Gross domestic product is the main indicator of economic development of the state

The Level of country's development and a stable position are determined based on the number of economic indicators. These indexes allow to determine the rate of development of the state, but also individual industries. The undisputed leader among these indicators is the gross domestic product. This is the most accurate economic wording, which was adopted to calculate the market value of the amount of produced goods and rendered services within the country. For the determination of this value takes a specific period of time. This files most often as the main criterion used is the calendar year.

Composition of the index

Don't forget that gross domestic product – the cost calculation of all those goods and services that have already passed all stages of production and have the final form, i.e., they can be called "ultimate benefits". The calculation takes the volume of output within the territory of one country. In this case, the summation of benefits shall be issued as the citizens of a state and persons within its territory with special permission. In other words, if any factory, plant or any other company are owned by a foreign entity or have foreign investment, still all the products of this organization goes into the calculation of the described indicator.

The subtleties of the calculus

When determining the value of this index, you may encounter some problems. For example, the dual calculus. Suppose that the plant is “N” produces components for tractors and delivers them to the plant “M” that these same tractors and descends from the conveyor. In this case, all the spare parts produced by the first organization recognized in its annual balance sheet, and not otherwise.

Gross domestic product – total value of all provided works and services. Various social services, service stations and others included in this category are also required to calculate this indicator. The calculation of gross domestic product – mnogokasatelnoy technology which can be implemented by various methods to obtain various indexes.

Index Calculation

The Foundation of the basis of calculation of this indicator is the price. It should be noted that depending on whether it is operating or the value taken for the previous period, the required index will be named differently. Nominal gross domestic product lays in its calculation so-called "active" at the moment (real) prices.

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The Formula image of the expression is represented as follows:

• The Value of GDP = the total volume of GDP of country x applicable price.

Initially, the indicator is calculated for each organization, firm, enterprise, etc. and Then data is written to a single register and then summed.

If in the above equality to replace the last term on the price of the base year, the gross domestic product – this is the real GDP.

The Differential between the price values of the current and the previous year shows the price index. Using this ratio, it is possible to obtain information about the increase or decrease in the rate of growth of economic welfare of the country.

This index is based on the standard of living of the population. So, if you divide the value of gross domestic product to the number of residents and non-residents, obtained the measure of output is GDP per capita. This index is the most significant in determining the position of the state in the ranking of the welfare of the world's countries.