In the forecasts of economists, voiced in news plots, often talk about changing GDP in a large or smaller side. However, to understand what exactly it can turn into a country, people are not easy enough. We will deal with what GDP is and how its importance affects the life of ordinary citizens.

GDP and GNP: what is the speech

From school courses of economic geography and fundamentals of economic literacy, many have made knowledge that GDP is one of the macroeconomic indicators for which the country's level of development is estimated. And what he is higher, the more prosperous residents of the state. This is true, but only partly. For specialists, the value of GDP is that it allows you to assess and predict:

  • national income of any state;
  • the success of economic activities in it;
  • the level of activity of the subjects of the economy;
  • direction of economic development.

The gross domestic product, namely, the abbreviation is decrypted, reflects the valuation of all goods produced in the territory of the state and rendered services for a certain period. The cost of GDP includes the cost of manufactured in all areas: industry, agriculture, service sector, transport, etc. The contribution of each of them is different, such as in the diagram given.

As a rule, it is customary to compare GDP for the year, but smaller periods may also be taken to analyze, for example, a quarter to reflect the dynamics of GDP. For convenience comparison, the cost of the economy is given in US dollars as the most stable world currency. However, national monetary units can also be used in the evaluation of this indicator.

Only the final product, created exclusively in the territorial boundaries of the country, is taken into account. However, due to the division of labor, a number of national industries are outside their state. It is no secret that most European and American companies have placed their production facilities in Eastern or Southeast Asia. It turns out that goods produced for them replenish the GDP of the respective countries.

To evaluate the cost of the national economy, another indicator is used - the gross national product, otherwise GNP. It includes value assessment of products of national companies, including produced abroad. For an accurate assessment of the welfare of the inhabitants of one or another state, it will be more informative that the National Income will be more informative.

Types of GDP

Various approaches are used to evaluate GDP. The choice depends on what kind of processes occurring in the country's economy will have to evaluate. Highlight three types of GDP:

  • nominal;
  • real;

Nominal

Nominal called GDP, calculated in the prices valid at the time of data collection. The lack of such an indicator is that it does not take into account inflation, based exclusively on current prices. That is, it shows the cost of all manufactured goods and services rendered at the end of the period. Thanks to inflation, GDP growth can be observed formally with a valid reduction in production.

In fact, nominal GDP reflects only an increase or decrease in the cost of services and goods within the country, and not the dynamics of production. But economists make such an indicator to make certain conclusions and forecasts. For example, that as a result of a constant increase in prices, gradually decreases demand and GDP will begin to fall.

Real

Real GDP inflation takes into account and reflects the growth of production volumes. For calculations, the prices of one of the previous periods are usually the last year. Rosstat, for example, to calculate GDP in 2016, takes data on the prices of 2011

The advantage of such an indicator is that it expresses precisely the increase in the country's turnover. It does not depend on fluctuations in currency exchange rates or other economic indicators. According to real GDP, it is possible to conclude about the current state of the state economy and processes occurring in it. For example, the crisis state will be wrapped with a decrease in production in all sectors, and the HTR will reduce the cost of production of some goods and causes the rapid growth of others - innovative.

In countries with a stable economy, real and nominal GDP graphics practically repeat each other. Where inflation processes play a silent role, the picture will be fundamentally different.

Per capita

GDP is most interesting to marketers in terms of purchasing power (her parity) of the population. For this purpose, the GDP indicator coming to one inhabitant. In the simplest case, the formula will be this: we take GDP and divide the population. It is such an indicator that is used to compare the economic well-being of countries and their inhabitants.

Other methods can be used to calculate purchasing power. One of the most popular is the so-called unofficial "Big Mac index". For a relatively non-sensitive name, reflecting the cost of the popular burger in different countries, it is quite a reliable indicator illustrating the economic condition of the state.

How to find out the size of GDP

Any resident of the country is available to the official portal of Rosstat, where you can get data on the size of GDP or GNP for different periods. But in order for this data to appear there, GDP must be calculated. There are three main ways to do it. GDP is calculated:

  • by expenses;
  • by income;
  • by value added.

Regardless of which method is used, the final amount is the same. It is logical if you consider that in macroeconomics the amount of income is always equal to the size of the costs. The cost of final products is its added value, therefore it is precisely such an amount of buyers when buying of course products.

By income

The name of this method of calculating GDP is distributed. The final amount includes:

  • national income;
  • net income from abroad;
  • indirect taxes (minus subsidies);
  • depreciation.

The most multifaceted of the listed terms will be national income. It includes:

  • all salaries paid in the country and incentive payments to employees;
  • profit from land rental, obtained by its owners (private and public);
  • interest payments for the use of borrowed funds in production;
  • profit of entrepreneurs (including interest for consumer loans and mortgage).

It is noteworthy that in this system of counting the direct taxes of the wages of civil servants are not taken into account. This is done to eliminate duplication of indicators. These articles fall under budget revenues and are counted accordingly.

By expenses

The following types of expenditures are taken to calculate the GDP size:

  • Consumer. This is the largest part of GDP. They include spending on the purchase of goods of daily need (for example, products), clothing, goods with a long term of use (for example, vehicles or household appliances), as well as various services (education, transport, medicine, entertainment, etc.).
  • State. They include, above all, public investment in the economy. And the costs associated with the implementation of management functions (maintenance of authorities), ensuring national security, etc.
  • Investment. These include investments in their own means of the production of private companies. These may be reserves of raw materials or necessary materials, fixed assets or construction of industrial buildings. In the size of this part, one can judge the stability of the economic situation.
  • Pure exports. The difference between income from exports and exports to import goods and services. Another name of this component is a trading balance.

By value added

Otherwise, the production method. The value added, as is well known, is the difference between the income and the cost of goods produced by the company. To obtain GDP, added value calculated for each industry is separate.