The success of a national economy is measured by such indicators as gross domestic product (GDP), gross national product (GNP) and national income.

GDP is the total market value of all final goods and services produced in a year. Final products- any product (consumer goods, equipment, buildings, etc.) not intended for further industrial processing or resale. This means resales, financial transactions, fines, etc. are not included in GDP.

Only officially registered transactions are included in GDP, i.e. Self-employment and the shadow economy (illegal economic activities) are not taken into account here.

A country's GDP is calculated based on the expenses or income of all economic entities.

If we subtract depreciation costs (the cost of worn-out equipment and premises) from GDP, we get net national product (NNP). NNP = GDP - A.

GNP is different from GDP. GDP takes into account the work of all people in the country, regardless of citizenship (foreign workers in Russia increase our GDP).

GNP takes into account work citizens of the country not only on its territory, but also abroad (for example, the work of a Russian in a foreign company). GDP and GNP differ from each other by several percent, but their dynamics are always unidirectional, so one of these indicators is usually used to analyze the state of the economy.

National income (NI)- the sum of all incomes of the country's population for the year, newly created value. This is what production managed to add to the country's welfare in a year. With the help of ND, the level of well-being of a country is measured.

TOPIC 13. ROLE OF THE STATE IN THE ECONOMY.

Currently, most economic systems combine market relations with elements of government regulation, i.e. the market operates, but the state also actively intervenes in the economy. All levers of influence of the state on the economy can be divided into direct and indirect.

Direct regulation involves the use of administrative methods. One of them is legal regulation- adoption of laws relating to the market. Plays a special role here antimonopoly legislation, the purpose of which is to limit the dictates of monopolistic associations in the market.

Indirect regulation involves various economic measures :

1) system of government orders, those. purchases of certain goods that will increase demand and, therefore, expand the domestic market;

2) financial and economic regulation- regulation of the economy using the monetary system (for example, issuing loans to enterprises). This is the main lever of influence on the economy.

The manner and extent of government intervention in the economy is controversial. In this matter, two economic theories collide: monetarism and Keynesianism.

Monetarism (M. Friedman) means maximum liberation of the economy from state control, allowing the market to independently regulate the production of goods and their exchange (trade).

Keynesianism (D. Keynes) means greater government intervention in the economy, its regulation by increasing or reducing demand through changes in the money supply: only an active financial policy of the state that stimulates demand can cope with many market ills, for example, unemployment.

In the modern world, most governments use both monetary and Keynesian methods.

TOPIC 14. TAXES

Taxes are mandatory payments to the state for part of the income of citizens and organizations. They are established by law and are necessary for the state to have the means to carry out its functions.

All activities related to the collection of taxes are called tax policy.

The tax system consists of several elements:

1) types of taxes;

2) tax legislation;

3) methods of calculation;

4) tax collection forms.

Functions of taxes :

1) fiscal- this is filling the state budget so that the government can fulfill its obligations to society;

2) social- redistribution of income in favor of the poor through various social programs;

3) stimulating- the use of taxes as a tool to influence the economic behavior of producers and consumers (providing tax benefits, etc.).

Taxes are divided into direct and indirect :

1) straight- are levied explicitly on the income of citizens and organizations (income tax, corporate profit tax);

2) indirect- citizens pay them unnoticed when purchasing goods and services, because such taxes already paid by enterprises are included in prices (excise taxes, customs duties).

The tax may be:

1) progressive- this is a tax, the interest rate of which increases as the taxpayer’s income grows (the higher the income, the greater the percentage of it that must be paid);

2) regressive- The interest rate decreases as the taxpayer's income increases. All indirect taxes are regressive - having bought the same things, the rich and the poor will pay the same amount, but it will be different shares in the income of these two people: the poor will give a larger share of their income than the rich.

3) proportional - the average rate is constant. In the Russian Federation, income tax is proportional - 13%, regardless of the amount of income.

In developed countries, direct taxes predominate: income tax, property tax, profit tax, etc. These taxes are paid by the rich, who are more obligated to support the state than the poor. In the Russian Federation the situation is the opposite. The bulk of the Russian Federation's income is generated by indirect taxes (customs duties, VAT, excise taxes, etc.). Everyone pays these taxes, but the main burden falls on the poor due to the nature of the indirect tax.

Types of taxes are established by the Tax Code and are divided into federal, regional and local. To the regional ones, for example, transport tax applies, to the locals- land and property taxes for individuals.

Gross National Product. The main characteristics of the gross national product are the following indicators.

1. GNP includes all products produced, including that part of it that is not sold; therefore, the increase in production inventories is taken into account when calculating GNP.
2. GNP is measured in monetary terms and reflects the market value of goods and services.
3. GNP excludes unproductive transactions entered into during the year. Such transactions include purely financial transactions and the sale of second-hand goods. Financial transactions are of three types: a) government transfer payments (social insurance payments, unemployment, pensions of various types); b) private transfer payments; c) transactions with securities.
4. GNP is free from double counting because it takes into account the market value of final products only. Final products are goods and services that are purchased for final use and not for further processing, processing or resale, i.e. The cost of intermediate products is excluded from the GDP.

In accordance with the modern international standard UN SNA (1993), the results of activities in the shadow sector of the economy are recommended to be included in GNP, including in that part of the sector where legally prohibited goods and services are produced. According to the 1986 UN SNA, when determining the value of GNP, the results of activities in the shadow economy were not taken into account. In a number of countries, attempts are currently being made to take into account in GNP the results of the activities of that part of the shadow economy where goods and services permitted by law are produced, but in this case tax laws are violated. At the same time, the overwhelming majority of countries, including Russia, do not consider it advisable to take into account goods and services, the production of which is prohibited by law, when calculating GNP.

Currently, in accordance with the system of national accounts, income tax can be calculated on a gross and net basis, i.e. before and after deduction of depreciation of fixed capital. In the first case, the gross national income is equal in value to the gross national product. In the second case, net national income compared to GNP is reduced by the amount of depreciation charges.

Methods for measuring GNP. There are three ways to measure GNP (GDP):

1. by value added (production method);
2. expenses (end-use method);
3. income (distribution method).

When calculating GNP using the production method, the value added at each stage of production of the final product is summed up.

Added value- this is the difference between the market value of products produced by the company and the amount paid to other companies for purchased raw materials, materials, etc. (i.e. for intermediate products).

The value of GNP is the sum of value added by all producing firms. If goods and services are created and sold only within the country, then the gross domestic product (GDP) indicator is used. The method of measuring the volume indicator, which takes into account the specific contribution of various firms and industries to the creation of GNP, avoids the problem of double counting.

The second way to measure GNP involves summing up the expenses of all economic agents using GNP. In essence, we are talking about the aggregate demand for produced GNP. The structure of total expenses can be presented as follows:

• household consumption expenditures, including household expenditures on durable goods (except for housing purchases) and current consumption;
• total private investment, consisting of depreciation charges and net investment. Net investment increases the stock of capital in the national economy;
• public procurement of goods and services;
• net exports of goods and services, calculated as the difference between exports and imports.

Of these components, the largest share usually falls on consumer spending, and the most dynamic indicator is investment spending. The share of consumer spending in GDP by the end of the 20th century. ranged from 40% in Singapore, 53% in South Korea, 58% in Japan, 68% in the USA. Total private investment accounted for from 16% in the US to 30% in Japan and 38% in South Korea. In the Russian Federation at the beginning of the 21st century. The main items of GDP expenditure were as follows: household consumption expenditure was 46.1%, gross capital formation - 17.1%, government expenditure - 14.4%, net exports - 20.4%.

When calculating GNP by income, all types of income for the relevant factors of production are summed up, as well as two components that are not income: depreciation charges and net indirect business taxes. GNP includes such types of income as wages of employees; owners' income; corporate profits; rental income; bank interest. If in the structure of GNP (GDP) as a whole the share of wages by the beginning of the 21st century. ranged from 52% in EU countries to 60% in the USA, then its share in the structure of factor income is noticeably higher (about 70% in the USA).

Of the considered methods for determining GNP, the production and end-use methods are the most widely used. This choice in most EU countries is associated with the availability of a reliable statistical base. Since in Russia currently the most accessible and timely information is data on the production of goods and services collected by Rosstat on the basis of statistical reporting of enterprises, the main method for calculating GNP (GDP) is the production method.

Since GNP is a monetary indicator, its value depends on price dynamics and the purchasing power of the monetary unit. Therefore, when determining the volume of production, it is necessary to take into account the price level, which is expressed in the form of a price index, which is the ratio between the total price of a certain set of goods and services (called the market basket) for a given time period and the total price of a similar group of goods and services in the base period ( base year):

Price index in a given year =

Market basket price in a given year
Market basket price in base year

The GNP price index is a GNP deflator. It includes the prices of consumer goods and services, the prices of capital goods purchased by the government, and the prices of goods and services bought and sold in the world market. Therefore, the GNP deflator is an adjustment of nominal GNP to account for changes in prices. Thus, GNP is a monetary, time and quantitative indicator. GNP expressed in current prices is called nominal GNP. GNP, adjusted for the price level, is called real GNP. It is calculated by the formula

Real GNP =

Nominal GNP
Price index

When calculating GNP, certain difficulties arise: some goods and services produced in a given year do not enter the market and therefore do not have a market price. In GNP they are taken into account at imputed value. For example, the services of civil servants who do not have a market value are taken into account in GNP as corresponding government expenses, in particular for employee wages. Many goods and services are produced and consumed by households without being exchanged in markets, and they are often not included in GNP calculations.

One of the problems in assessing the results of the national economy is taking into account the shadow sector of the economy. This problem is especially relevant for countries implementing economic reforms. The growth of the shadow sector and the difficulty of accounting for its scale lead to an underestimation of the value of GNP compared to the results of its use, since illegally produced goods and services and the income received are spent on consumption and accumulation legally.

Indicators of GNP or ND per capita, are often used for cross-country comparisons, in particular when assessing the level of well-being in a country. However, their use may lead to a distortion of reality. Thus, two countries may have the same GNP per capita, but different price levels and different purchasing power of the monetary unit. GNP does not reflect improvements in the quality of goods, changes in the structure of consumption and the distribution of goods and services among the population. When assessing the level of well-being of a society, the GNP per capita indicator can be supplemented by indicators of the level of education of the population, life expectancy, housing conditions, etc. This allows a more objective assessment of the level of well-being of the nation.

The central indicator of the SNA is gross national (or internal) product (GNP or GDP). It is the total market value of final goods and services produced over a specified period of time (usually a year).

To determine GNP, it is important to distinguish between the concepts of “final” and “intermediate product”.

TO final product These include those goods and services that are purchased for final consumption and are not intended for further processing or resale. TO intermediate product refers to everything that is purchased as raw materials, materials, semi-finished products for production or during the sales process does not reach the final consumer.

Most products go through several stages of processing and sales. At each stage, the costs of intermediate goods are reflected in the market price of the finished product. Therefore, accounting for all goods and services sold on the market would lead to repeated counting. Determining GNP based on the final product allows one to avoid such distortion of the results, since it eliminates repeated calculations.

Gross National Product is a cost indicator that reflects the market assessment of national production volumes and measures them in market prices. However, some goods are provided to final consumers without going through market exchange and do not have a market price. These are, for example, public administration services, judicial services, national defense, partly education and healthcare services. As part of GNP, services of this kind are taken into account according to the value of costs, i.e., government costs associated with providing them to the population. This technique, of course, is imperfect, but it is used due to the lack of appropriate market estimates.

Some of the goods and services produced in the country cannot be taken into account in GNP at all, since they are consumed without going through the market, and there is no information about the value of costs. These are, for example, the services of housewives, household products used for personal consumption. Final products produced in the shadow economy are not taken into account in GNP, since the income received from these products is sheltered from taxation and therefore is not reflected in the system of national accounts.

Thus, the gross national product is not an absolutely accurate indicator of the volume of production produced in a country. But it is quite suitable for comparing output volumes by year, assessing economic dynamics, cross-country comparisons, and also for assessing the level of economic well-being. For these purposes, the indicator is calculated GNP per capita. In this capacity, GNP also does not provide complete information, since, in addition to the above-mentioned shortcomings, it does not take into account the structure of production in different countries, the amount of free time, the degree of inequality in income distribution, country differences in price levels, and the impact on the level of well-being of such negative factors as environmental pollution , crime rate, negative consequences of urbanization. Therefore, to assess the level of well-being of a nation, the indicator is used net economic welfare (CHEB). To determine the NEB indicator, the value of GNP is adjusted: the valuation of non-market activities and leisure is added and the monetary valuation of negative factors is subtracted

Despite these shortcomings, GNP is the best general indicator of economic performance that economists currently have at their disposal.

There are three ways to calculate GNP: by expenditure, by income and by value added. Different methods should ideally lead to the same results. Discrepancies are possible only if there are omissions and errors in the national accounting system.

Calculated by three methods:

1) by income- the income of individuals, joint-stock companies and private enterprises, as well as state income from business activities are summed up:

· remuneration of employees, including wages and other payments related to the hiring of labor (bonuses, overtime pay, etc.);

· income from property, i.e. income of owners of unincorporated, including individual enterprises;

· rent payments received by owners of land and real estate;

· corporate profits, which are further broken down into income taxes, dividends and retained earnings;

· interest on capital paid by firms to suppliers of debt capital.

2) by expenses- expenses on personal consumption, on government purchases (state needs), on capital investments and the balance of foreign trade are summed up and it is assumed that the produced products are sold and their cost is paid by end customers:

· household expenditures on consumer goods and services, i.e. personal consumption expenses;

· investment expenditures of the business sector, including industrial capital investments, housing construction costs, as well as investments in inventories;

· government expenses for the purchase of goods and services, which include all costs of government bodies for the acquisition of final products, as well as for financing the production of services provided to the population free of charge;

· expenses of foreign buyers for the purchase of goods and services of national production.

3) by added value(production method) - the totality of conditionally net products from all spheres of the economy is summed up. In practice, added value is defined as the difference between the market value of finished products (sales revenue) and current material costs.

Nominal GNP- the sum of final goods and services at current market prices.

Real GNP- the cost of goods and services, recalculated in constant prices (prices of the base period).

GNP deflator is the ratio of the nominal volume of GDP to the real one.

One of the main macroeconomic indicators that evaluate the results of economic activity is gross domestic product (GDP).

Gross national product (in English). Gross National Product)– the cost of goods and services produced by residents of a country, both within the country and abroad. GNP is almost identical to gross domestic product (GDP), except that the latter does not include income accruing to residents of the country from investments abroad (less income earned in the domestic economy but accruing to residents of other countries).In other words, GNP calculates the value of all products produced by domestic companies, regardless of location of production.

The United States replaced GDP with GNP as the main indicator of economic size only in the early 1990s.

How is gross national product calculated?

The official formula for calculating GNP is as follows:

Y = C + I + G + X + Z

Where:

C – consumption expenses

I – investment

G – government expenses

X – (export value minus imports)

Z – net income (inflow of net profit from abroad minus the outflow of funds to foreign countries)

Alternatively, GNP can also be calculated as follows:

GNP = GDP + Inflow of net income from abroad – Outflow of net income to foreign countries

Where

GDP = Consumption + Investment + Government Expenditures + Exports – Imports

GNP takes into account the production of physical goods such as vehicles, agricultural products, equipment, etc., as well as the provision of services such as health care, business consulting, and education. GNP also includes taxes and depreciation. The cost of services used in the production of tangible goods is not taken into account separately, since it is already included in the cost of the finished product.

Read more about GDP in the article.

To compare with previous years, the gross national product must be adjusted for inflation - real GNP. In addition, for comparisons of GNP volume between countries, GNP is calculated per capita. Since exchange rates can be volatile, statistical agencies use .

When calculating GNP, there are difficulties in taking into account dual citizenship. If a producer has citizenship in two countries, both countries will count his productivity and this will result in double counting.

Comparison of GNP with GDP

Example of gross national product

A country's GNP can be higher or lower than its GDP. This depends on the volume of domestic and foreign production in a particular country.

Japan's GNP is approximately $500 billion higher than the country's GDP. The large-scale production of household appliances, electronics and automobiles by Japanese corporations in overseas factories is responsible for the higher GNP relative to GDP.

For example, a Japanese multinational produces automobiles in the United States. The foreign firm's production will be counted in US GDP. However, dividends that a Japanese company distributes to U.S. shareholders will be included in U.S. GNP under the heading “Net Income from Foreign Income.”

At the same time, in 2016, China's GDP turned out to be $300 billion more than its GNP, according to official data from the National Bureau of Statistics of the People's Republic of China. This is due to the huge number of foreign companies producing inside China.

Despite, that both indicators attempt to measure the size of a country's economy, GDP is the most common method of measuring a country's economic success. However, GNP can also be useful. It is important for analysts and economists to have a deep understanding of both indicators for a more competent assessment of the risks and development prospects of a particular region.