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Topics Covered
- What is GDP
- Key determinants of GDP
- Problems with GDP
- Alternatives to GDP
Talk Citation
Cohen, I.K. (2015, September 30). Gross domestic product (GDP) [Video file]. In The Business & Management Collection, Henry Stewart Talks. Retrieved December 8, 2024, from https://doi.org/10.69645/VMHN2328.Export Citation (RIS)
Publication History
Other Talks in the Series: Macroeconomics
Transcript
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0:00
Hello. My name is Ivan Cohen.
I'm an associate professor
in finance and economics
at Richmond University,
The American International
University in London.
And this little talk
is about GDP,
Gross Domestic Product.
0:18
During the business cycle,
the key element,
which is going up and down,
is of course,
macroeconomic
output or production.
We usually measure
macroeconomic output
by a statistic called
gross domestic product,
and of course, we've become
such a sophisticated society
that news readers and newspapers
take it for granted
that ordinary people understand
what is gross domestic product
or GDP.
Very simply,
GDP is best defined by the P,
product or production.
Gross domestic product measures
the output generated
through production
which is physically located
within
the confines of a country.
So any production that occurs
within the national borders
of a country
contributes
to its gross domestic product.
It therefore excludes income
earned by citizens
working overseas.
And we know that many countries
these days have
a diaspora of people
who tend to work overseas
and send money home
to their families at home,
such moneys
are not included within GDP.
GDP includes the rental value
of owner-occupied housing.
That is to say,
when a house is built,
we don't assume
the entire value of the house
as part of GDP.
Rather, we look at
the value of the services
that house is likely to provide
over a number of years
in terms
of its equivalent rental value.
The important thing about GDP is
because it's measured
in the same way
in different countries,
it enables us
to make good comparisons
between countries.
And it has become the standard
used in international guidelines
for economic accounting.
If you learn, no other
macroeconomic statistic,
you should know what GDP is.
It really is the statistic
which gives us
the best measure
of how well economies are doing,
but it is not flawless.
Before I get to look at
what makes the flaws in GDP,
let's have a quick look at
the key determinants of GDP.