Regional gross product: structure, volume, calculation

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:47

The economic status of each subject of the Russian Federation makes it relevant to use a variety of tools to assess economic well-being, financial balance and competitive conditions not only in the domestic but also in the global market. These tools are essential for the implementation of an effective federal policy aimed at eliminating interregional imbalances and strengthening the integrity of the economy and politics. The independence of the regions leads to the actualization of the regional policy and to the significance of such an indicator as the regional gross product.

Information support through GRP

Prosperity of fiscal federalism is becoming a urge to develop regional management solutions with modern approaches to information support and economic feasibility. The optimal basis for analyzing the characteristics of a complex market economy is the system of national accounts, or SNA. At the regional level, the SNA acts in the format of the SRS (system of regionalaccounts). The central position in the SNA belongs to the gross domestic product, or GDP. The regional equivalent of GDP in the SNA is the gross regional product, or GRP. This indicator shows the level of economic development, is a kind of reflection of the results of the economic activity of each of the economic entities within the region. GRP is used as the basis for the formation of regional accounts.

Why is GRP calculated?

On the territory of Russia there are about 89 administrative-territorial entities located in different time zones, differing in geographical location and level of economic and social development. The GDP reflects only the general situation in the country, not allowing to clearly see how things are in its different parts, which excludes the possibility of making objective decisions. The state is interested in data that can comprehensively characterize the situation in each individual corner of the country.

Differentiated information, the source of which is the regional gross product, makes it possible to develop an appropriate economic policy and evaluate the effectiveness of decisions made not at the country level, but at the regional level. With the help of GRP dynamics, in combination with cost and natural indicators, it is possible to establish the direction and intensity of economic processes that can serve as a strong impetus to development at the interregional level. GRP plays a big role in the calculation of macroeconomic indicators and in reforminginterregional relations. The indicator serves as a guideline in the process of distributing funds from the “Fund for Financial Support of Subjects of the Region of the Russian Federation.”

So what is GRP?

The regional gross product is, in fact, a generalized economic indicator that characterizes the level of economic development of the region. It reflects and characterizes the process of production of goods and services. The volume of GRP indicates the value of all goods and services produced in all economic sectors in a particular region. At the first stages of introducing the indicator into economic analysis, data were published taking into account market prices. The assessment of GRP in the format of basic prices differs significantly from the assessment in market prices exactly by the amount of net taxes on products. Subsidies are not taken into account. GRP in the dominant shops reflects the sum of value added in basic prices with a focus on a certain type of economic activity.

GRP structure, or What it includes

Gross regional product is calculated taking into account the basic price, which is calculated per unit of goods or services. Taxes are not taken into account, but subsidies on products are taken into account. Gross value added is calculated in each individual segment of economic activity as the difference between the output of goods or services and their intermediate consumption. For the reporting period, the total price of output of goods and services within one region is the volume of output. The output includes already sold goods with services formarket value. The average value is used for calculation. Work in progress is included in gross output, but only at cost. Intermediate consumption includes the value of goods with services that are fully used in production during the reporting period. Fixed capital does not play a role in calculating intermediate consumption. Expenditures on the final use of GRP include expenditures on households, government institutions, and collective services. Estimating the volume of the gross regional product and its structure, it is possible to determine the sources of financing for final consumption.

Calculation options

In the conditions of the modern economy, it is customary to use several options for calculating GRP. The production method for calculating the indicator is used at the production stage. It is, in fact, the sum of the gross value added, which is formed by each institutional unit-resident in the area of the economic territory of the region. The gross regional product, the calculation of which is based on the difference between the output of goods and services and their intermediate consumption, is formed on the basis of prices for goods and services that are fully used in production, and is carried out at the level of industries and sectors of the regional economy. GRP can also be calculated on the basis of current market prices by comparing them.

Difference between GDP and GRP

Gross regional product, which is calculated for each of the regions, has significant differences from GDP. Difference betweenindicators is the amount of added value. These include:

• Non-market collective public services: defense, governance.
• Non-market services financed from the budget, but information about them is not available at the regional level.
• Services of financial institutions that almost always operate outside of one region.
• Services related to foreign trade data collected at the Federal level.

Gross product: features of the indicator

The difference between GDP and GRP is formed by the cost of paying taxes in connection with imports and exports. This value is very problematic to calculate due to its specificity and uneven integration between individual regions. Gross regional product by region is calculated over 28 months. The SAC technique allows you to get faster results. The government uses many mechanisms to track the dynamics and growth of the indicator. An interesting fact is that, in total, all GRP indicators do not correspond to GDP, which is determined by the specifics of the calculations and the exclusion of additional costs.

On the basis of what data is GRP calculated?

The multifaceted structure of the gross regional product determines the use of a large number of sources at the same time to calculate the parameter values. Thus, in the CIS countries, experts take into account the registers of enterprises andreports on the production and sale of goods with services, reports on production costs. Sample surveys and special reporting at the regional level are taken into account. The calculation is based on employment reports and on the basis of surveys of each individual segment of the economy, based on a survey of household budgets. Significant sources of information are the data of the tax authorities and banking statistics, reports of public organizations and data on the implementation of various types of budget.

GRP in practice in Russia

Gross regional product by regions of Russia fully characterizes the level of development of the region and is compared with macro-level indicators. It plays the role of a territorial factor in the development of social and economic processes. The calculation of the value is based on the methodological principles of the SNA, the development of which was carried out within the framework of the FSGS. Publication of the results after their preliminary approval is also carried out at the FSGS level.

Forecasting the gross regional product is based on data collected from all residents of the regional economy. These can be corporations, quasi-corporations and households whose center of economic interest is located directly in the region under consideration. For the first time, the calculation and analysis of the gross regional product was carried out in 1991 for 21 regions. Starting from 1993, all regional-territorial authorities took part in the calculations. Since 1995, the assessment and calculation of GRP has beena prerequisite for the implementation of the "Federal Program". It was only in 1997 that the assessment of the dynamics of the indicator began. It provides grounds for the implementation of a sound economic policy in the sphere of production and industry, which in almost all regions account for 60 to 80 percent of the total GRP.