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1301.0 - Year Book Australia, 2002  
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Contents >> Introduction >> Measuring GDP

There are three ways of measuring GDP:

  • the income approach, which measures GDP by summing the incomes accruing from production: compensation of employees (wages and salaries, and employers' social contributions); gross operating surplus (profits); gross mixed income (income from unincorporated businesses, including a return to the owners of these businesses for their labour); and taxes less subsidies on production and imports;
  • the expenditure approach, which involves summing all final expenditures on goods and services (i.e. those goods and services which are not processed any further), adding on the contributions of changes in inventories and the value of exports, and deducting the value of imports. Final expenditures consist of final consumption expenditure and gross fixed capital formation. Exports are included in GDP because they are part of Australian production even though they are sold to overseas purchasers. Imports are deducted because, although they are included in final expenditures (e.g. when someone buys an imported video recorder its value is included as part of household final consumption expenditure), they are not part of Australian production; and
  • the production approach, which calculates GDP by taking the value of goods and services produced by an industry (its output at basic values, which implicitly includes taxes less subsidies on production) and deducting the cost of goods and services used up by the industry in the productive process (intermediate consumption), which leaves the value added by the industry. GDP is then obtained by summing value added across all industries, and adding taxes less subsidies on products.

While each approach should, conceptually, deliver the same estimate of GDP, if the three measures are compiled independently using different data sources then different estimates of GDP result. However, the Australian national income, expenditure and product estimates have been integrated with annual balanced supply and use tables which are available for 1994-95 to 1998-99. Integration with balanced supply and use tables ensures that the same estimate of GDP is obtained from the three approaches, so that annual estimates using the income, expenditure and production approaches are identical for the years for which supply and use tables are available.

Prior to 1994-95, and for 1999-00, the estimates using each approach are based on independent sources, and there are usually differences between the income, expenditure and production estimates. Nevertheless, for these periods, a single estimate of GDP has been compiled. Table 29.1 shows time series of chain volume measures for GDP, and GDP per capita, from 1973-74 to 1999-2000. (For a discussion of chain volume measures, see the section Chain volume or 'real' GDP.)

29.1 GROSS DOMESTIC PRODUCT, Chain Volume Measures(a)

Year
GDP

$m
GDP per capita

$

1973-74
266,549
19,582
1974-75
271,547
19,651
1975-76
279,738
20,030
1976-77
288,811
20,467
1977-78
290,865
20,368
1978-79
307,300
21,286
1979-80
314,754
21,556
1980-81
324,871
21,936
1981-82
335,197
22,265
1982-83
326,818
21,373
1983-84
345,021
22,281
1984-85
362,179
23,095
1985-86
377,670
23,751
1986-87
387,944
24,037
1987-88
408,831
24,930
1988-89
425,722
25,514
1989-90
441,385
26,058
1990-91
440,389
25,638
1991-92
442,021
25,411
1992-93
457,984
26,040
1993-94
476,986
26,848
1994-95
498,550
27,757
1995-96
520,261
28,594
1996-97
539,088
29,257
1997-98
565,126
30,338
1998-99
595,417
31,581
1999-2000
620,963
32,539

(a) Reference year 1998-99.

Source: Australian System of National Accounts (5204.0).


The chain volume measure of GDP increased by 4.3% in 1999-2000, following an increase of 5.4% in 1998-99. For some analytical purposes, it is important to allow for the impact of population growth on movements in GDP. Annual growth in GDP per capita has been about one to two percentage points lower than that for GDP since the mid-1970s and was negative in 1977-78, 1982-83, 1990-91 and 1991-92 (graph 29.2). In 1999-2000 GDP per capita increased by 3.0%.



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