Gross domestic product

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In economics, the gross domestic product (GDP) is a measure of the size of the economy of a particular territory.

It is defined as the total value of all goods and services produced within that territory during a specified period (most commonly, per year). GDP differs from gross national product in excluding inter-country income transfers, in effect attributing to a territory the product generated within it rather than the incomes received in it.

A common equation for GDP is:

GDP = consumption + investment + government expenditures + exports - imports

Aggregate expenditures are calculated in a similar way, although the aggregate expenditures formula does not account for unplanned investment (left over inventory at the end of the reporting cycle) and is more commonly used by economic theorists.

GDPs of different countries may be compared by converting their value in national currency according to either (a) exchange rates prevailing on international currency markets, or (b) the purchasing power parity (PPP) of each currency relative to a selected standard (usually the United States dollar).

The relative ranking of countries may differ dramatically between the two approaches, as using official exchange rates can routinely understate the relative effective domestic purchasing power of the average producer or consumer within a less-developed economy by 50-60% owing to the weakness of local currencies on world markets.

On the other hand, comparison based on official exchange rates can offer a better indication of a country's purchasing power on the international market for goods and services.

For more information see measures of national income.

Table of contents

1 Problems 2 List of economies by GDP 2.1 List of the total GDP, PPP basis by country 2.2 List of total GDP 3 See also 4 External links

Problems

Problems with GDP include:

• GDP, as a measure of economic size, fails to measure well-being and living standards accurately.
• GDP doesn't take into account the black economy, non-monetary economy such as bartering, volunteer work, or informal creation of wealth, such as unpaid childcare provided by non-working parents.
• GDP doesn't measure the sustainability of growth, as a country may achieve a temporary high GDP by over-exploiting natural resources.
• GDP counts work that produces no net gain. For example, if a factory pollutes a river, that boosts GDP, and when the taxpayers pay to have it cleaned up, that boosts GDP again.

List of economies by GDP

(based on total GDP, PPP basis. All numbers in US Dollars)

1. European Union 11.50 trillion
2. United States 10.40 trillion
3. Mainland China 5.70 trillion
4. Japan 3.55 trillion
5. India 2.66 trillion
6. Russia 1.35 trillion
7. Brazil 1.34 trillion
8. South Korea 931 billion
9. Canada 923 billion
10. Mexico 900 billion

(1) Although the European Union is not formally a nation, it is tied together with a single currency (excluding the UK, Sweden, Denmark, and the 10 new member states) and is considered by some to be a single entity.

The methodology for deriving accurate PPP comparisons remains under constant review, and questions have been raised as to whether the relative size of Mainland China's GDP may be overstated to some extent.

List of the total GDP, PPP basis by country

Rank	Entity	PPP total	PPP/capita	Population
		(U.S dollars)	(U.S dollars)	(2003 est.)
	'''European Union*	11.50 trillion	25,300	454,900,000
1.	United States	10.40 trillion	37,600	290,343,000
2.	Mainland China	5.70 trillion	4,400	1,287,000,000
3.	Japan	3.55 trillion	28,000	127,215,000
4.	India	2.66 trillion	2,540	1,049,701,000
5.	Germany	2.18 trillion	26,600	82,399,000
6.	France	1.54 trillion	25,700	60,181,000
7.	United Kingdom	1.52 trillion	25,300	60,095,000
8.	Italy	1.44 trillion	25,000	57,998,000
9.	Russia	1.35 trillion	9,300	144,526,000
10.	Brazil	1.34 trillion	7,600	182,032,000
11.	South Korea	931 billion	19,400	48,249,000
12.	Canada	923 billion	29,400	32,207,000
13.	Mexico	900 billion	9,000	104,908,000
14.	Spain	828 billion	20,700	40,218,000
15.	Indonesia	663 billion	3,100	234,894,000
16.	Australia	528 billion	27,000	19,732,000
17.	Turkey	468 billion	7,000	68,110,000
18.	Iran	456 billion	7,000	68,279,000
19.	Netherlands	434 billion	26,900	16,151,000
20.	South Africa	432 billion	10,000	42,769,000
21.	Thailand	429 billion	6,900	70,000,000
22.	Taiwan	406 billion	18,000	22,116,000
23 .	Argentina	391 billion	10,200	38,000,000
24.	Poland	368 billion	9,500	38,000,000

Source: CIA World Factbook: PPP, PPP/Capita, Population

List of total GDP

Total GDP 2002 (millions of Ranking Economy US dollars), (i.e. no PPP as in the list above) (If changing number, please use the same source for all countries)
(data slightly outdated, current ranking would place the European Union of the first rank)

1. USD 10,383,100 -- United States
2. USD 9,040,722 -- European Union-25
3. USD 3,993,433 -- Japan
4. USD 1,984,095 -- Germany
5. USD 1,566,283 -- United Kingdom
6. USD 1,431,278 -- France
7. USD 1,266,052 -- Mainland China
8. USD 1,184,273 -- Italy
9. USD 714,327 -- Canada
10. USD 653,075 -- Spain
11. USD 637,203 -- Mexico
12. USD 510,177 -- India
13. USD 476,690 -- South Korea
14. USD 452,387 -- Brazil
15. USD 417,910 -- Netherlands
16. USD 409,420 -- Australia
17. USD 346,520 -- Russian Federation
18. USD 267,445 -- Switzerland
19. USD 245,395 -- Belgium
20. USD 240,313 -- Sweden
21. USD 204,066 -- Austria
22. USD 190,477 -- Norway
23. USD 189,021 -- Poland

Source: Worldbank This ranking is different to the previous as it is based on the currency exchange rate and not on the PPP.

See also: list of countries by gross domestic product

See also

• GDP deflator
• Measures of national income
• Natural gross domestic product

External links

• What's wrong with the GDP?
• Complete listing of countries by GDP: Purchasing Power Parity Method and Current Exchange Rate Method