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gross domestic product

A nation's gross domestic product (abbreviated GDP) is defined as the total value of all goods and services produced within that territory during a specified period (typically one year). (or, if not specified, annually, so that "the UK GDP" is the UK's annual product). GDP differs from gross national product, a measure that is now less often used.

Traditional economic measures related to GDP:

  • nominal GDP: the total amount spent on GDP,
  • real GDP: corrects the GDP number for the effects of inflation.
  • GDP per capita divides output by population to create a statistic of output per person.
  • GNP or gross national product includes the net income recieved from production in other countries.
  • NNP or net national product, subtracts depreciation of capital from GNP for a more accurate measure of disposable income.

history


The first comprehensive accounting of national output was initiated in the US, in the 1930's. Maximizing national output became a policy priority during World War II and remained popular with governments thereafter.


position: NNP, not GDP is a real measure of national wealth.


position: GDP (and GNP) are fundamentally flawed because they don't count non-economic transactions like housework or nature's services.


position: the GDP should be replaced by a GPI.

A Genuine Progress Indicator or other Alternative Progress Indicator refers to well-being directly not to exchange value, and is intended to replace GDP in both fiscal policy and stewsinc at eol.ca" class="wiki wiki_page">monetary policy decisions - which GDP's creators strongly advise against.

  • Argument (Pro): GDP is abused as a measure of collective wealth and of well-being, which it actually does not measure at all. It is easy to find examples where GDP goes up but wealth and well-being go down. A car accident or divorce always raises GDP but has negative correlation with wealth and well being. The story of the "GDP hero" is often used to illustrate how miserable someone would be if they actually tried to live if deliberately increasing the GDP was their goal in life.