Return to National productivity measures

Outputs – GDP

  • The output of any nation is the many different products and services from its many different sectors
  • The only way to measure them all is to convert them into a single measure of total economic activity – Gross Domestic Product
  • GDP is variously defined as:
    • The value of all final goods and services produced in a given year, or
    • The total expenditure on all finished goods and services, or
    • The value added in the production of goods and services, or
    • The corporate and personal incomes generated by this production



GDP= C + I + G + (X – M)

  •  C   =  Private consumption of final goods and services
  •  I   =  Investment, public and private, in new buildings,

highways, ports, plant, equipment and IT

  •  G  =  Government spending – public sector pay, investments,

purchases of weapons etc – but not ‘benefits’

  •  X – M  =  Net exports = Exports less imports


  • The alternative to GDP for measuring national output is GNP
  • GNP = Gross National Product = GDP + net income from foreign investments:
    • GNP is thus a more complete picture of total national income
    • Some say the UK’s wealth inheritance over many decades has been used to buy assets abroad which now provide a healthy extra income for the nation – others say this might actually be negative
  • Either way, here we’re more concerned with the outputs and outcomes produced by inputs from within our national boundary, so we prefer to use GDP as our national output measure

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