We all once heard that there is such a thing as GDP, and it is very important for the country. And some even remember how V.V. Putin, in the prime of his presidency, “threatened” to double the GDP indicator twice as much over a ten-year period. Well, frankly, he got excited. However, many of us do not even know what GDP is.
This abbreviation means “gross domestic product”. In simple terms, GDP is the total amount of all goods and services that were produced in any particular period (year or quarter) for domestic consumption, as well as for accumulation and export. At the same time, gross product is expressed in price equivalent. In order to correctly and with minimal errors calculate the level of GDP, several types are taken. The data obtained is then compared and a relatively accurate result is output.
To understand what GDP is and to calculate its size, you need to separately determine the absolute GDP (which is calculated by the prices of the reporting period), then separately calculate the real GDP (last year's prices excluding inflation). These indicators compare and get a picture of the development of the country's economy and the increase or decrease in GDP over the year. If you make simple calculations and divide the total value of GDP by the number of population in the state, you can get the size of the indicator, which falls on every Russian citizen. And if you make such a calculation for another country, then you can easily compare the level of development of the two states. To put it even more simply, the answer to the question of what is GDP is as follows. This is the sum of all that people consume, government spending, exports, investments, net of imports.
That is, we consume goods and use services and pay money for it. In turn, the state also spends money, only budgetary, for national needs. And investors are investing their financial savings and savings in business development. However, there is one more important link in this system - this is the balance between import and export of products in the country. It is called trading, and it happens that it contains negative indicators. This is the case if a country purchases more goods on the foreign market than it sells. Because of this, its GDP is declining.
There is another calculation formula that answers the question of what GDP is in terms of income. So, based on the foregoing, we get that the indicator consists of the income of the owners and personal income. In fact, these two different formulations are generalized by one concept - money. It’s just that in one case the earned funds are considered, and in the other - the spent, however, the amount in both cases is the same.
In addition, there are such concepts as nominal and real GDP. What is the difference? The first is calculated based on the prices of the current year, while the real one is expressed in the prices of the base year, which may be 1999, 2000, and even 2014. The indicators of both types of GDP are calculated in the appropriate units: rubles, US dollars or euros.
Many countries seek to increase the level of GDP. As for Russia, this indicator very often rises not due to the level of production of goods, since this indicator standardly lags behind the value of goods produced in Soviet times. At the same time, we can confidently say that the president’s promises turned out to be empty, since for a qualitative increase in GDP it is necessary that the economy grow by 7-8% annually, and for this it is necessary to invest large sums of money in it, which our country does not have, and in the near future is not expected.