What is GDP (gross domestic product)- GDP definition and Types.

GDP: 

The full form of GDP is Gross Domestic Product. The definition of GDP is as follows. 

GDP is the monetary measure of the market values of all the goods and services produced in a specific period of time. It is usually calculated annually.

GDP is considered as the “most powerful statistical indicator of national development and progress” of a country. It is the world’s best yardstick of measuring the growth, economic status and living standards of the people of a country. It helps to compare the living standards between nations.

GDP Nominal: It is the GDP calculated using current market prices. Therefore, nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation.

History of GDP:

The basic concept of GDP was first introduced at the end of the 18th century. Simon Kuznets in 1934 an American economist, presented the modern concept of GDP. In 1944, at the Bretton Woods conference GDP was adopted as the main measure of a country's economy.

What is the GDP used for?

Some very important uses of GDP are as follows

1) GDP is the most commonly used measure of economic activity.

2) GDP is the world’s best yardstick of measuring the growth, economic status and living standards of the people of a country.

3) GDP helps to compare the living standards between nations.
4)  GDP is a measure of the economic output of a country.

Types of GDP:

There are three types of GDP 

1) GDP (E):  It is the GDP calculated using the Expenditure approach.
2) GDP (I):  It is the GDP calculated using the Income approach.
3) GDP (P):  It is the GDP calculated using the Production approach.

Note: Each type of GDP is calculated using different formulas, using respective parameters

Why we shouldn’t judge a country by its GDP?

GDP is very volatile and dynamic, it may change from constantly. GDP can change due to various factors. It does not portray the true living conditions, basic human needs like food, water, shelter, medication, and factors of wellbeing like education, IT,  social liberty, equality, freedom of living, freedom of speech, happiness index, etc. of the population of a country.

So instead of GDP, the above-mentioned factors should be used as parameters to measure the growth of a country.

A good example of this is that during Barak Obama’s term US GDP never crossed 3%. So it doesn’t mean that during his term the USA did not progress and were unemployed and hungry. So Barak Obama is the only president on USA history to never have a year of 3% US GDP growth. But people of the US elected him for the second term even after the low GDP of the USA.

This fact is recently stated in a tweet by Donald Trump Jr. “Incredible numbers. I remember when “the experts” laughed about breaking 3%. Just because Obama never broke 2% doesn’t mean that someone with great policies can’t. Let’s keep this going”.

Some facts about the GDP of various counties of the world:

1.      Bangladesh has a GDP of 8.5 in 2019.
2.      Bangladesh has a GDP greater than that of India in 2019.
3.      Under PM. Naredar Modi India’s GDP declined from 9.0 in 2014 to 4.5% in 2019.
4.      USA has the highest GDP in 2019.
5.      Philippines has a GDP of 6.9.
6.     In India generally three states Karnataka, Tamil Nadu, and Maharashtra have                  more  GDP than 20 other states of India.
7.      In the GDP of the US, state of Florida was the highest contributor in 2017 but              in 2018  it was in fourth place with Columbia at the top. In 2019 it will again differ.
8. so the social wellbeing parameters are better than the volatile GDP to calculate the development of a country.

Which country has the highest GDP in 2019?

Top Twenty counties with the highest GDP in 2019. GDP of US is the highest.

1) The United States of America 2) China 3) Japan 4) Germany 5) United Kingdom 6) France 7) India 8) Italy 9) Brazil 10) Canada 11) Russia 12) South Korea 13) Spain 14)Australia 15) Mexico 16) Indonesia 17) Netherland 18) Saudi Arabia 19) Turkey 20) Switzerland

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