. International organizations such as GDP also calculate global and regional measures of real GDP growth. This gives an idea of ​​how fast or slow the economies of countries in a particular region of the world are growing. Aggregates are compiled as weighted averages of individual country GDPs, with weights reflecting each country's share of the group (PPP exchange rates are used to determine appropriate weights).

What GDP doesn't show
It is also important to understand what information GDP cannot provide. GDP is not a measure of a country's overall standard of living. Although changes in the output of goods and services per person (GDP per capita) are often used as a measure of whether the average person in a country is more or less well-off, it does not reflect aspects that may be considered important to overall well-being. For example, increased production may come at the expense of environmental damage or other external costs such as noise. Or it may be due to a reduction in free time or the depletion of non-renewable natural resources. Quality of life may also depend on the distribution of GDP among a country's residents, and not just on its overall level. To take such factors into account, the United Nations produces a Human Development Index, which ranks countries not only based on per capita GDP but also on other factors such as life expectancy, literacy and school enrollment. Other attempts have been made to overcome some of the shortcomings of GDP, such as the Genuine Progress Index or the Gross National Happiness Index, but these measures have also been criticized.

People who watch the news often hear statements that a country's GDP is increasing or decreasing. In addition, you can often hear forecasts regarding possible changes in its value. According to the statements of the speakers, it becomes clear that this indicator is very important for the state’s economy. For this reason, it is necessary to constantly monitor its changes. However, not all ordinary people know what a country’s GDP is. You can understand all the features of the indicator and understand why its changes are so important only by reading the information on the topic.

Concept of GDP

What is GDP in economics in simple words? This question is asked by many people who first heard the concept. First you need to know that GDP is an abbreviation for the concept of “gross domestic product”. It represents the value of all goods and services that were produced by the government. Typically, the indicator is calculated for 1 year.

If a person begins to understand what GDP is in simple words, it is necessary to understand that when calculating it, not only goods and services that were produced for use within the state are taken into account, but also products sent for export and retained to ensure reserves. The value of the indicator can be expressed only in 3 types:

• the currency of the state for which the calculation is carried out;
• US dollars;
• in the currency of another country.

The calculation of GDP in the money of another state is carried out in order to make a comparison. The indicator is often used as an indicator of the general welfare of the state. However, experts say that such an action is wrong.

To make it easier to understand, experts advise people to calculate the indicator for themselves and their loved ones. So, a family of 3 people can act as a small state. Its income will consist of the earnings of working members received over a certain period. So, if the mother earned 30,000 rubles, and the father earned 45,000 rubles, the total GDP of the family will be equal to 75,000 rubles. In addition, additional income is taken into account. So, if a son, who does not receive any other income, went to a neighbor, helped him remove snow from the street, and receives 1,000 rubles for the work done, the money will also be taken into account in the overall GDP of the family. Its size will be 76,000 rubles.

Types of GDP

If a person thinks about what GDP per capita is, he will find out that today there are 3 types of indicator. These include:

• nominal;
• real;
• according to PPP.

The calculation of nominal gross domestic product is carried out in the value of goods in current year prices. In this case, the inflation rate is not taken into account. Nominal GDP does not provide a true picture of changes in government income. It only shows income growth, not taking into account that prices are also rising.

Real GDP makes it possible to see the real picture of what is happening. When calculating the indicator, the impact of inflation is taken into account. It is deducted from the increase in income expressed as a percentage.

For example, the overall growth rate of the state's GDP was 12%, while the inflation rate was 11.5%. To calculate the value of real gross domestic product, a specialist will perform the following simple manipulation: 12-11,5=0,5% . From the calculations it becomes clear that state income increased by only half a percent.

To find out how a country's well-being has changed on a global scale, the gross national product must be calculated in dollars. The result of the manipulation will be finding an indicator called GDP purchasing power per capita. According to experts, it is this value that allows one to get an idea of ​​the country’s well-being.

In addition to standard calculations, experts find gross domestic product at purchasing power parity per capita. Sometimes it is called GDP at PPP. To calculate the value of the indicator, experts add up the prices of all products and services produced over a certain period, express them in dollars and divide by the number of residents living in the country. GDP at PPP is used to compare a state's position relative to other countries. For this reason, the total indicator value is presented in dollars.

What to consider when making calculations

To calculate GDP, experts take into account all the goods and services that were produced in a country over a certain period. It is difficult to take into account all the nuances of calculating the indicator. For this reason, it is found by professionals who use special methods.

Today there are 2 principles for making calculations – profitable, which is the summation of the cost of all manufactured products, and expendable, the essence of which is to add up the amount of money spent within 1 year. If the specialist made the calculations correctly, the application of the methods should result in approximately equal amounts.

Why do you need to know the value of the indicator?

Having studied the gross domestic product, any person with a list of knowledge will be able to get an idea of ​​​​the state of the state's economy. If GDP increases, this means that the number of goods and services produced increases and new enterprises open. All this indicates an improvement in the general condition of the country's economy. In addition, the population of the state has more opportunities to earn money, and the overall well-being of residents increases.

A decrease in GDP is a sign that a country's economy is in decline. The quantity of products produced is decreasing. Citizens' incomes are becoming lower and the number of jobs is declining. That is why experts are so closely monitoring changes in the indicator, and states are striving to increase its size.

Quickly explaining what GDP is in economics, in simple words and without using specific terms, is not an easy task. But the very essence can be conveyed using real examples, especially if we take into account the economic processes taking place in our country in recent years.

How is economics related to politics?

Politics and economics are two inextricably linked processes; in this tandem, the first follows from the second:

1. A stable economic model entails well-fed and calm years;
2. Any economic crisis fuels the population's dissatisfaction with the ruling elite;
3. Historical examples prove the cyclical nature of events - every crisis and every “stagnation” develops according to an almost identical model;
4. The level of support for the government directly depends on the well-being of the population, unless heavy artillery is launched in the form of propaganda;
5. Most wars began during or immediately after severe economic upheaval.

All current political trends are dictated solely by economic motives. In any country, as long as the people are fed and clothed, protests are kept to a minimum. As soon as real financial problems arise, yesterday's tacit agreement of the crowd turns into a violent expression of discontent.

What is economics in simple words?

The society interacts:

• Conducts business activities;
• Produces something;
• Redistributes material resources;
• Conducts trade.

All these processes can take place within one country or spread to a number of independent states, with their own economy - a set of economic relations.

We live in a post-industrial society, where the main part of the economy is the services market. Factories still inspire awe and respect, but they do not feed the bulk of the country's population.

Thanks to the presence of economics as a science:

1. We can assess the real state of affairs in the country;
2. New solutions are being developed to more effectively manage the production and distribution of goods and services;
3. Society is developing and does not stand still.

A strong economy means:

• A sustainable model of market relations;
• A thriving system capable of ensuring the well-being of citizens;
• Constantly developing production;
• Active use of the latest technologies.

If any economic crisis or external blow is capable of destroying the entire system, it means that some mistake was made during its creation.

What is GDP?

The abbreviation stands for:

• IN- gross;
• IN- internal;
• P- product.

But this does not bring much clarity. And the definition is simple - the value of all goods and services produced by a country in a year.

1. All oil sold and all gas pumped;
2. All delivered tanks and wagons;
3. All built nuclear power plants;
4. All grain sold;
5. All income received from consulting services.

Only companies located in the country are taken into account, excluding foreign investments.

Why define the indicator itself? There are several options:

• Monitor changes in the country’s income over time;
• Observe which industries are developing and which areas only bring losses;
• Build policy;
• Compare your performance with your “neighbors” and potential opponents.

There are many options for using information. And it’s even more interesting to know how everyone else is doing. This way you can track changes in the region - who will become the new leader, and who may have protests or even full-fledged riots in the country in the near future. It's not for nothing that intelligence analysts eat their bread.

What is economics for?

The economy does not exist for a purpose, it simply is:

1. The factory located near your home produces steamers;
2. The intermediary buys its products from the plant at a bargain price;
3. The goods are sent through a chain of resellers;
4. Steamers reach the shelves of small stores and the end customer - with a huge markup.

And all this - a system consisting of producers, customers, resellers and end consumers - is the economy. Or rather, part of it, if we take it in a global sense.

Purely theoretically, in any country the economic system should:

• Ensure an adequate level of state revenue;
• Modernize to be competitive;
• Create connections with other states for more efficient work;
• Withstand periodic downturns.

In a welfare state, the main goal of the economy is to provide a decent life for all citizens. So that there are no needy people and everyone receives a well-deserved reward for their work. But only the Scandinavians were able to build a model that was at least somewhat similar, so we can only dream and wait for the future.

What is a command economy?

This concept means one of the options for economic management that took place in the Union:

1. Strict centralization of all processes, their “start” in the capital;
2. State ownership of most industries;
3. Using the directive method.

If you look closely, you can find a lot in common with a planned economy. But as real life has shown, market relations regulate such issues much better. Yes, keeping some enterprises under state ownership is a necessary evil when it comes to strategic directions.

But otherwise, thanks to private ownership:

• Competition among manufacturers is growing;
• New technologies are being introduced;
• Legal control over compliance with standards is facilitated;
• The buyer receives goods in larger volumes and at lower prices.

You can scold the modern economy for a long time and tediously, remembering the “well-fed Soviet times.” But if you compare the standard of living, just look at photographs of an ordinary Soviet and an equally modern apartment - everything will fall into place.

Today, command economies can be found in a number of former Soviet Republics and in some Asian countries. The West does not intend to resort to such practices in the foreseeable future.

Importance of GDP for the country

GDP is the total value of everything a country produces in a year:

• Measured in dollars for ease of comparison;
• Within the state, data is provided in national currency;
• Recalculated once a year;
• Formed from private and government revenues;
• Reflects the state of the state's economy.

It is not entirely correct to use only numbers for assessment when there are other indicators. It is interesting to go through the industries in order to have an idea of ​​where exactly this or that state receives the bulk of its income.

The Middle East is a good example of how you can make money from selling oil and still not build a strong economy. Numbers with a large number of zeros should not be misleading in this case, because social crises and civil wars are not uncommon in these countries. It is extremely difficult to imagine this in a developed economy.

If they don’t want to explain to you what GDP is in economics in simple words, they want to deceive you. Any, even the most complex thing, can be “broken down” into accessible definitions, which is what we did in this article.

Video about the role of GDP in the country's economy

In this video, economist Leonid Avakov will clearly explain what the GDP of any country is made up of and show a diagram of how it all “works”:

Almost everyone who has read or watched economic news has come across the concept of GDP. For ordinary people it may seem complicated and incomprehensible, but in fact it is not.

GDP is a macroeconomic indicator that characterizes the level of development of a state; the sum of all services and goods produced in a country over a certain period, expressed in monetary terms. The cost of the gross product includes absolutely everything: from sold tourist packages, cars, public transport to chewing gum and movie tickets.

What is the difference between GDP and GNP

In addition to GDP, there is also such a thing as Gross National Product. Although they are similar to each other, there is a fundamental difference in the calculations. GDP takes into account the cost of services and goods manufactured only on the territory of the state. However, thanks to the international division of labor, part of the capacity of national enterprises is located outside its borders.

This is primarily due to the distribution of natural resources, as well as the price of labor. For example, many American companies have factories in China and India. It turns out that the budget of enterprises is replenished by other states. GDP takes into account all services and goods within a country, and GNP are goods and services produced by national companies.

Types of gross domestic product

There are three types of gross product:

• nominal;
• real;
• per capita.

For simplicity, let’s look at GDP using the example of an ordinary family of 3 people. Let’s say in 2010 the total family income was 900 thousand rubles, and next year – 1 million rubles.

Nominal gross product is calculated without taking into account inflation, that is, to determine the growth rate of nominal GDP, you just need to divide the 2011 figure by the 2010 figure and multiply by 100%. It turns out that in 2011, family income increased by 11.1 percent over the year. Everything would be fine, but nominal GDP does not take into account rising prices.

Actually, real GDP takes into account inflation. In 2011 it was at 11.4 percent. Taking this fact into account, in 2011 the family began to live 11.1-11.4 = -0.3 percent worse than last year. These calculations show the financial status of a family within a country. To compare well-being with families from other countries, the GDP of a Russian family must be converted into dollars - this indicator is called purchasing power per capita.

Find out the level of GDP

Every resident of the country can find out the GNP or GDP indicators for any period. To do this, you need to visit the official Rosstat website.

To calculate GDP, the statistics department uses three methods:

• by added value;
• distribution;
• according to expenses.

Moreover, the total amount in three cases is absolutely the same. In fact, this is logical - the amount of macroeconomic income equals the amount of expenses.

The distribution method of calculating gross domestic product includes:

• indirect taxes;
• depreciation;
• net income from trade with foreign agents;
• national income.

The most multifactorial indicator listed above is national income. It consists of:

• rental income;
• salaries and bonuses;
• entrepreneurial profit;
• interest on loans.

In the distribution system does not take into account the salaries of civil servants and direct taxes.

The calculation of GDP by expenditure takes into account:

• consumer spending – expenses for the purchase of goods, clothing, medicine, transport, education, etc.;
• investment expenses - investments in production, resources, real estate and fixed assets;
• public expenditures – public investments, expenditures on national security, maintenance of the government apparatus;
• trade balance.

The production method or value-added method represents the difference between income and the cost of goods manufactured. To calculate GDP, you need to sum up all the added value for each industry.

Russia's GDP in 2017

According to Rosstat's initial estimate, GDP growth in 2017 was 1.5 percent, which is comparable to the forecast of the Ministry of Economic Development made at the end of December 2016. In monetary terms, the gross product exceeded 92 trillion rubles. The price inflation index for 2017 was 5.5 percent. The largest revenue growth last year was in the entertainment, sports, wholesale and transportation sectors.

A drop in income was observed in healthcare, construction and education. For final consumers, expenses increased by 3.4 percent, but gross capital formation, on the contrary, grew by as much as 7.6 percent. Imports of goods exceeded exports by 12 percent. As you can see, economic indicators are not very difficult to understand. Thanks to them, you can understand the vector of the country’s development, and this is one of the main elements of the well-being of every family.