GDP is generally defined as the monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis.. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
GDP = C + G + I + NX
C is equal to all private consumption, or consumer spending, in a nation's economy.
G is the sum of government spending.
I is the sum of all the country's businesses spending on capital.
NX is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)
To summarise, GDP is like a price tag on a country's output, and it measures the size of the economy.
The term business cycle refers to economy-wide fluctuations in production, trade, and general economic activity. There are four phases that describe the business cycle. At any point in time you are in one of these stages:
GDP is commonly used as an indicator of the economic health of a country, as well as to measure a country's standard of living. Despite being a broad measure, there are several things that GDP does not measure that are essential for both the economy and society. Basically, in order for something to be included in GDP, it has to be something that is actually produced. It has to be something that isn't used to produce something else. It has to be produced here and not somewhere else, and it also has to be legal.
Singapore is one of the wealthiest per capita metropolises on the planet. Singapore, once swampland, is now a multicultural hub of commerce. More and more multinationals are making Singapore their choice for setting up their regional/global headquarters. Singapore’s strategic geographical location, excellent infrastructure, stringent intellectual property protection, good physical and trade connectivity, and easy access to global talent attract people from all over the world for better opportunities.
On the other hand, Singapore is also the world's most expensive city 2014 and 2015, according to the Economist Intelligence Unit (EIU). Day-to-day life in Singapore is famously governed by a series of strict rules to maintain its clean, well-ordered city. Particularly, the import of chewing gum is banned to avoid the globs on the street. Violating the rules could face serious fine or punishment. Meanwhile, Singapore is also often criticized by western scholars about its authoritarian democracy.
Why did you move to Singapore? Money or lifestyle? In your opinion, which is more important?
The above presentation shows an example of the GDP calculation. Click the fullscreen button on the bottom right to view the fullsize version.
GDP represents the total dollar value of all goods and services produced over a year. - you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year.
GDP can be measured in three ways:
In theory all three approaches should produce the same number.
According to World bank, Singapore ranked 8th in the 2013 GDP per capita list and 3rd in GDP based on purchasing-power-parity (PPP) per capita list, both higher than the US. The following chart shows the GDP of Singapore from 1980 to 2019 (outlook). Mouse tracing the line to view the detail figure each year.
The following chart shows the top 30 GDP ranking from 1980 to 2014. Click the play button on the left bottom or the time bar to view the changes over the years.
Gross national product (GNP) is the market value of all the products and services produced in one year by labour and property supplied by the citizens of a country. Unlike gross domestic product (GDP), which defines production based on the geographical location of production, GNP allocates production based on location of ownership.
GNP = GDP + NR (Net income inflow from assets abroad or Net Income Receipts) - NP (Net payment outflow to foreign assets)
If a Japanese multinational produces cars in the UK. This production will be counted towards UK GDP. However, if the Japanese firm sends £50m in profits back to shareholders in Japan. Then this outflow of profit is subtracted from GNP. UK nationals don’t benefit from this profit.
The assessment of gross national happiness (GNH) was designed in an attempt to define an indicator and concept that measures quality of life or social progress in more holistic and psychological terms than only the economic indicator of GDP.
GNH has only been officially used in Bhutan, where a Gross National Happiness Commission is charged with reviewing policy decisions and allocation of resources.
The concept of GNH consists of four pillars: fair socio-economic development (better education and health), conservation and promotion of a vibrant culture, environmental protection and good governance.
The four pillars are further elaborated in nine domains which are illustrated in the following diagram (click to view a larger version).
The Human Development Index (HDI) is a composite statistic of life expectancy, education, and income indices used to rank countries into four tiers of human development. It was created by Indian economist Amartya Sen and Pakistani economist Mahbub ul Haq in 1990 and was published by the United Nations Development Programme.
The HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone. It can be used to question national policy choices. However, the HDI does not reflect on inequalities, poverty, human security, empowerment, etc.
Click the following map to find HDI information for individual countries 1980-2013 interactively.
The Happy Planet Index (HPI) is an index of human well-being and environmental impact that was introduced by the New Economics Foundation (NEF) in July 2006. The index is weighted to give progressively higher scores to nations with lower ecological footprints.
The index is designed to challenge well-established indices of countries’ development, such as the GDP and the HDI, which are seen as not taking sustainability into account. It is believed that the notion of sustainable development requires a measure of the environmental costs of pursuing those goals.
Singapore ranked 90th among 151 countries in the latest 2012 HPI report.
The index has been criticised for weighting the carbon footprint too heavily and ignores issues such as political freedom, human rights and labor rights.
Click the following map to find HPI information for individual countries 2012 interactively.
According to GDP calculation, it minimizes the value of expenditures on health care, education, social services, and environmental protection. It ignores democratic progress. It excludes the value of natural capital and the vital services provided by nature. It excludes the value of unpaid housework, child care, volunteer work and leisure. These are all good things that matter to us. If the GDP doesn’t count them, does the GDP count?
The figure below shows the quality of life, implications for sustainability and the interaction with GDP (click for larger image).