The value of country’s overall output of goods and services (typically during one fiscal year) at market prices, excluding net income from abroad.
GDP or Gross Domestic Product can be estimated in 3 ways which, in theory, should yield identical figures. They are:
1. Expenditure Basis : how much money was spent
2. Output Basis : how many goods and services were sold, and
3. Income Basis: how much income (profit) was earned.
These estimates, published quarterly, are constantly revised to approach greater accuracy. The most closely watched data is the period to period change in output and consumption. in real terms.
If Indirect Taxes are deducted from market prices and Subsidies are added, it is called GDP at Factor Cost or National Dividend. If depreciation of the national capital stock is deducted from the GDP, it is called Gross National Product (GNP).
The main criticism of GDP as realistic guide to nation’s well being are that :
i. it is preoccupied with indiscriminate production and consumption and
ii. it includes the cost of damage caused by pollution as a positive factor in its calculations, while excluding the lost value of depleted natural resources and unpaid costs of environmental harm.