The level of development of the country and its stable position are determined on the basis of a number of economic indicators. These indices allow you to determine the pace of development not only of the entire state, but also of individual industries. The undisputed leader among these indicators is the gross domestic product. This is the most accurate economic formulation, which is adopted to calculate the market value of the number of manufactured products and services rendered within the country. At the same time, a specific period of time is taken to determine this value. Most often, the calendar year is used as the main criterion.
The composition of the indicator
Do not forget that the gross domestic product is the cost calculation of all those goods and services that have already passed all stages of their production and have the final form, that is, they can be called "final goods". The volume of output within the territory of one country is taken into account. In this case, benefits issued by both citizens of the state and persons located on its territory under special permissions are subject to summation. That is, in other words, if any factory, factory or any other enterprise is owned by a foreign person or has foreign investment in itself, all the same, all the products of this organization are used to calculate the described indicator.
Subtleties of calculus
When determining the value of this index, you may encounter some problems. For example, double calculus. Suppose that the N plant produces components for tractors and delivers them to the M plant, which lowers these tractors from the conveyor. In this case, all spare parts produced by the first organization are taken into account only in its annual balance sheet, and not otherwise.
Gross domestic product is the total cost of all rendered works and services. Various social services, service stations and other institutions in this category are also required to calculate this indicator. At the same time, the calculation of gross domestic product is a multivariate technology that can be carried out by various methods in order to obtain various indices.
Index calculation
The foundation of the basis for calculating this indicator is price. It should be noted that depending on whether it is current or the value is taken for the previous period, the desired index will be called differently. The nominal gross domestic product lays in its calculation the so-called "current" prices (real).
The formula image of this expression is represented as follows:
- Cost of GDP = volume of the country's total GDP x current price.
Initially, the indicator is calculated for each organization, company, enterprise, etc. Then the data falls into a single register and is summarized.
If in the equality presented above the last term is replaced by the price of the base year, then the gross domestic product obtained is already real GDP.
The differential between the price values of the current and previous year displays the price index. Using the value of this indicator, you can get information about the 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 gross domestic product by the number of residents and non-residents of the country, we get an indicator characterizing 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.