(I) Production Method
The production method is a method of calculating GDP from the production point of view. From the total value of products and services produced and provided by each sector of the national economy in a certain period of time, the value of intermediate products invested in the production process is deducted to obtain the value added of each sector, and the sum of the value added of each sector is the GDP. Calculation formula:
Total output - intermediate inputs = value added
GDP = the sum of the value added of each sector
1, total output: refers to the value of all the goods and services produced by the resident unit in a certain period of time, including both new value and transfer value, reflecting a certain range of production and business activities in various sectors of the total scale, also called gross output. It reflects the total scale of production and business activities of all sectors within a certain scope, also called gross output. Gross output is calculated at producer prices. Gross output of the main sectors is calculated as follows:
Total output of agriculture, forestry, animal husbandry and fishery is the gross value of agricultural production, calculated according to the product method, i.e., by multiplying the output of agricultural products by the price of the unit of product during the accounting period, in which the output of agricultural products includes the output of agricultural products produced by the producers for their own use.
Total industrial output is calculated by the factory method, i.e., industrial enterprises as a whole, according to the final results of the enterprise's production activities to calculate the value of products within the same enterprise is not allowed to repeat the calculation. It includes the value of finished products produced during the accounting period, the value of industrial operations and the value of homemade semi-finished products, and the value of the difference between the beginning and the end of the period of work-in-process. With the introduction of VAT, total industrial output is equal to gross industrial output plus output tax.
The total output of the construction industry is the gross output value of the construction industry, which refers to the value of the works completed by the construction enterprises or self-employed construction enterprise units during the accounting period. Specifically including the value of construction output, machinery and equipment installation project output, housing, structure repair output, non-standard equipment manufacturing value. The total output of the construction industry is generally calculated on the basis of the physical volume of completed works or progress multiplied by the budget unit price.
The total output of the transportation, storage and postal industry is equal to its operating income, is the total income of all kinds of transportation, postal and telecommunications operations during the accounting period. Specifically, including highway, waterway, air, rail, pipeline and other transportation gross revenue, telephone, telegraph and transmission of mail and other postal operations operating income.
The total output of wholesale and retail trade is equal to the business surcharge, which is the net proceeds from the sale of merchandise minus the cost of goods sold, commonly known as gross profit. In order to avoid double counting in the distribution process and to maintain consistency in the purchase price of merchandise, it is necessary to deduct transportation and loading/unloading and handling charges paid externally.
The total output of the accommodation and food service industry is equal to its operating income.
The total output of the banking industry is equal to the virtual service income plus the actual service fee income of financial media service activities.
The total output of the insurance industry is equal to the difference between premium income and claims expenses plus other operating income.
Total output of real estate includes total output of real estate development and operation industry, total output of property management, total output of real estate intermediation services and total output of services for resident-owned housing.
Total output of other services is calculated separately for both for-profit and non-profit units. The total output of for-profit units is their operating (business) income, such as the operating income of social services. Non-profit units are mainly business, administrative units and social organizations, generally no operating income, or a small amount of operating income but can not offset the expenditure, the total output of these sectors is the accounting period for the cost of providing services to the community, according to the recurring operating expenditures plus virtual depreciation of fixed assets, do not calculate the operating surplus.
2, intermediate inputs: is a permanent unit of a certain period of time in the production process, consumption and use of non-fixed asset goods such as raw materials, fuel, power and the value of various services. Calculation of intermediate inputs must have two conditions: one is consistent with the scope of the caliber of calculation of total output, that is, the calculation of the value of intermediate products consumed in the process of production and operation corresponding to the total output. Therefore, the calculation method of intermediate inputs in each sector corresponds to the calculation method of its total output. For example, if the total industrial output is calculated according to the factory method, and no double counting is allowed within the factory, then its intermediate inputs should be calculated according to the purchased raw materials, fuel and power consumed in the production and the service costs paid to the outside world; the total agricultural output is calculated according to the product method, and its intermediate inputs include both the purchased and the intermediate products (such as seeds and fodder) that are self-produced and self-consumed. The value of intermediate inputs includes both purchased and self-produced intermediate products (e.g., seed, feed). The second is generally for the current period of one-time use, that is, the current consumption of non-durable goods that do not belong to fixed assets; low value consumables are calculated on the basis of the portion of amortization in the current period.
3, value added: is the total output minus the balance of intermediate inputs, is the value of material goods and services produced by the production unit exceeds the value of intermediate inputs consumed in the production process after the difference between the part. Reflects the final results of production and business activities of various sectors and units in a certain period of time.
(2) Income method
Income method is a method of calculating GDP from the point of view of the income generated by each factor of production in the production process. That is, the value added of each resident unit is equal to the sum of four items: compensation of laborers, depreciation of fixed assets, net production tax and operating surplus. These four items are also referred to as the initial input value in input-output. The sum of the value added of each resident unit is GDP, which is calculated as follows:
GDP (Gross Domestic Product) = compensation of laborers + depreciation of fixed assets + net production tax + operating surplus
1, compensation of laborers: refers to the laborers to engage in production activities and receive various forms of compensation from the production unit, including all the laborers through various channels from the production unit of income in monetary and in-kind forms and income in the form of money and in-kind. Income in the form of money and in kind and the income of individual workers through labor. There are four main forms: firstly, wages, secondly, benefits, thirdly, remuneration for labor equivalent to the nature of wages paid to individual workers from profits or costs, and fourthly, income in kind, which refers to the value of agricultural and sideline products produced by farmers and used for their personal consumption, as well as the value of physical goods received by laborers from the unit free of charge or at below-market prices.
2. Depreciation of fixed assets: it is the value of fixed assets consumed in the production activities of the resident unit during the accounting period and withdrawn. Depreciation of fixed assets is not the value of the current period of production activities newly created, but the value of fixed assets consumed in the production, is a transfer value. the reason why the GDP includes this part of the transfer value, is because the depreciation of fixed assets is free from fixed assets as depreciation into the cost, the depreciation recorded in the cost of the depreciation is also as a depreciation fund is raised for new investment in fixed assets into the enterprise's capital cycle movement, rather than being consumed out like other costs, and from this point of view it is similar to value added labor compensation and operating surplus. In addition, from the point of view of income, calculating depreciation in value added can avoid the fluctuation of value added due to calculating depreciation in intermediate inputs, which will bring about different sizes of operating surpluses due to different sizes of depreciation. This problem is avoided if depreciation is calculated in value added. Therefore, if depreciation is calculated in value added, it can improve the accuracy and consistency of GDP calculation as well as enhance the comparability of GDP.
3. Net production tax: It is the difference between the production tax paid by each sector to the government and the production subsidy paid by the government to each sector. Taxes on production are taxes levied by the government on the production, sale, purchase, and use of goods and services by various sectors. There are three main forms: first, sales tax, and second, tax into the cost, which refers to the tax levied by the state on production units for engaging in production activities, but some industries treat this tax uniformly as sales tax. Third, various surcharges and fees. Production subsidies are subsidies paid by the government to certain sectors for the purpose of controlling prices and supporting production, including price subsidies for food enterprises and subsidies for policy losses of enterprises. After the implementation of VAT, the production tax also includes the VAT payable for the current period (the difference between the output tax on products and the input tax on purchased goods and services).
4. Operating surplus: the remainder of total output after deducting intermediate inputs, depreciation of fixed assets, compensation of laborers, and net production tax, which is the share of value added created by a permanent establishment remaining after compensation for fixed assets, distribution to laborers, and payment of state taxes.
(3) Expenditure Method
The expenditure method is a method of calculating GDP and its destination from the point of view of end-use, which consists of final consumption of goods and services, gross capital formation and net exports. The formula is:
GDP (Gross Domestic Product) = Final Consumption + Gross Capital Formation + Net Exports
1. Final Consumption: It refers to the final consumption expenditures of resident units for goods and services in the accounting period, including residential consumption and government consumption. Among them, residents' consumption is all the material products and services purchased by residents of permanent residence units in the accounting period to meet their individual final consumption needs, including commodity consumption, consumption of cultural and living services, housing and water, electricity and gas consumption; government consumption is the services provided to the whole society by social public ****service departments in order to satisfy the needs of the public, as well as the services provided by the enterprises to their employees in order to satisfy the needs of the public **** of the enterprises. services provided by enterprises to meet the public **** needs of their employees.
2. Gross Capital Formation: refers to the aggregate of investment expenditures of resident units in the accounting period, which is divided into two items: fixed capital formation and increase in inventories. Fixed capital formation refers to the value of fixed assets purchased and constructed by the resident unit during the accounting period, including all kinds of tangible fixed assets and intangible fixed assets. The increase in inventory is the value of the change in inventory at the end of the accounting period and at the beginning of the period for resident units.
Gross Capital Formation = Fixed Capital Formation + Increase in Inventories
Increase in Inventories = Closing Inventory - Opening Inventory
3. Net Exports of Goods and Services: It is the difference between the total amount of imports minus the total amount of imports, such as the total amount of imports is greater than the exports are expressed as a negative number. Exports are permanent units to non-residential units sold and non-remunerated total value of goods and services; imports are permanent units from non-residential units purchased and non-remunerated total value of goods and services. Regional net exports also include inflows and outflows.
Net Exports = Total Exports of Goods and Services - Total Imports of Goods and Services
Theoretically, GDP calculated through three different methods, namely the production method, the income method, and the expenditure method, is equal, i.e., GDP calculated by the production method is equal to GDP calculated by the income method, and to GDP calculated by the expenditure method, which is known as triple-sided equivalence. That is to say, the results of the production of social final products and income distribution and end use should be equal, so it is necessary to keep the caliber of calculation of the three methods consistent. However, in the actual calculation, due to different sources of information, some differences in the calculation results will appear, called statistical error, is normal. The three methods have their own characteristics and complement each other. As far as our province is concerned, all three methods are used in accounting for annual GDP, and the production and income methods are usually used in accounting for quarterly GDP.
Nominal GNP or nominal GDP: total output calculated using current market prices.
Real GNP or real GDP: total output using market prices in a base period.
The relationship between the two is: Nominal GNP or GDP = Real GNP or GDP x Inflation Rate
Real GNP or GDP = Nominal GNP or GDP / Inflation Rate
Consumer Price Deflator (CPI) = Nominal GNP or GDP/Real GNP or GDP