Feb27
2018Gross Domestic Product:
Gross Domestic Product or GDP is one of the measurement which economists, governments and investors use to measure productivity and growth of an economy. GDP represents the total monetary value of all the final products / services produced by all people and organisations over a given period of time. The Organisation for Economic Co-operation and Development (OECD) defines GDP as "an aggregate measure of production equal to the sum of the gross values added of all resident and institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs).” As per International Monetary Fund (IMF) "GDP measures the monetary value of final goods and services - that are bought by the final user - produced in a country in a given period of time (say a quarter or a year).". By far, GDS is one of the most powerful measure to indicate productiveness of a country in the world.
Approaches to measure GDP?
There are three approaches to measure GDP of an economy, namely:
Let us understand all three approaches into greater detail:
Output / Production Approach:
Income Approach:
1. GDP can also be measured by adding all the incomes generated in production process of goods and services. This approach takes into consideration various incomes like:
2. In simple words, income approach measures the total income earned by all individuals and organisations (Factors of Product) in a country.
3. GDS is calculated with the help of below formula in this method:
Expenditure Approach:
1. Unlike Income Approach, this method tries to measure total amount spent by all factors of productions like individuals, organisations.
2. GDP under this approach is measured with the help of the following formula
What does GDP indicate?
Top Ten Countries / Regions by Nominal GDP:
Rank | Country/Region | GSD(US $) |
1 | The USA | 19362129 |
2 | European Union | 17112922 |
3 | China | 11937562 |
4 | Japan | 4884489 |
5 | Germany | 3651871 |
6 | France | 2574807 |
7 | United Kingdom | 2439008 |
8 | India | 2080916 |
9 | Brazil | 1921139 |
10 | Italy | 1640385 |
11 | Canada | 1640385 |