Total value of goods and services produced by the residents or nationals of a country in a period, usually a year, deducting what is consumed in production, i.e., consolidated. It includes consumption, investment, changes in inventories, and the value of exports minus imports and depreciation. It can be measured at constant prices, market prices, or factor costs. The basic criterion is nationality, so unlike Gross Domestic Product (GDP), it includes what is produced by nationals outside the country and deducts what is produced by foreigners within the country. It is equal to GDP minus depreciation. On the other hand, GDP is the sum of the value of goods and services produced in an economy during a certain period. Not all goods and services are included, only final ones, as it is considered that the value of intermediate goods, such as raw materials, is included in the value or prices of final products. However, some economists believe that by excluding intermediate goods, more importance is given to consumption and less to investment, as investment is mainly realized in intermediate goods, such as machinery, and it offers a distorted picture of the real economy, which depends mainly on investment and not so much on consumption.
« Back to Glossary IndexNet Domestic Product (NDP)
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