Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. GDP, revised and provisional estimates are commonly used to determine the economic performance and standard of living of a whole country or region, and to make international comparisons.
GDP provides the basic arithmetic, which guides all investment decisions; on asset geographic location, that affect people and money contracts. Hence, the smallest and minutest operation function or business activity, every form and type of employment and all financial transactions, will contribute to or disturb GDP in attracting investment and in nation building.
Investment decisions on Assets,
such as Lands, Buildings, Plant and Equipment, productive or unproductive, has monetary
value contributing in GDP calculations. People also have monetary values, through
skilled manual and mental work, which contribute to GDP. Finance instruments
earns capital gains and interest income, which also adjust GDP. Foreign and Local
Investment, from financial, work, material and technology investment, is
decided firstly by eco-socioeconomic factors based on GDP. Financial investment
instruments, shares and bonds, are legal paper assets that, value and earnings,
reflect GDP. Work investment instruments, skilled people, are employment legal
contracts, which value and increases, add services to GDP. Material and
technology investments are legally accepted property value assessments, which
worth and earnings, also contribute to GDP.
Real GDP is an inflation-adjusted measure that reflects the value of
all goods and services produced by an economy in a given year, expressed in
base-year prices, and is often referred to as "constant-price,"
"inflation-corrected" GDP or "constant dollar GDP." Unlike
nominal GDP, real GDP can
account for changes in price level and provide a more accurate figure of
economic growth. This as a
denominator gives a clear picture of past and future geographic performance. Is
this economy growing or declining? Is there expansion room in the sector or
industry for specific career choice? is there employment openings and salary
growth in this economy. Is there opportunity for competition in sectors or
industries?
Sectors and
Industries are targeted by and for investment by Government Policies with key
incentives to build or expand activity. The Security and Exchange Commission
and many other Government departments use this common designation in its
filings. It is the National Statistics Agency which manages this Standard Industrial
Classifications and Codes. Each category; Agriculture,
Forestry and Fishing, Mining and Quarrying, Manufacturing with sub-categories; Food, beverages and tobacco products, Textiles, clothing, leather, wood,
paper and printing, Petroleum and chemical products, Other manufactured
products, other categories; Electricity and gas, Water supply and sewerage, Construction,
Trade and repairs, Transport and storage, Accommodation and food services, Information
and communication, Financial and insurance activities, Real estate activities, Professional,
scientific and technical services, Administrative and support services, Public
administration, Education, Human health and social work, Arts, entertainment
and recreation, Other service activities, and Domestic services, are measured
year to year.
The Total Government Revenue-to-GDP (tax-to-GDP)
ratio is the ratio of tax collected compared to national GDP. Some countries
aim to increase the tax-to-GDP ratio by a certain percentage to address deficiencies
in their budgets. In states where tax revenue has gone up significantly in
comparison to GDP, policymakers may decide to increase the percentage of tax
revenue they apply towards foreign debt or other programs. The tax-to-GDP ratio gives policymakers and analysts a
metric that they can use to compare tax receipts from year to year. Such
receipts can refer to Core Revenue (revenue without deficit financing), Total
Tax and Non-Tax Revenue, Capital Revenue and Net Surplus/(Deficit). In most
cases, because taxes are related to economic activity, the ratio should stay
relatively consistent. Essentially, as the GDP grows, tax revenue should grow
as well.
The Total Government Debt to GDP (debt-to-GDP)
ratio is the ratio of a country's public debt to its GDP. By comparing what a country owes to what
it produces, the debt-to-GDP ratio indicates the country's ability to
pay back its debt. Often expressed
as a percentage, the ratio can be interpreted as the number of years needed to
pay back debt if GDP is dedicated entirely to debt repayment. The
change (year-to-year) in debt-to-GDP is approximately net increase in debt as
percentage of GDP; for Government (Public-Sector) debt, Quasi-Government debt and
Total National debt, this is deficit or (surplus) as percentage of GDP. Debt-to-GDP measures the financial
leverage of an economy. Geopolitical and economic considerations –
including interest rates, recessions, and other variables – influence the borrowing practices
of a nation and the choice to incur further debt.
High external debt is believed to have harmful effects on an economy.
Hence, investing personal or business time,
skills or funds in a country, firstly requires study and reflection on its Real
GDP, Total Government Revenue-to-GDP, Total Government Debt
to GDP and actual and estimated changes year on year.
Rationale
T.A.J & Associates Company Limited
uses this occasion to comment on topics that have been covered, both academically
and by the mainstream media, to add its opinion and point out investment
opportunity, not to invoke any social action.
