Gross domestic product is the main indicator of the economic development of the state

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:42

The level of development of the country and its stable position are determined based on a number of economic indicators. These indices make it possible to determine the pace of development not only of the entire state, but also of individual industries. The undisputed leader among such indicators is the gross domestic product. This is the most accurate economic formulation that has been adopted to calculate the market value of the quantity of goods produced and services rendered within a country. In this case, a specific period of time is taken to determine this value. Most often, the calendar year is used as the main criterion.

Composition of the indicator

Do not forget that the gross domestic product is the value of all those goods and services that have already gone through all the stages of their production and have a final form, that is, they can be called "final goods". The volume of products produced within the territory of one country is taken into account. WhereinBenefits issued by both citizens of the state and persons located on its territory under special permits are subject to summation. That is, in other words, if any factory, plant or any other enterprise is owned by a foreign person or has foreign investments, all the same, all the products of this organization are included in the calculation of the described indicator.

Subtleties of calculus

There are some problems when determining the value of this index. For example, double calculus. Let's assume that plant "N" produces components for tractors and delivers them to plant "M", which rolls these same tractors off the assembly line. In this case, all spare parts produced by the first organization are considered only in its annual balance sheet, and not otherwise.

Gross domestic product is the total cost of all works and services rendered. Various social services, service stations and other institutions included in this category are also required to calculate this indicator. At the same time, the calculation of the gross domestic product is a multivariate technology that can be carried out by various methods in order to obtain different indices.

Index calculation

The basis for calculating this indicator is the price. It should be noted that depending on whether it is valid or the value is taken from the previous period, the desired index will be called differently. The nominal gross domestic product includes in itscalculation of the so-called "acting" at the moment (real) prices.

The formula representation of this expression is represented as follows:

GDP value=country's total GDP x current price

Initially, the indicator is calculated for each organization, firm, enterprise, etc. Then the data is entered into a single register and summarized.

If the last term in the equation above is replaced by the price of the base year, then the resulting gross domestic product is already real GDP.

The differential between the price values of the current and the previous year displays the price index. Using the value of this indicator, one can obtain information about an increase or decrease in the growth rate of the country's economic well-being.

Thanks to this index, the standard of living of the population is determined. So, if we divide the value of the gross domestic product by the number of residents and non-residents of the country, we get an indicator that characterizes the output of GDP per capita. This index is the most significant in determining the position of the state in the ranking of the well-being of world countries.