There are various economic indicators that can safely be called relevant. But not all of them are known to ordinary people. And to the question "GRP - what is it?" not everyone will be able to give a clear answer. Therefore, in order to understand such a difficult topic, this article will consider the essence and structure of this indicator.
GRP
GRP can be defined as an indicator of a generalized type that characterizes the economic activity of a particular region and the process of production of services and goods in particular.
To publish GRP data, as a rule, market prices are used. But it is possible to form this indicator with the help of basic prices. In this case, the main difference would be the amount of net taxes on products (subsidies on goods deducted). If we talk about the GRP of Russian regions in basic prices, then it should be noted that this is the sum of value added by type of economic activity.
Importance of Gross Regional Product
In order to correctly assess the economic state of the CIS, it is necessary to use certain indicators that will reflect the dynamics of key processes. And if we consider the GRP of Russia, then it can be argued that this indicator is extremely important, especially given the constantgrowing autonomy of the regions.
The bottom line is that as a basis for conducting a comprehensive assessment of the characteristics of a generalizing type in a market economy, one can define the SNA (system of national accounts) and SRS (system of regional accounts), which is a logical continuation of the first. At the same time, in the first system, the key position is occupied by the gross domestic product, and in the SNR, respectively, the regional one. A simple conclusion follows from this, helping to answer the question “GRP - what is it?”: without this indicator, it is not possible to build a CHP, which means that a full-fledged analysis of the economic state of the region and the country as a whole is also impossible. This means that it is mandatory in the process of assessing the economy.
Key terms
First of all, it is worth deciding what the basic price is, which was discussed above. This term is used to characterize the value that the manufacturer assigns to a particular unit of goods, taking into account the subsidy on products, but without taxes.
The output of goods and services should be understood as their total value, which is formed as a result of the production activities of residents. The inclusion of the produced and sold product in the output occurs at the actual market price. If we talk about unsold goods, they are included in the output at average market prices. This factor, as well as others given in this section, includes the structure of GRP.
It is important to pay attention to such an indicator as an intermediateconsumption. In this case, we are talking about the price of services and goods that are completely consumed or transformed in the production process within a specific reporting period.
There are also costs associated with the final consumption of GRP. They are made up of such indicators as the expenditures of public institutions on collective and individual services, as well as the expenditures of households on final consumption. This category includes spending by non-profit organizations that provide services to households.
How Russia's GRP is calculated
There are several ways to determine the gross regional product.
This indicator can be calculated at the level of sectors and industries. For this, the production method is used, which boils down to identifying the difference between the output of services and goods and intermediate consumption, which is formed from the value of products. However, this calculation is made before the consumer fixed capital is deducted.
Understanding what GRP is and how to determine it, it makes sense to pay attention to the formation of this indicator in the production stage. In this case, we are talking about the amount of gross value added that was created through the activities of all resident institutional units located in the economic territory of the region. It is worth noting that net taxes on products are not taken into account in this case.
Sources used for calculation
The volume of GRP in the CIS countries is calculated using the followingsources of information:
- reporting of companies regarding the sale of services, products and production itself, as well as the cost of releasing goods;
- specialized regional and special sample surveys;
- company registers.
If we touch on the topic of registers in more detail, it should be noted that they contain various information, including the location of enterprises. It is this information that is used to generate special statistical reporting on the key performance indicators of companies in the region.
Production method of calculus
Before proceeding to the method itself, it is worth noting that GRP per capita can be considered a macroeconomic indicator. It can be considered at several stages: production, income generation and, of course, the use of income.
At the production stage, GRP is used to characterize the value added that was created by residents in the process of producing goods and services within the current reporting period.
Taking into account the stage of income generation, it is worth noting that in this case, GRP per capita is calculated by summing up the primary income received by residents in the process of producing goods. This amount is distributed among the participants in the production process.
As for the calculation of GRP at the stage of using income, here we are talking about reflecting the sum of expenditures of all sectors of the national economy on final accumulation andconsumption, as well as net exports of services and goods.
Calculation by distribution
GRP per capita of the local population (meaning the regions) can also be calculated at the stage of income generation. In this case, this indicator can be defined as the sum of primary income, which is subject to distribution among residents who are directly involved in the production process.
This group includes the following income received in the production process:
- Remuneration of hired personnel (both residents and non-residents). It is defined as remuneration in kind and in cash and is paid to hired employees for their work. In this case, all amounts that are accrued to employees are taken into account before taxes on income and other deductions are excluded from wages. Insurance contributions to social funds are also taken into account.
- Gross profit and mixed income that was received for the right to use borrowed non-financial and financial non-productive assets in the process of issuing goods.
- Net taxes on imports and production, which are government revenue. The structure of the GRP includes this element. In this case, in addition to subsidies and taxes on products, those types of taxation that relate to production units as participants in the production process are taken into account.
End-use method
This is another way to calculate the gross regional product that needs to be considered in order to answer thethe question "GRP - what is it?". In this case, it is worth recalling the principle according to which GRP is the sum of residents' expenditures aimed at final consumption.
Final consumption refers to the use of services and goods in order to satisfy the individual needs of both the population and the collective needs of society.
Expenditures related to final consumption include institutional units related to several sectors of the economy: households and various government, as well as commercial organizations serving their needs.
The conclusion is obvious: in order to get a complete picture of the state of the economy of a particular region and the country as a whole, such an indicator as GRP must be taken into account. At the same time, the task is facilitated by the presence of several methods for calculating this indicator, depending on the type of study.
