Concepts
Gross Domestic Product
Also Known As GDP · National Output
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Gross domestic product, generally abbreviated GDP, is the total market value of the final goods and services produced within a country over a given period of time, most often measured quarterly or annually. Economists developed systematic national income accounting methods, including early versions of what became GDP, during the 1930s and 1940s, in part to give policymakers a way to track the scale of economic activity through depression and wartime mobilization. GDP is widely used as a headline measure of the size and growth rate of an economy, though economists have long noted its limits: it does not directly capture unpaid work, environmental costs, or the distribution of income across a population, and a rising GDP figure is not the same claim as a rising standard of living for most people in a country.
Facts
SignificanceAfter the 1944 Bretton Woods Conference, GDP became the main tool used internationally for measuring the size of a country's economy, though Kuznets himself warned throughout his career that a national income figure says little on its own about a population's actual welfare. 2 Cross-Tradition Connections
Critiqued Here
Amartya Sen, Economists Sen argued that gross domestic product and income per capita are incomplete measures of well-being, and that development should instead be judged by the real freedoms, or capabilities, people have to live the lives they value. This thinking helped shape the United Nations Human Development Index.
Associated With School
National income accounting rose alongside Keynesian demand-management policy needs from the 1930s and 1940s.
Attributed To
Sources
Frequently Asked Questions
Who invented GDP, and did he think it was a good measure?
Simon Kuznets developed the modern concept of gross domestic product for a 1934 report to the United States Congress, and it became the world's main tool for measuring an economy's size after the 1944 Bretton Woods Conference. Kuznets himself was skeptical of treating it as a measure of welfare, warning throughout his career that a national income figure says little on its own about a population's actual well-being, a caution economists still repeat today.Reader Challenges (0 open reader challenges)
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