【DSE Econ】GDP and GNI 最齊精讀|囊括所有背書內容【懶人包】

gdp and gni dse






Gross domestic product (GDP)

The total value of production of all resident producing of an economy during a specified period.

Resident producing units (can be individual/organization)

They are producing units which maintain a center of predominant economic interest in that economic territory.


They have remained or intend to remain in the economic territory for at least 12 months (for individuals) or ordinarily operate in the economic territory of the economy (for organization).

Items not included in GDP

  • No (current) production is involved, such as transfer payments, capital gain, financial assets, money transfers and second-hand goods.


  • Not produced by resident producing units, such as imported goods and services.


  • Not produced during the specified period, such as past inventories.


  • Not locally produced, i.e., some intermediate goods/consumption (e.g. raw materials) are imported


  • Unpaid services produced by households for self-consumption and volunteer services offered to non-profit making institutions.


  • The values of illegal, unreported or non-marketed production are estimated and included in GDP, such as smuggling, production of hawkers.

Different approaches that can be used to measure GDP

Production approach

It finds the total value-added of all resident producing units in all industries.


It measures the total value of production.

Expenditure approach

It finds the total expenditure on final products produced by all resident producing units.


It measures the total expenditure.

Income approach (out-syllabus)

It finds the total income distributed to all factors of production by all resident producing units.


It measures the total factor income.

*Total value of production = Total expenditure = Total factor income

Using production approach to measure GDP

Value-added = Value of output – Value of intermediate consumption


Intermediate consumption = Inputs bought from other resident producing units which are used up during the production stage


Sum of value-added of all RPUs of an economy = GDP of the economy


GDP at market price = GDP at factor cost + Indirect tax – Subsidies

Using expenditure approach to measure GDP

GDP at market price = C + I + G + X – M

                                 = C + I + G = NX

Private consumption expenditure (C)

The final expenditure of domestic households.

Gross investment expenditure / Gross domestic capital formation (I)

The final expenditure of domestic firms.


Gross investment expenditure = Gross fixed investment expenditure + Changes in inventories

                                                = Depreciation + Net fixed investment expenditure +                                                        Changes in inventories

                                                = Depreciation + Net investment expenditure



Gross fixed investment expenditure/Gross domestic fixed capital formation

  • The expenditure of domestic firms on fixed capital such as building, construction and equipment.


Net fixed investment expenditure/Net domestic fixed capital formation

  • The net change in capital goods.


Depreciation/Capital consumption allowance

  • The amount of capital goods used up in production in a specified period of time.


Changes in inventories

  • The change in total value of inventories held by domestic firms including raw materials, semi-finished products and unsold finished products.

Government consumption expenditure (G)

The final consumption expenditure by government departments which are not engaged in market activities.


For examples, the Fire Services Department and Education Bureau and quasi-government non-profit institutions such as Consumer Council.


Government consumption expenditure is generally measured at cost.


Government consumption expenditure is calculated as the sum of:

  • Compensation paid to employees such as wages, pensions and housing benefits.
  • Purchases of goods and services, less receipts from their sales since they have been recorded in C.

Exports (X)

Foreign expenditures on domestic production of goods and services.


Total exports = Exports of goods + Exports of services

                       = Domestic exports of goods + Re-exports of goods + Exports of


Imports (M)

Domestic expenditures on foreign production of goods and services.


Total imports = Imports of goods + Imports of services

Net exports (NX)

The difference between total exports and total imports.


Net exports = Total exports – Total imports

                   = Net exports of goods + Net exports of services

Gross national income (GNI)/Gross national product (GNP)

The total income earned by residents of an economy from engaging in various economic activities during a specified period.


GNI = GDP + Factor income from abroad – Factor income paid abroad

       = GDP + Net factor income from abroad

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