Gross Domestic Product - GDP

GDP or Gross Domestic Product of a country is considered to be one of the most important measure of economic activity in that country. The percapita gross domestic product is the GDP (total income) of a country, divided by its population. It provides a good measure of the economic activity and well-being of the country for international comparative purposes.

GDP is an aggregation of the demand, production and income of the country. In many countries, especially small and in the Third World, growth is hectic and irregular, with frequent and deep absolute falls and booms.

On a global scale, the distance between the richest and the poorest countries is increasing, whereas locally there exist "convergence clubs" in which distances are getting smaller. A few developing countries have taken off and reached a high development stage.

There are three different calculations of GDP. Current GDP is GDP expressed in the current prices of the period being measured; Nominal GDP growth is GDP growth in nominal prices, unadjusted for price changes; Real GDP growth is GDP growth adjusted for price changes.

The real GDP growth allows economists to determine if production increased or decreased, regardless of changes in the purchasing power of the currency. GDP per capita is often used as an indicator of standard of living in an economy, the rationale is that all citizens would benefit from their country's increased economic production.