Return to National productivity measures

Outputs – GDP

  • The outputs of any nation are the many different products and services produced by its many different sectors

  • The only way to measure them all together is to convert them all 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, 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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