Understanding: gross domestic product (GDP) and economic growth

Understanding: gross domestic product (GDP) and economic growth


Hello and welcome to this new video of "Draw My Economy". Today, I will tell you about GDP and growth. As always, do not forget to put an inch up, comment and share this video, it helps the chain to be known. I hesitated to make this video because other YouTubers have already spoken with talent but it will allow me to talk to you in other videos of productivity, the taxation of robots and economic programs of Mélenchon and Hamon.
Gross domestic product by example

Let's take the example of my cousin eglantine that we had seen for the forces to wear. Eglantine has a company that sells teddy bear. She buys her bear, 1 € unity to a Mulin-based industrialist in Germany, she sells her bears to Amazon Luxembourg for € 2. The turnover of its company is 2 € per unit and its added value is 2 € - 1 € for the industrialist, or 1 € per unit of product. As it sells 200,000 bears a year, its annual turnover is € 400,000 and its annual added value is 200,000 €.

If the Eglantine company was the only one in France, the GDP of France would be 200,000 €, because GDP is the sum of the added values ​​of a country's companies. This is an imperfect measure but very suitable for industrial societies.

Why imperfect? Let's take another example of Alembert and Diderot, the inventors of the encyclopedia are teleported in France nowadays. They run with the Minister of Finance and explain their idea to increase French GDP. We will create an encyclopedia in 24 volumes that we sell to 27 million French households for 1000 €. This will increase GDP of 27 billion euros. Yes, but today, this encyclopedia exists, it's called Wikipedia and it is free. It contributes for 0 € in GDP.
GDP per capita

But let us continue the example of Eglantine. France is the Eglantine company. Eglantine works alone in his business. GDP per capita is therefore 200,000 €. Eglantine creates 200000 € wealth that she does not have to share. She is rather rich. For convenience, Eglantine hires an accountant, this post office even if it is very helpful will not allow the sale of an extra teddy bear. The GDP remains therefore 200000 euros but there are now two people in the company. 200000 € are therefore shared more at least equitably between two people. There is then 100000 € of wealth produced by person.

This is the notion of GDP per capita. Eglantine is necessarily less rich. Imagine now that eglantine recruits various employees with different qualifications and more positions at least linked with production and sale. It distributes 100% value added value. The company reaches 10 employees for added value of € 700,000. The added value by employee is now 700000 € divided by 10. Either 70000 €. The median salary is 70000 €.
Why is growth needed?

The following year, the company goes to 11 employees for a turnover of 720000 €. The added value by employee is now € 65,000. The median salary is € 65,000. This means that employees have impoverished. So that there is no depletion, so it is necessary that the added value increases at the same speed or faster than the number of employees. This is the reason why growth is needed. If the population of a country increases, it is necessary that GDP increases at least in the same proportions so that the population does not adverse. It is a necessary but not sufficient condition. The fruits of this growth must also be confiscated by a group to the detriment of others.

In other words, the distribution key of this wealth must remain about the same so that the entire population benefits from growth. Thank you for watching this video, put him a big thumb up. Share it and subscribe. You can also follow me on Twitter or Facebook.