Cautious Optimism At Start Of New Year

[Sebrof]

Erm Slim - as far as I am aware the contribution companies make to GDP is basically their profits - plus or minus changes in inventory levels.

 

I'll bow to any superior knowledge, but that's my understanding - GDP is value added to an economy - ie how the balance sheets of the companies and households have increased over the year - that's basically profits at 1st order.

 

GDP is a measure of output. Associated costs are irrelevant. The contribution companies make to GDP is their sales.

 

In places like the IOM, financial institutions will usually be foreign-owned, and their profits will go abroad.

 

S

[Chinahand]

I really think you are wrong on this - I admit GDP can be calculated multiple ways - and I agree it is a measure of output - it is the level of increase in the national accounts each period (usually year)

 

Wiki gives the following:

 

Another formula can be written as this:

 

GDP = R + I + P + SA + W

where R = rents

I = interests

P = profits

SA = statistical adjustments (corporate income taxes, dividends, undistributed corporate profits)

W = wages

Which is another way of looking at the conventional equation of:

 

GDP = consumption + gross investment + government spending + (exports − imports)

 

Sebrof you are mistaking GDP and GNP - the profits of non-manx owned companies will count to the owning countries GNP, but to the IOM GDP.

[Sebrof]

I really think you are wrong on this - I admit GDP can be calculated multiple ways - and I agree it is a measure of output - it is the level of increase in the national accounts each period (usually year)

 

Sebrof you are mistaking GDP and GNP - the profits of non-manx owned companies will count to the owning countries GNP, but to the IOM GDP.

 

No. See this: "GDP is concerned with the region in which income is generated. It is the market value {sales} of all the output produced in a nation in one year. GDP focuses on where the output is produced rather than who produced it. GDP measures all domestic production, disregarding the producing entities' nationalities."

 

GNP includes foreign earnings, and excludes output within the territory of foreign enterprises.

 

S

[Slim]

Erm Slim - as far as I am aware the contribution companies make to GDP is basically their profits - plus or minus changes in inventory levels.

I'll bow to any superior knowledge, but that's my understanding - GDP is value added to an economy - ie how the balance sheets of the companies and households have increased over the year - that's basically profits at 1st order.

 

No, particularly not in a zero/zero-ten environment. The Isle of Man government wouldn't be worried if a huge bank was here and employed 300 people contributing a nice big slice of GDP and made no profit.