The gross domestic product (GDP) is a measure used in economics of the size of a territory's economy.
It is defined as the total value of all goods and services produced within that territory during a specified period (most commonly, per year). GDP differs from gross national product in excluding inter-country income transfers, in effect attributing to a territory the product generated within it rather than the incomes received in it.
A common equation for GDP is:
GDPs of different countries may be compared by converting their value in national currency according to either (a) exchange rates prevailing on international currency markets, or (b) the purchasing power parity (PPP) of each currency relative to a selected standard (usually the United States dollar).
The relative ranking of countries may differ dramatically between the two approaches, as using official exchange rates can routinely understate the relative effective domestic purchasing power of the average producer or consumer within a less-developed economy by 50-60% owing to the weakness of local currencies on world markets.
On the other hand, comparison based on official exchange rates can offer a better indication of a country's purchasing power on the international market for goods and services.
For more information see measures of national income.
|Rank||Country||PPP total||PPP/capita|| Population
Source: CIA World Factbook: PPP, PPP/Capita, Population
The methodology for deriving accurate PPP comparisons remains under constant review, and questions have been raised as to whether the relative size of Mainland China's GDP may be overstated to some extent.