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GDP Formula Write for Us

GDP Formula Write for us

GDP (Gross Domestic Product), in English GDP (Gross Domestic Product), represents the aggregate gross value of goods and services produced in a country or a geographical area, such as Italy or the European Union, in a period, for example, a year (annual GDP – Italy) or a quarter (quarterly GDP – Italy). It represents the income produced by a country’s economic strength and originates in the development of national accounting since the 1700s. If you can send us the ideas and submit the article at contact@businessian.com

What is GDP?

GDP, an acronym for Gross Domestic Creation, is a numerical value that expresses the sum of all final goods and services shaped within a State in a specific period, generally a year. According to the National Institute of Statistics, the GDP is “the final result of the manufacturing activity of the resident producing units.”

What is GDP for?

GDP is used to describe the wealth produced in a period in a geographical area; it represents its economic strength and is used by policymakers to make economic and financial forecasts. GDP is used in many financial indicators, often in the denominator. One of the most important is the ratio between public debt and GDP, which represents a cornerstone of economic policy in the European Union, together with the balance between public deficit (or surplus) and GDP.

How is GDP Per Capita Calculated?

GDP is a gross aggregate measure, but per capita GDP can also be calculated, i.e., divided by the number of inhabitants (formula GDP per capita: GDP/population); this measure better represents the area’s wealth. The per capita income in Italy is around €26,000.
The formula for GDP (Gross Domestic Product) per capita is as follows:
GDP per capita = Total GDP / Population
Total GDP represents the value of all goods and services produce in a country over a specific period (usually a year). Population is the number of inhabitants of the land in the same period.

How is GDP Calculated?

GDP calculation explanation:
Goods and services can also export or imported; in the case of exports, these contribute positively to the calculation of GDP, while imports contribute negatively since they consider consumption (or investment) outside national or geographical borders.

Who Measures Gross Domestic Product?

The GDP is measured by the National Institute of Statistics (ISTAT) every quarter; then, the data is aggregated and correct with seasonality to obtain the annual value.  The calculation made by ISTAT can be based on one of the following methods: expenditure, added value, or income. GDP, calculated based on price, is the sum of the monetary value of the goods and facilities produced in a country or geographical area over some time.

GDP History

Now that we have seen what GDP is let’s reconstruct the history of this concept in its fundamental stages.
The first concept of GDP, similar to today’s one, was formulated by Adam Smith in his most famous work, The Wealth of Nations.
According to Smith, capital can circulating or fixed:

    • Working capital generates a profit for its owner only when the owner sells it;
    • Fixed capital, on the other hand, creates profit simply from its possession.

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Monetary measure
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