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Gross domestic product (GDP) is a
monetary Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are: med ...
measure of the total
market value Market value or OMV (open market valuation) is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with ''open market value'', ''fair value'' or '' fair market value'', although t ...
of all the
final good A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike an intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good. Whe ...
s and services produced and rendered in a specific time period by a
country A country is a distinct part of the world, such as a state, nation, or other political entity. When referring to a specific polity, the term "country" may refer to a sovereign state, state with limited recognition, constituent country, ...
or countries. GDP is often used to measure the economic performance of a country or region. Several national and international economic organizations maintain definitions of GDP, such as the
OECD The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...
and the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
. GDP is often used as a metric for international comparisons as well as a broad measure of economic progress. It is often considered to be the world's most powerful statistical indicator of national development and progress. The GDP can be divided by the total population to obtain the average
GDP per capita This is a list of countries by nominal GDP per capita. GDP per capita is the total value of a country's finished goods and services (gross domestic product) divided by its total population (per capita). Gross domestic product (GDP) per capita is ...
. Total GDP can also be broken down into the contribution of each industry or sector of the economy. Nominal GDP is useful when comparing national economies on the international market according to the
exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
. To compare economies over time
inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...
can be adjusted by comparing real instead of nominal values. When comparing GDPs between countries differences in the
cost of living The cost of living is the cost of maintaining a certain standard of living for an individual or a household. Changes in the cost of living over time can be measured in a cost-of-living index. Cost of living calculations are also used to compare t ...
can be adjusted with
Purchasing power parity Purchasing power parity (PPP) is a measure of the price of specific goods in different countries and is used to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of a market bask ...
(PPP). GDP per capita at purchasing power parity can be useful when comparing
living standards Standard of living is the level of income, comforts and services available to an individual, community or society. A contributing factor to an individual's quality of life, standard of living is generally concerned with objective metrics outside ...
between nations. GDP has been criticized for leaving out key
externalities In economics, an externality is an indirect cost (external cost) or indirect benefit (external benefit) to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced ...
, such as
resource extraction Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest, and cultural value. ...
,
environmental impact Environmental issues are disruptions in the usual function of ecosystems. Further, these issues can be caused by humans ( human impact on the environment) or they can be natural. These issues are considered serious when the ecosystem cannot reco ...
and unpaid domestic work. Alternative economic indicators such as doughnut economics use other measures, such as the
Human Development Index The Human Development Index (HDI) is a statistical composite index of life expectancy, Education Index, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income i ...
or Better Life Index, as better approaches to measuring the effect of the economy on
human development Human development may refer to: * Development of the human body ** This includes physical developments such as growth, and also development of the brain * Developmental psychology * Development theory * Human development (economics) * Human Develo ...
and well being.


History

Sir
William Petty Sir William Petty (26 May 1623 – 16 December 1687) was an English economist, physician, scientist and philosopher. He first became prominent serving Oliver Cromwell and the Commonwealth of England, Commonwealth in Cromwellian conquest of I ...
came up with a concept of GDP, to calculate the tax burden, and argue landlords were unfairly taxed during warfare between the Dutch and the English between 1652 and 1674. Charles Davenant developed the method further in 1695. The modern concept of GDP was first developed by
Simon Kuznets Simon Smith Kuznets ( ; rus, Семён Абра́мович Кузне́ц, p=sʲɪˈmʲɵn ɐˈbraməvʲɪtɕ kʊzʲˈnʲets; April 30, 1901 – July 8, 1985) was a Russian-born American economist and statistician who received the 1971 Nobe ...
for a 1934
U.S. Congress The United States Congress is the legislative branch of the federal government of the United States. It is a bicameral legislature, including a lower body, the U.S. House of Representatives, and an upper body, the U.S. Senate. They both ...
report, where he warned against its use as a measure of welfare (see below under '' limitations and criticisms'').Congress commissioned Kuznets to create a system that would measure the nation's productivity in order to better understand how to tackle the
Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
.Simon Kuznets, 1934. "National Income, 1929–1932". 73rd U.S. Congress, 2d session, Senate document no. 124, page 5–7 Simon Kuznets, 1934. "National Income, 1929–1932". 73rd U.S. Congress, 2d session, Senate document no. 124, page 5–7 Simon Kuznets, 1934. "National Income, 1929–1932". 73rd U.S. Congress, 2d session, Senate document no. 124, page 5–7. https://fraser.stlouisfed.org/title/971
After the
Bretton Woods Conference The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was the gathering of 730 delegates from all 44 allied nations at the Mount Washington Hotel, in Bretton Woods, New Hampshire, United States, to ...
in 1944, GDP became the main tool for measuring a country's economy. At that time
gross national product The gross national income (GNI), previously known as gross national product (GNP), is the total amount of factor incomes earned by the residents of a country. It is equal to gross domestic product (GDP), plus factor incomes received from n ...
(GNP) was the preferred estimate, which differed from GDP in that it measured production by a country's citizens at home and abroad rather than its "resident institutional units" (see
OECD The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...
definition above). The switch from GNP to GDP in the United States occurred in 1991. The role that measurements of GDP played in World War II was crucial to the subsequent political acceptance of GDP values as indicators of national development and progress. A crucial role was played here by the U.S. Department of Commerce under Milton Gilbert where ideas from Kuznets were embedded into
institution An institution is a humanly devised structure of rules and norms that shape and constrain social behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions and ...
s. The history of the concept of GDP should be distinguished from the history of changes in many ways of estimating it. The value added by firms is relatively easy to calculate from their accounts, but the value added by the
public sector The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, pu ...
, by financial industries, and by
intangible asset An intangible asset is an asset that lacks physical substance. Examples are patents, copyright, exclusive franchises, Goodwill (accounting), goodwill, trademarks, and trade names, reputation, Research and development, R&D, Procedural knowledge, ...
creation is more complex. These activities are increasingly important in developed economies, and the international conventions governing their estimation and their inclusion or exclusion in GDP regularly change in an attempt to keep up with industrial advances. In the words of one academic economist, "The actual number for GDP is, therefore, the product of a vast patchwork of statistics and a complicated set of processes carried out on the raw data to fit them to the conceptual framework."
China China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
officially adopted GDP in 1993 as its indicator of economic performance. Previously, China had relied on a Marxist-inspired national accounting system.


Determining gross domestic product (GDP)

GDP can be determined in three ways, all of which should, theoretically, give the same result. They are the production (or output or value added) approach, the income approach, and the speculated expenditure approach. It is representative of the total output and income within an economy. The most direct of the three is the production approach, which sums the outputs of every class of enterprise to arrive at the total. The expenditure approach works on the principle that all of the products must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers", colloquially) must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes.


Production approach

Also known as the Value Added Approach, it calculates how much value is contributed at each stage of production. This approach mirrors the
OECD The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...
(Organisation for Economic Co-operation and Development) definition given above. # Estimate the gross value of domestic output out of the many various economic activities; # Determine the
intermediate consumption Intermediate consumption (also called "intermediate expenditure") is an economic concept used in national accounts, such as the United Nations System of National Accounts (UNSNA), the US National Income and Product Accounts (NIPA) and the Europe ...
, i.e., the cost of material, supplies and services used to produce final goods or services. # Deduct intermediate consumption from gross value to obtain the gross value added.
Gross value added In economics, gross value added (GVA) is the measure of the value of goods and service (economics), services produced in an area, industry or sector of an economy. "The ''gross value added'' is the Value of output (economy), value of output minus t ...
= gross value of output – value of intermediate consumption. Value of output = value of the total sales of goods and services plus the value of changes in the inventory. The sum of the gross value added in the various economic activities is known as "GDP at factor cost". GDP at factor cost plus indirect taxes less subsidies on products = "GDP at producer price". For measuring the output of domestic product, economic activities (i.e. industries) are classified into various sectors. After classifying economic activities, the output of each sector is calculated by any of the following two methods: # By multiplying the output of each sector by their respective market price and adding them together # By collecting data on gross sales and inventories from the records of companies and adding them together The value of output of all sectors is then added to get the gross value of output at factor cost. Subtracting each sector's intermediate consumption from gross output value gives the GVA (=GDP) at factor cost. Adding indirect tax minus subsidies to GVA (GDP) at factor cost gives the "GVA (GDP) at producer prices".


Income approach

The second way of estimating GDP is to use "the sum of primary incomes distributed by resident producer units". If GDP is calculated this way it is sometimes called gross domestic income (GDI), or GDP (I). GDI should provide the same amount as the expenditure method described later. By definition, GDI is equal to GDP. In practice, however, measurement errors will make the two figures slightly off when reported by national statistical agencies. This method measures GDP by adding incomes that firms pay households for factors of production they hire – wages for labour, interest for capital, rent for land and profits for entrepreneurship. The US "National Income and Product Accounts" divide incomes into five categories: # Wages, salaries, and supplementary labor income # Corporate profits # Interest and miscellaneous investment income # Income earned by sole proprietors and from the Housing subsector (net of expenses) # Net income from transfer payments from businesses These five income components sum to net domestic income at factor cost. Two adjustments must be made to get GDP: # Taxes on production and imports minus subsidies are added to get from factor cost to market prices. # Depreciation (or capital consumption allowance) is added to get from net domestic product to gross domestic product. Total income can be subdivided according to various schemes, leading to various formulae for GDP measured by the income approach. A common one is: : GDP = + + + * Compensation of employees (COE) measures the total remuneration to employees for work done. It includes wages and salaries, as well as employer contributions to
social security Welfare spending is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifically to social insurance ...
and other such programs. * Gross operating surplus (GOS) is the surplus due to owners of incorporated businesses. Often called profits, although only a subset of total costs are subtracted from
gross output In economics, gross output (GO) is a measure of the value of production of new goods and services during an accounting period. Gross output represents the total value of ''sales'' by producing enterprises (their gross revenue or turnover) in an ac ...
to calculate GOS. * Gross mixed income (GMI) is the same measure as GOS, but for unincorporated businesses. This often includes most small businesses. The sum of COE, GOS and GMI is called total factor income; it is the income of all of the factors of production in society. It measures the value of GDP at factor (basic) prices. The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the government has levied or paid on that production. So adding taxes less subsidies on production and imports converts GDP(I) at factor cost to GDP(I) at final prices. Total factor income is also sometimes expressed as: : ''Total factor income'' = ''employee compensation'' + ''corporate profits'' + ''proprietor's income'' + ''rental income'' + ''net interest''


Expenditure approach

The third way to estimate GDP is to calculate the sum of the final uses of goods and services (all uses except intermediate consumption) measured in purchasers' prices. Market goods that are produced are purchased by someone. In the case where a good is produced and unsold, the standard accounting convention is that the producer has bought the good from themselves. Therefore, measuring the total expenditure used to buy things is a way of measuring production. This is known as the expenditure method of calculating GDP.


Components of GDP by expenditure

GDP (Y) is the sum of consumption (C), investment (I), government expenditures (G) and net exports (X − M). : Y = C + I + G + (X − M) Here is a description of each GDP component: * C (consumption) is normally the largest GDP component in the economy, consisting of private expenditures in the economy ( household final consumption expenditure). These personal expenditures fall under one of the following categories:
durable good In economics, a durable good or a hard good or consumer durable is a good that does not quickly wear out or, more specifically, one that yields utility over time rather than being completely consumed in one use. Items like bricks could be conside ...
s, nondurable goods, and services. Examples include food, rent, jewelry, gasoline, and medical expenses, but not the purchase of new housing. * I (investment) includes, for instance, business investment in equipment, but does not include exchanges of existing assets. Examples include the construction of a new mine, the purchase of software, or the purchase of machinery and equipment for a factory. Spending by households (not the government) on new houses is also included in investment. In contrast to its colloquial meaning, "investment" in GDP does not mean purchases related to financial investments. Buying
financial products Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance. The financ ...
is classed as '
saving Saving is income not spent, or deferred Consumption (economics), consumption. In economics, a broader definition is any income not used for immediate consumption. Saving also involves reducing expenditures, such as recurring Cost, costs. Methods ...
', as opposed to investment. This avoids double-counting: if one buys shares in a company, and the company uses the money received to build a plant, purchase equipment, etc., the amount will be counted toward GDP when the company spends the money on those things; to also count it when one gives it to the company would be to count two times an amount that only corresponds to one group of products. Buying bonds or companies' equity shares is a swapping of
deed A deed is a legal document that is signed and delivered, especially concerning the ownership of property or legal rights. Specifically, in common law, a deed is any legal instrument in writing which passes, affirms or confirms an interest, right ...
s, a transfer of claims on future production, not directly an expenditure on products; buying an existing building will involve a positive investment by the buyer and a negative investment by the seller, netting to zero overall investment. * G (government spending) is the sum of government expenditures on
final good A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike an intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good. Whe ...
s and services. It includes salaries of public servants, purchases of weapons for the military and any investment expenditure by a government. It does not include any transfer payments, such as
social security Welfare spending is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifically to social insurance ...
or
unemployment benefits Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is the proportion of people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work d ...
. Analyses outside the US will often treat government investment as part of ''investment'' rather than ''government spending''. * X (exports) represents gross exports. GDP captures the amount a country produces, including goods and services produced for other nations' consumption, therefore exports are added. * M (imports) represents gross imports. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign
supply Supply or supplies may refer to: *The amount of a resource that is available **Supply (economics), the amount of a product which is available to customers **Materiel, the goods and equipment for a military unit to fulfill its mission *Supply, as ...
as domestic. C, I, and G are expenditures on
final good A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike an intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good. Whe ...
s and services; expenditures on intermediate goods and services do not count. (Intermediate goods and services are those used by businesses to produce other goods and services within the accounting year.) So for example if a car manufacturer buys
auto parts This is a list of auto parts, which are manufactured components of automobiles. This list reflects both fossil-fueled cars (using internal combustion engines) and electric vehicles; the list is not exhaustive. Many of these parts are also used o ...
, assembles the car and sells it, only the final car sold is counted towards the GDP. Meanwhile, if a person buys replacement auto parts to install them on their car, those are counted towards the GDP. According to the U.S. Bureau of Economic Analysis, which is responsible for calculating the national accounts in the United States, "In general, the source data for the expenditures components are considered more reliable than those for the income components ee income method, above" Encyclopedia Britannica records an alternate way of measuring exports minus imports: notating it as the single variable NX.


Nominal GDP and real GDP

The raw GDP figure given by the equations above is called the nominal, historical, or current GDP. When comparing GDP figures from one year to another, compensating for changes in the value of money—for the effects of inflation or deflation is desirable. To make it more meaningful for year-to-year comparisons, a nominal GDP may be multiplied by the ratio between the value of money in the year the GDP was measured and the value of money in a base year. For example, suppose a country's GDP in 1990 was and its GDP in 2000 was . Suppose also that inflation had halved the value of its currency over that period. To meaningfully compare its GDP in 2000 to its GDP in 1990, we could multiply the GDP in 2000 by one-half, to make it relative to 1990 as a base year. The result would be that the GDP in 2000 equals × = , ''in 1990 monetary terms.'' We would see that the country's GDP had realistically increased 50
percent In mathematics, a percentage () is a number or ratio expressed as a fraction of 100. It is often denoted using the ''percent sign'' (%), although the abbreviations ''pct.'', ''pct'', and sometimes ''pc'' are also used. A percentage is a dime ...
over that period, not 200 percent, as it might appear from the raw GDP data. The GDP adjusted for changes in money value in this way is called the
real GDP Real gross domestic product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e. inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantit ...
. The factor used to convert GDP from current to constant values in this way is called the ''
GDP deflator In economics, the GDP deflator (implicit price deflator) is a measure of the money price of all new, domestically produced, final goods and services in an economy in a year relative to the real value of them. It can be used as a measure of the val ...
''. Unlike
consumer price index A consumer price index (CPI) is a statistical estimate of the level of prices of goods and services bought for consumption purposes by households. It is calculated as the weighted average price of a market basket of Goods, consumer goods and ...
, which measures inflation or deflation in the price of household consumer goods, the GDP deflator measures changes in the prices of all domestically produced goods and services in an economy including investment goods and government services, as well as household consumption goods.


National measurement

Within each country GDP is normally measured by a national government statistical agency, as
private sector The private sector is the part of the economy which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The private sector employs most of the workfo ...
organizations normally do not have access to the information required (especially information on expenditure and production by governments).


International standards

The international standard for measuring GDP is contained in the book ''
System of National Accounts The System of National Accounts or SNA (until 1993 known as the United Nations System of National Accounts or UNSNA) is an international standard system of concepts and methods for national accounts. It is nowadays used by most countries in the w ...
'' (2008), which was prepared by representatives of the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
,
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
,
Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...
,
United Nations The United Nations (UN) is the Earth, global intergovernmental organization established by the signing of the Charter of the United Nations, UN Charter on 26 June 1945 with the stated purpose of maintaining international peace and internationa ...
and
World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...
. The publication is normally referred to as SNA2008 to distinguish it from the previous edition published in 1993 (SNA93) or 1968 (called SNA68) SNA2008 provides a set of rules and procedures for the measurement of national accounts. The standards are designed to be flexible, to allow for differences in local statistical needs and conditions.


GDP per capita

GDP can be adjusted for population growth, also called ''Per-capita GDP'' or ''GDP per person''. This measures the average production of a person in the country. The major advantage of GDP per capita as an indicator of the standard of living is that it is measured frequently, widely, and consistently. It is measured frequently in that most countries provide information on GDP every quarter, allowing trends to be seen quickly. It is measured widely in that some measure of GDP is available for almost every country in the world, allowing inter-country comparisons. It is measured consistently in that the technical definition of GDP is relatively consistent among countries. It can be argued that GDP per capita is an indicator of standard of living. As a result, GDP per capita as a standard of living is a continued usage because most people have a fairly accurate idea of what it is and know it is tough to come up with quantitative measures for such constructs as happiness, quality of life, and well-being. From the perspective of environmental, social and governance (ESG) measures, GDP per capita trends can be influenced by factors such as gender parity and elements of regulatory quality. The change in number of MSMEs (Micro, Small, and Medium Enterprises) in the Philippines from 2008 through 2021 would be an example of elements such as the per capita gross domestic product and unemployment rate having significant effect on a developing country with mixed economy.


Lists of countries by GDP per capita

*
List of countries by GDP (nominal) per capita This is a list of countries by nominal GDP per capita. GDP per capita is the total value of a country's finished goods and services (gross domestic product) divided by its total population (per capita). Gross domestic product (GDP) per capita is ...
*
List of countries by GDP (PPP) per capita A country's gross domestic product (GDP) at purchasing power parity (PPP) per capita is the PPP value of all final goods and services produced within an economy in a given year, divided by the average (or mid-year) population for the same year ...
*
List of countries by past and projected GDP (nominal) per capita This is an alphabetical list of countries by past and projected gross domestic product per capita, based on official exchange rates, not on the purchasing power parity (PPP) methodology. Values are given in USDs and have not been adjusted for inf ...
( PPP)


Economic growth

Real GDP can be used to calculate the GDP growth rate, which indicates how much a country's production has increased (or decreased, if the growth rate is negative) compared to the previous year, typically expressed as percentage change. The economic growth can be expressed as: *
List of countries by real GDP growth rate This article includes lists of countries and Dependent territory, dependent territories sorted by their real gross domestic product economic growth, growth rate; the rate of growth of the total value of all final goods and services produced with ...
* List of countries by past and projected GDP (nominal) ( PPP) *
List of countries by real GDP per capita growth This is a list of countries by real GDP per capita growth rate. These numbers take into account inflation and population growth rate but not purchasing power parity.List of countries by GNI per capita growth This is a list of countries by gross national income (GNI) per capita growth. This list is not to be confused with GDP per capita growth, GNI per capita or GDP growth. List of countries and dependencies The rate of GNI per capita growth in annu ...


Relation to Gross national income

GDP can be contrasted with the
Gross national income The gross national income (GNI), previously known as gross national product (GNP), is the total amount of factor incomes earned by the residents of a country. It is equal to gross domestic product (GDP), plus factor incomes received from ...
(GNI) also known as gross national product (GNP). The difference is that GDP defines its scope according to location, while GNI defines its scope according to ownership. In a global context, world GDP and world GNI are, therefore, equivalent terms. GDP is a product produced within a country's borders; GNI is product produced by enterprises owned by a country's citizens. The two would be the same if all of the productive enterprises in a country were owned by its own citizens and those citizens did not own productive enterprises in any other countries. In practice, however, foreign ownership makes GDP and GNI non-identical. Production within a country's borders, but by an enterprise owned by somebody outside the country, counts as part of its GDP but not its GNI; on the other hand, production by an enterprise located outside the country, but owned by one of its citizens, counts as part of its GNI but not its GDP. For example, the GNI of the US is the value of output produced by American-owned firms, regardless of where the firms are located. Similarly, if a country becomes increasingly in debt, and spends large amounts of income servicing this debt this will be reflected in a decreased GNI but not a decreased GDP. Similarly, if a country sells off its resources to entities outside their country this will also be reflected over time in decreased GNI, but not decreased GDP. This would make the use of GDP more attractive for politicians in countries with increasing national debt and decreasing assets. Gross national income (GNI) equals GDP plus income receipts from the rest of the world minus income payments to the rest of the world. In 1991, the
United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
switched from using GNP to using GDP as its primary measure of production. The relationship between United States GDP and GNP is shown in table 1.7.5 of the ''
National Income and Product Accounts The national income and product accounts (NIPA) are part of the national accounts of the United States. They are produced by the Bureau of Economic Analysis of the Department of Commerce. They are one of the main sources of data on general econ ...
''. You find other examples that amplify differences between GDP and GNI by comparing indicators of developed and developing countries. The GDP of Japan for 2020 was 5.05559 trillion. Predictably, as a developed country, we see a higher GNI of 5.16915 trillion for the same year. An increase of 113.560 million. This being indicative of the production level in the country being higher than that of national production. On the other hand, the case with
Armenia Armenia, officially the Republic of Armenia, is a landlocked country in the Armenian Highlands of West Asia. It is a part of the Caucasus region and is bordered by Turkey to the west, Georgia (country), Georgia to the north and Azerbaijan to ...
is the opposite with its GNI in 2023 being lower than its GDP by 3.85 billion. This shows us countries receive investments and foreign aid from abroad.


Limitations and criticisms

Simon Kuznets Simon Smith Kuznets ( ; rus, Семён Абра́мович Кузне́ц, p=sʲɪˈmʲɵn ɐˈbraməvʲɪtɕ kʊzʲˈnʲets; April 30, 1901 – July 8, 1985) was a Russian-born American economist and statistician who received the 1971 Nobe ...
, the economist who developed the first comprehensive set of measures of national income, stated in his second report to the U.S. Congress in 1937, in a section titled "Uses and Abuses of National Income Measurements":
The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria. With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification. .. All these qualifications upon estimates of national income as an index of productivity are just as important when income measurements are interpreted from the point of view of economic welfare. But in the latter case additional difficulties will be suggested to anyone who wants to penetrate below the surface of total figures and market values. Economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.
In 1962, Kuznets stated:
Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what.
GDP as initially defined includes spending on goods and services that would shrink if underlying problems were solved or reduced - for example, medical care, crime-fighting, and the military. During World War II, Kuznets came to argue that military spending should be excluded during peacetime. This idea did not become popular; these activities are tracked because they fit into macroeconomic models (e.g. military spending uses up capital and labor). Ever since the development of GDP, multiple observers have pointed out limitations of using GDP as the overarching measure of economic and social progress. Furthermore, the GDP does not consider human health nor the educational aspect of a population. Instances of GDP measures have been considered numbers that are artificial constructs. American politician Robert F. Kennedy criticized GDP (or GNI), listing many examples of bad things it does count and good things it does not count:


Unpaid work

GDP excludes the value of household and other
unpaid work Unpaid labor or unpaid work is defined as labor or work that does not receive any direct remuneration. This is a form of non-market work which can fall into one of two categories: (1) unpaid work that is placed within the production boundary of ...
. Some, including
Martha Nussbaum Martha Nussbaum (; Craven; born May 6, 1947) is an American philosopher and the current Ernst Freund Distinguished Service Professor of Law and Ethics at the University of Chicago, where she is jointly appointed in the law school and the philos ...
, argue that this value should be included in measuring GDP, as household labor is largely a substitute for goods and services that would otherwise be purchased with money. Even under conservative estimates, the value of unpaid labor in Australia has been calculated to be over 50% of the country's GDP. A later study analyzed this value in other countries, with results ranging from a low of about 15% in Canada (using conservative estimates) to high of nearly 70% in the United Kingdom (using more liberal estimates). For the
United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
, the value was estimated to be between about 20% on the low end to nearly 50% on the high end, depending on the methodology being used. Because many public policies are shaped by GDP calculations and by the related field of
national accounts National accounts or national account systems (NAS) are the implementation of complete and consistent accounting Scientific technique, techniques for measuring the economic activity of a nation. These include detailed underlying measures that ...
, public policy might differ if unpaid work were included in total GDP. Some economists have advocated for changes in the way public policies are formed and implemented. Some have pointed out that GDP did not adapt to sociotechnical changes to give a more accurate picture of the modern economy and does not encapsulate the value of new activities such as delivering price-free information and entertainment on
social media Social media are interactive technologies that facilitate the Content creation, creation, information exchange, sharing and news aggregator, aggregation of Content (media), content (such as ideas, interests, and other forms of expression) amongs ...
. In 2017 Diane Coyle explained that GDP excludes much unpaid work, writing that "many people contribute free digital
work Work may refer to: * Work (human activity), intentional activity people perform to support themselves, others, or the community ** Manual labour, physical work done by humans ** House work, housework, or homemaking ** Working animal, an ani ...
such as writing
open-source software Open-source software (OSS) is Software, computer software that is released under a Open-source license, license in which the copyright holder grants users the rights to use, study, change, and Software distribution, distribute the software an ...
that can substitute for marketed equivalents, and it clearly has great economic value despite a price of zero", which constitutes a common criticism "of the reliance on GDP as the measure of economic success" especially after the emergence of the
digital economy The digital economy is a portmanteau of digital computing and economy, and is an umbrella term that describes how traditional Brick and mortar, brick-and-mortar economic activities (production, distribution, trade) are being transformed by the ...
.


GDP and assets

The UK's Natural Capital Committee highlighted the shortcomings of GDP in its advice to the UK Government in 2013, pointing out that GDP "focuses on flows, not stocks. As a result, an economy can run down its assets yet, at the same time, record high levels of GDP growth, until a point is reached where the depleted assets act as a check on future growth". They then went on to say that "it is apparent that the recorded GDP growth rate overstates the
sustainable growth Sustainable development is an approach to growth and human development that aims to meet the needs of the present without compromising the ability of future generations to meet their own needs.United Nations General Assembly (1987)''Report of th ...
rate. Broader measures of wellbeing and wealth are needed for this and there is a danger that short-term decisions based solely on what is currently measured by national accounts may prove to be costly in the long-term".


Health

In 2013 scientists reported that large improvements in
health Health has a variety of definitions, which have been used for different purposes over time. In general, it refers to physical and emotional well-being, especially that associated with normal functioning of the human body, absent of disease, p ...
only lead to modest long-term increases in GDP per capita. After developing an abstract metric similar to GDP, the
Center for Partnership Studies Riane Tennenhaus Eisler (born July 22, 1931) is an Austrian-born American systems scientist, futurist, attorney, and author who writes about the effect of gender and family politics historically on societies, and vice versa. She is best known ...
highlighted that GDP "and other metrics that reflect and perpetuate them" may not be useful for facilitating the production of products and provision of services that are useful – or comparatively more useful – to society, and instead may "actually encourage, rather than discourage, destructive activities". The number of obese adults was approximately 600 million (12%) in 2015.


Environment

Many
environmentalists Environmentalism is a broad philosophy, ideology, and social movement about supporting life, habitats, and surroundings. While environmentalism focuses more on the environmental and nature-related aspects of green ideology and politics, ecologi ...
argue that GDP is a poor measure of social progress because it does not take into account harm to the environment. In the language of economics, everything comes down to its monetary value. In essence, GDP rewards behaviors that are detrimental to the environment. GDP also does not capture certain phenomena impacting citizens' well-being. For example, traffic jams could cause GDP to increase as there is a higher consumption of gasoline, however, GDP fails to consider citizens' well-being in terms of the quality of air due to air pollution from the traffic jams. Various alternatives have been developed(see below). A 2020 study found that "poor regions' GDP grows faster by attracting more polluting production after connection to China's expressway system. GDP may not be a tool capable of recognizing how much
natural capital Natural capital is the world's stock of natural resources, which includes geology, soils, air, water and all living organisms. Some natural capital assets provide people with free goods and services, often called ecosystem services. All of t ...
agents of the economy are building or protecting. In 2020 scientists, as part of a World Scientists' Warning to Humanity-associated series, warned that worldwide growth in
affluence Wealth is the abundance of Value (economics), valuable financial assets or property, physical possessions which can be converted into a form that can be used for financial transaction, transactions. This includes the core meaning as held in the ...
in terms of GDP-metrics has increased resource use and pollutant emissions with affluent citizens of the world – in terms of e.g. resource-intensive consumption – being responsible for most negative environmental impacts and central to a transition to safer,
sustainable Sustainability is a social goal for people to co-exist on Earth over a long period of time. Definitions of this term are disputed and have varied with literature, context, and time. Sustainability usually has three dimensions (or pillars): env ...
conditions. They summarised evidence, presented solution approaches and stated that far-reaching lifestyle
changes Changes may refer to: Books * '' Changes: A Love Story'', 1991 novel by Ama Ata Aidoo * ''Changes'' (The Dresden Files) (2010), the 12th novel in Jim Butcher's ''The Dresden Files'' Series * ''Changes'', a 1983 novel by Danielle Steel * ''Chan ...
need to complement technological advancements and that existing societies, economies and cultures incite consumption expansion and that the structural imperative for growth in
competitive Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, indi ...
market economies A market economy is an economic system in which the decisions regarding investment, production, and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a mark ...
inhibits societal change. Text and image were copied from this source, which is available under
Creative Commons Attribution 4.0 International License
.
Sarah Arnold, Senior Economist at the
New Economics Foundation The New Economics Foundation (NEF) is a Great Britain, British think-tank that promotes "social, economic and environmental justice". NEF was founded in 1986 by the leaders of The Other Economic Summit (TOES) with the aim of working for a "new m ...
(NEF) stated that "GDP includes activities that are detrimental to our
economy An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...
and
society A society () is a group of individuals involved in persistent social interaction or a large social group sharing the same spatial or social territory, typically subject to the same political authority and dominant cultural expectations. ...
in the long term, such as
deforestation Deforestation or forest clearance is the removal and destruction of a forest or stand of trees from land that is then converted to non-forest use. Deforestation can involve conversion of forest land to farms, ranches, or urban use. Ab ...
, strip mining, overfishing and so on". The number of trees that are net lost annually is estimated to be approximately 10 billion. The global average annual deforested land in the 2015–2020 demi-decade was 10 million hectares and the average annual net forest area loss in the 2000–2010 decade 4.7 million hectares, according to the Global Forest Resources Assessment 2020. According to one study, depending on the level of
wealth inequality The distribution of wealth is a comparison of the wealth of various members or groups in a society. It shows one aspect of economic inequality or economic heterogeneity. The distribution of wealth differs from the income distribution in that ...
, higher GDP-growth can be associated with more deforestation. In 2019 "agriculture and
agribusiness Agribusiness is the industry, enterprises, and the field of study of value chains in agriculture and in the bio-economy, in which case it is also called bio-business or bio-enterprise. The primary goal of agribusiness is to maximize profit ...
" accounted for 24% of the GDP of Brazil, where a large share of annual net tropical forest loss occurred and is associated with sizable portions of this economic activity domain. Steve Cohen of the Earth Institute elucidated that while GDP does not distinguish between different activities (or lifestyles), "all consumption behaviors are not created equal and do not have the same impact on
environmental sustainability Sustainability is a social goal for people to co-exist on Earth over a long period of time. Definitions of this term are disputed and have varied with literature, context, and time. Sustainability usually has three dimensions (or pillars): env ...
". Johan Rockström, director of the Potsdam Institute for Climate Impact Research, noted that "it's difficult to see if the current G.D.P.-based
model A model is an informative representation of an object, person, or system. The term originally denoted the plans of a building in late 16th-century English, and derived via French and Italian ultimately from Latin , . Models can be divided in ...
of economic growth can go hand-in-hand with rapid cutting of emissions", which nations have agreed to attempt under the
Paris Agreement The Paris Agreement (also called the Paris Accords or Paris Climate Accords) is an international treaty on climate change that was signed in 2016. The treaty covers climate change mitigation, adaptation, and finance. The Paris Agreement was ...
in order to mitigate real-world impacts of climate change. In 1989, John B. Cobb and
Herman Daly Herman Edward Daly (July 21, 1938 – October 28, 2022) was an American ecological and Georgist economist and professor at the School of Public Policy of University of Maryland, College Park in the United States, best known for his time as a ...
introduced
Index of Sustainable Economic Welfare The Index of Sustainable Economic Welfare (ISEW) is an economic indicator intended to replace the gross domestic product (GDP), which is the main macroeconomic indicator of System of National Accounts (SNA). Rather than simply adding together all ...
(ISEW) by taking into account other factors such as consumption of nonrenewable resources and degradation of the environment. ISEW is roughly defined as: personal consumption + public non-defensive expenditures − private defensive expenditures + capital formation + services from domestic labour − costs of
environmental degradation Environment most often refers to: __NOTOC__ * Natural environment, referring respectively to all living and non-living things occurring naturally and the physical and biological factors along with their chemical interactions that affect an organism ...
− depreciation of natural capital. In 2005, Med Jones, an American Economist, at the International Institute of Management, introduced the first secular Gross National Happiness Index a.k.a.
Gross National Well-being Gross National Well-being (GNW), also known as Gross National Wellness, is a socioeconomic development and measurement framework. The GNW Index consists of seven dimensions: economic, environmental, physical, mental, work, social, and political. M ...
framework and Index to complement GDP economics with additional seven dimensions, including environment, education, and government, work, social and health (mental and physical) indicators. The proposal was inspired by the King of Bhutan's GNH philosophy. In 2019, Serge Pierre Besanger published a "GDP 3.0" proposal which combines an expanded GNI formula which he calls GNIX, with a Palma ratio and a set of environmental metrics based on the Daly Rule.


Standard of living

Although a high or rising level of GDP is often associated with increased economic and social progress, the opposite sometimes occurs. For example, Jean Drèze and
Amartya Sen Amartya Kumar Sen (; born 3 November 1933) is an Indian economist and philosopher. Sen has taught and worked in England and the United States since 1972. In 1998, Sen received the Nobel Memorial Prize in Economic Sciences for his contributions ...
have pointed out that an increase in GDP or in GDP growth does not necessarily lead to a higher standard of living, particularly in areas such as healthcare and education. Another important area that does not necessarily improve along with GDP is political liberty, which is most notable in China, where GDP growth is strong yet political liberties are heavily restricted. GDP does not account for the distribution of income among the residents of a country, because GDP is merely an aggregate measure. An economy may be highly developed or growing rapidly, but also contain a wide gap between the rich and the poor in a society. These inequalities often occur on the lines of race, ethnicity, gender, religion, or other minority status within countries. This can lead to misleading characterizations of economic well-being if the
income distribution In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes e ...
is heavily skewed toward the high end, as the poorer residents will not directly benefit from the overall level of wealth and income generated in their country (their purchasing power can decline, even as the mean
GDP per capita This is a list of countries by nominal GDP per capita. GDP per capita is the total value of a country's finished goods and services (gross domestic product) divided by its total population (per capita). Gross domestic product (GDP) per capita is ...
rises). GDP per capita measures (like aggregate GDP measures) do not account for income distribution (and tend to overstate the average income per capita). For example, South Africa during apartheid ranked high in terms of GDP per capita, but the benefits of this immense wealth and income were not shared equally among its citizens. The United Nations has aimed in its
Sustainable Development Goals The ''2030 Agenda for Sustainable Development'', adopted by all United Nations (UN) members in 2015, created 17 world Sustainable Development Goals (SDGs). The aim of these global goals is "peace and prosperity for people and the planet" – wh ...
, amongst other global initiatives, to address wealth inequality. GDP does not include several factors that influence the standard of living. In particular, it fails to account for: *
Externalities In economics, an externality is an indirect cost (external cost) or indirect benefit (external benefit) to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced ...
– Economic growth may entail an increase in negative externalities that are not directly measured in GDP. Increased industrial output might grow GDP, but any pollution is not counted. * Non-market transactions – GDP excludes activities that are not provided through the market, such as household production, bartering of goods and services, and volunteer or unpaid services. * Non-monetary economy – GDP omits economies where no money comes into play at all, resulting in inaccurate or abnormally low GDP figures. For example, in countries with major business transactions occurring informally, portions of local economy are not easily registered. Bartering may be more prominent than the use of money, even extending to services. * Quality improvements and inclusion of new products – by not fully adjusting for quality improvements and new products, GDP understates true
economic growth In economics, economic growth is an increase in the quantity and quality of the economic goods and Service (economics), services that a society Production (economics), produces. It can be measured as the increase in the inflation-adjusted Outp ...
. For instance, although computers today are less expensive and more powerful than computers from the past, GDP treats them as the same products by only accounting for their monetary value. The introduction of new products is also difficult to measure accurately and is not reflected in GDP although it may increase the standard of living. For example, even the richest person in 1900 could not purchase standard products, such as antibiotics and cell phones, that an average consumer can buy today, since such modern conveniences did not exist then. * Sustainability of growth – GDP is a measurement of economic historic activity and is not necessarily a projection. *
Income distribution In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes e ...
– GDP does not account for variances in incomes of various demographic groups. See
income inequality metrics Income inequality metrics or income distribution metrics are used by social scientists to measure the distribution of wealth, distribution of income and economic inequality among the participants in a particular economy, such as that of a specific ...
for discussion of a variety of inequality-based economic measures.


Proposals to overcome GDP limitations

In response to these and other limitations of using GDP, alternative approaches have emerged. * In the 1980s,
Amartya Sen Amartya Kumar Sen (; born 3 November 1933) is an Indian economist and philosopher. Sen has taught and worked in England and the United States since 1972. In 1998, Sen received the Nobel Memorial Prize in Economic Sciences for his contributions ...
and
Martha Nussbaum Martha Nussbaum (; Craven; born May 6, 1947) is an American philosopher and the current Ernst Freund Distinguished Service Professor of Law and Ethics at the University of Chicago, where she is jointly appointed in the law school and the philos ...
developed the
capability approach The capability approach (also referred to as the capabilities approach) is a normative approach to human welfare spending, welfare that concentrates on the actual capability of persons to achieve lives they value rather than solely having a right ...
, which focuses on the functional capabilities enjoyed by people within a country, rather than the aggregate wealth held within a country. These capabilities consist of the functions that a person is able to achieve. * In 1990, Mahbub ul Haq, a Pakistani economist at the United Nations, introduced the
Human Development Index The Human Development Index (HDI) is a statistical composite index of life expectancy, Education Index, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income i ...
(HDI). The HDI is a composite index of life expectancy at birth, adult literacy rate and standard of living measured as a logarithmic function of GDP, adjusted to purchasing power parity. * In 2009 the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
released a communication titled ''GDP and beyond: Measuring progress in a changing world'' that identified five actions to improve indicators of progress in ways that make them more responsive to the concerns of its citizens. * In 2009 Professors
Joseph Stiglitz Joseph Eugene Stiglitz (; born February 9, 1943) is an American New Keynesian economist, a public policy analyst, political activist, and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2 ...
,
Amartya Sen Amartya Kumar Sen (; born 3 November 1933) is an Indian economist and philosopher. Sen has taught and worked in England and the United States since 1972. In 1998, Sen received the Nobel Memorial Prize in Economic Sciences for his contributions ...
, and Jean-Paul Fitoussi at the Commission on the Measurement of Economic Performance and Social Progress (CMEPSP), formed by French President,
Nicolas Sarkozy Nicolas Paul Stéphane Sarközy de Nagy-Bocsa ( ; ; born 28 January 1955) is a French politician who served as President of France from 2007 to 2012. In 2021, he was found guilty of having tried to bribe a judge in 2014 to obtain information ...
published a proposal to overcome the limitation of GDP economics to expand the focus to well-being economics with a well-being framework consisting of health, environment, work, physical safety, economic safety, and political freedom. This has been adopted in a number of countries as a wellbeing economy policy. * In 2008, the Centre for Bhutan Studies began publishing the Bhutan Gross National Happiness (GNH) Index, whose contributors to happiness include physical, mental, and spiritual health; time balance; social and community vitality; cultural vitality; education; living standards; good governance; and ecological vitality. * In 2013, the OECD Better Life Index was published by the OECD. The dimensions of the index included health, economic, workplace, income, jobs, housing, civic engagement, and
life satisfaction Life satisfaction is an evaluation of a person's quality of life. It is assessed in terms of mood, relationship satisfaction, achieved goals, self-concepts, and the self-perceived ability to cope with life. Life satisfaction involves a favorabl ...
. * Since 2012, John Helliwell,
Richard Layard Peter Richard Grenville Layard, Baron Layard FBA (born 15 March 1934) is a British labour economist, co-director of the Community Wellbeing programme at the Centre for Economic Performance at the London School of Economics, and co-editor of t ...
and Jeffrey Sachs have edited an annual
World Happiness Report The World Happiness Report is a publication that contains articles and rankings of national happiness, based on respondent ratings of their own lives, which the report also correlates with various (quality of) life factors. Since 2024, the r ...
which reports a national measure of subjective well-being, derived from a single survey question on satisfaction with life. GDP explains some of the cross-national variation in life satisfaction, but more of it is explained by other, social variables (See 2013 World Happiness Report). * In 2019, Erik Brynjolfsson and Avinash Collis argued that GDP does not reflect the growing value of many digital goods because they have zero price. Along with several coauthors, they proposed an alternative approach
GDP-B
which is based on measuring the ''benefits'' of goods and services, rather than their price or cost. * At the beginning of the 21st century the World Economic Forum published a series of analyses and propositions to create economic measurement tools more effective than GDP. * China launched the Gross Ecosystem Product (GEP) in 2020. It measures the contribution of ecosystems to the economy, including by regulating climate. It spread widely across the country. The first province to issue local rules about GEP was Zhejiang , and a year later it has already decided the fate of a project in the Deqing region. For example, the GEP of Chengtian Radon Spring Nature Reserve has been calculated as US$43 million.


Problems with GDP data

A peer-reviewed study published in the ''
Journal of Political Economy The ''Journal of Political Economy'' is a monthly peer-reviewed academic journal published by the University of Chicago Press. Established by James Laurence Laughlin in 1892, it covers both theoretical and empirical economics. In the past, the ...
'' in October 2022 found signs of manipulation of
economic growth In economics, economic growth is an increase in the quantity and quality of the economic goods and Service (economics), services that a society Production (economics), produces. It can be measured as the increase in the inflation-adjusted Outp ...
statistics in the majority of countries. According to the study, this mainly applied to countries that were governed semi-authoritarian/authoritarian or did not have a functioning
separation of powers The separation of powers principle functionally differentiates several types of state (polity), state power (usually Legislature#Legislation, law-making, adjudication, and Executive (government)#Function, execution) and requires these operat ...
. The study took the annual growth in the brightness of lights at night, as measured by satellites, and compared it to officially reported economic growth. Authoritarian states had consistently higher reported growth in GDP than their growth in night lights would suggest. An effect that also cannot be explained by different economic structures, sector composition or other factors. Incorrect growth statistics can also falsify indicators such as GDP or GDP per capita. It has been suggested that countries that have
authoritarian Authoritarianism is a political system characterized by the rejection of political plurality, the use of strong central power to preserve the political ''status quo'', and reductions in democracy, separation of powers, civil liberties, and ...
governments, such as the People's Republic of
China China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
, and
Russia Russia, or the Russian Federation, is a country spanning Eastern Europe and North Asia. It is the list of countries and dependencies by area, largest country in the world, and extends across Time in Russia, eleven time zones, sharing Borders ...
, inflate their GDP figures.
Corporate haven Corporate haven, corporate tax haven, or multinational tax haven is used to describe a jurisdiction that multinational corporations find attractive for establishing subsidiaries or Incorporation (business), incorporation of regional or main company ...
s can have a distorted GDP.


Lists of countries by GDP

*
List of continents by GDP This article includes a list of continents of the world sorted by their gross domestic product (GDP), the market value of all final goods and services from a continent in a given year. The GDP dollar estimates presented here are calculated at m ...
*
List of countries by GDP (nominal) Gross domestic product (GDP) is the market value of all final goods and services from a nation in a given year. Countries are sorted by nominal GDP estimates from financial and statistical institutions, which are calculated at market or go ...
*
List of countries by GDP (PPP) GDP (PPP) means gross domestic product based on purchasing power parity. This article includes a list of countries by their forecast estimated GDP (PPP). Countries are sorted by GDP (PPP) forecast estimates from financial and statistical ...
*
List of countries by GDP sector composition This is the list of countries by purely nominal gross domestic product (GDP) sector composition. By economic sector Nominal GDP sector composition (November 2024) Nominal GDP sector composition (billions of USD$) by percentage of sector: Rea ...


See also

* Chained volume series *
Circular flow of income The circular flow of income or circular flow is a economic model, model of the economy in which the major exchanges are represented as flows of money, Good (economics), goods and Service (economics), services, etc. between economic agents. The f ...
*
Composite Index of National Capability The Composite Index of National Capability (CINC) is a statistical measure of national power created by J. David Singer for the Correlates of War project in 1963. It uses an average of percentages of world totals in six different components. The ...
* Cost-of-living crisis *
Disposable household and per capita income Household income is a measure of income received by the household sector. It includes every form of cash income, e.g., salaries and wages, retirement income, investment income and cash transfers from the government. It may include near-cash gover ...
* Economy monetization * GDP density *
Gross regional domestic product Gross regional domestic product (GRDP), gross domestic product of region (GDPR), or gross state product (GSP) is a statistic that measures the size of a region's economy. It is the aggregate of gross value added (GVA) of all resident producer unit ...
* Growth imperative *
Impact evaluation Impact evaluation assesses the changes that can be attributed to a particular intervention, such as a project, program or policy, both the intended ones, as well as ideally the unintended ones. In contrast to outcome monitoring, which examines whe ...
*
Inventory investment Inventory investment (also private inventory) is a component of gross domestic product (GDP). What is produced in a certain country is naturally also sold eventually, but some of the goods produced in a given year may be sold in a later year rather ...
*
List of countries by average wage The average wage is a measure of total income after taxes divided by total number of employees employed. In this article, the average wage is adjusted for living expenses "purchasing power parity" (PPP). This is not to be confused with the averag ...
* List of economic reports by U.S. government agencies *
Misery index (economics) The misery index is an economic indicator, created by the American economist Arthur Okun. The index helps determine how the average citizen is doing economically and is calculated by adding the seasonally adjusted unemployment rate to the annual ...
*
Median income The median income is the income amount that divides a population into two groups, half having an income above that amount, and half having an income below that amount. It may differ from the mean (or average) income. Both of these are ways of unde ...
*
Modified gross national income Modified gross national income (also Modified GNI or GNI*) is a metric used by the Central Statistics Office (Ireland) to measure the Irish economy rather than Gross national income, GNI or GDP. GNI* is GNI minus the depreciation on Intellectual ...
* National average salary *
Per capita income Per capita income (PCI) or average income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. In many countries, per capita income is determined using regular population surveys, such ...
*
Potential output In economics, potential output (also referred to as "natural gross domestic product") refers to the highest level of real gross domestic product (potential output) that can be sustained over the long term. Actual output happens in real life while ...
*
Productivism Productivism or growthism is the belief that measurable productivity and growth are the purpose of human organization (e.g., work), and that "more production is necessarily good". Critiques of productivism center primarily on the limits to ...
*
Social Progress Index The Social Progress Index (SPI) measures the extent to which countries provide for the social and environmental needs of their citizens. Fifty-four indicators in the areas of basic human needs, foundations of well-being, and opportunity to prog ...


Notes


References


Further reading

* Australian Bureau for Statistics
''Australian National Accounts: Concepts, Sources and Methods''
(), 2000. Retrieved November 2009. In depth explanations of how GDP and other national account items are determined. * * Jerven, Morten (2013). ''Poor Numbers: How We Are Misled by African Development Statistics and What to Do about It.'' Cornell University Press. * Lepenies, Philipp. ''The Power of a Single Number: A Political History of GDP''. * Philipsen, Dirk. ''The Little Big Number: How GDP Came to Rule the World and What to Do About It''. *
Joseph E. Stiglitz Joseph Eugene Stiglitz (; born February 9, 1943) is an American New Keynesian economist, a public policy analyst, political activist, and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2 ...
, "Measuring What Matters: Obsession with one financial figure, GDP, has worsened people's health, happiness and the environment, and economists want to replace it", ''
Scientific American ''Scientific American'', informally abbreviated ''SciAm'' or sometimes ''SA'', is an American popular science magazine. Many scientists, including Albert Einstein and Nikola Tesla, have contributed articles to it, with more than 150 Nobel Pri ...
'', vol. 323, no. 2 (August 2020), pp. 24–31. * * In-depth explanations of how GDP and other national account items are determined.


External links

Global *
Australian Bureau of Statistics Manual on GDP measurement





World Development Indicators (WDI)
at World Bank
World GDP Chart (since 1960)
Data

* ttp://www.historicalstatistics.org/ Historicalstatistics.org: Links to historical statistics on GDP for countries and regions maintained by the Department of Economic History at
Stockholm University Stockholm University (SU) () is a public university, public research university in Stockholm, Sweden, founded as a college in 1878, with university status since 1960. With over 33,000 students at four different faculties: law, humanities, social ...

Historical U.S. GDP (yearly data)
1790–present, maintained by Samuel H. Williamson and Lawrence H. Officer, both professors of economics at the
University of Illinois at Chicago The University of Illinois Chicago (UIC) is a public research university in Chicago, Illinois, United States. Its campus is in the Near West Side community area, adjacent to the Chicago Loop. The second campus established under the Universi ...

The Maddison Project
of the Groningen Growth and Development Centre at the
University of Groningen The University of Groningen (abbreviated as UG; , abbreviated as RUG) is a Public university#Continental Europe, public research university of more than 30,000 students in the city of Groningen (city), Groningen, Netherlands. Founded in 1614, th ...
. This project extends the work of
Angus Maddison Angus Maddison (6 December 1926 – 24 April 2010) was a distinguished British economist specialising in quantitative macro economic history, including the measurement and analysis of economic growth and development. Maddison lectured at sev ...
in collating all the available, credible data estimating GDP for countries around the world. This includes data for some countries for over 2,000 years and for all countries since 1950. Articles and books * *
"What's wrong with the GDP?"
The Genuine progress indicator: Summary of Data and Methodology, Redefining Progress C1995
Whether output and CPI inflation are mismeasured
by Nouriel Roubini and David Backus, in Lectures in Macroeconomics * Rodney Edvinsson,
Clifford Cobb, Ted Halstead and Jonathan Rowe. "If the GDP is up, why is America down?" The Atlantic Monthly, vol. 276, no. 4, October 1995, pages 59–78
* Jerorn C.J.M. van den Bergh,
Abolishing GDP


{{DEFAULTSORT:Gross Domestic Product Macroeconomic indicators National accounts