Gross domestic product
The Gross domestic product (GDP) is a measure used in economics of the size of a territory's economy.
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.
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.
List of countries by total GDP, PPP basis, 2002
- United States: 10,400 billion dollars
- China: 5700 billion dollars
- Japan: 3550 billion dollars
- India: 2660 billion dollars
- Germany: 2184 billion dollars
- France: 1540 billion dollars
- United Kingdom: 1520 billion dollars
- Italy: 1438 billion dollars
- Russia: 1350 billion dollars
- Brazil: 1340 billion dollars
The methodology for deriving accurate PPP comparisons remains under constant review, and questions have been raised as to whether the relative size of China's GDP may be overstated to some extent.
See also: GDP deflator