Gross Domestic Product
The GDP estimates that are used by the Department of Finance are provided by Statistics Canada. Statistics Canada estimates GDP in two ways:
GDP at market prices
Values GDP by totaling the expenditures required to purchase the goods and services produced. This method is often referred to as GDP from the expenditure side. Example of calculation
GDP at basic prices
Values GDP by summing the payments made to the owners of the factors used in production (i.e., land, labour and machinery/buildings) inclusive of profit, which is the factor payment to entrepreneurs. Also referred to as GDP from the income side. GDP at basic prices equals GDP at market prices less taxes and subsidies on products. Example of calculation
Value added
A third alternative way of calculating GDP is by summing the value added to a commodity at each stage of the production process. For example, a wheat farmer, a miller, and a baker each contribute to the production of bread; if we sum up the incremental value added by each individual we get an estimate of GDP.
Theoretically, all three of these methods of calculating GDP yield the same result.
| Example of expenditure based GDP: Newfoundland and Labrador millions of dollars in 2001 |
|
|---|---|
| personal spending on consumer goods & services | 8,751 |
| government spending on goods & services | 3,818 |
| government investment in buildings, equipment & inventories | 468 |
| business investment in buildings, equipment & inventories | 2,824 |
| exports of goods & services | 7,983 |
| imports of goods & services | -9,997 |
| statistical discrepancy with other GDP calculations | 69 |
| GDP at market prices | 13,916 |