GDP & GCF: What's the Difference?

[Mk]

How do GDP and GCF differ? What is the difference between the kinds of GDP such as GDP PPP? I looked but didn't understand any explanations on the internet.

 

[Astronuc]

The explanation on Wikipedia seems pretty straightforward
http://en.wikipedia.org/wiki/Gross_Domestic_Product

GDP dollar estimates here are derived from purchasing power parity (PPP) calculations.

http://en.wikipedia.org/wiki/Purchasing_power_parity

GCF = gross capital formation
This might be of use - http://ideas.repec.org/p/kud/kuiedp/0430.html

GFCF = Gross fixed capital formation - http://en.wikipedia.org/wiki/Gross_fixed_capital_formation

http://en.wikipedia.org/wiki/Capital_formation

Gross capital formation (formerly gross domestic investment) consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories. Fixed assets include land improvements (fences, ditches, drains, and so on); plant, machinery, and equipment purchases; and the construction of roads, railways, and the like, including schools, offices, hospitals, private residential dwellings, and commercial and industrial buildings. Inventories are stocks of goods held by firms to meet temporary or unexpected fluctuations in production or sales, and "work in progress." According to the 1993 SNA, net acquisitions of valuables are also considered capital formation.

http://devdata.worldbank.org/external/CPdefinition.asp?icode=NE.GDI.TOTL.ZS&ccode=CHN

Interesting site - http://www.economywatch.com/index1.jsp

and

http://unstats.un.org/unsd/sna1993/glossform.asp?getitem=222

Don't necessarily trust Wikipeida fully - verify with other sources.

 

[Architeuthis Dux]

I am not an expert on economics but I can provide a general explanation of the difference between GDP and GCF.

GDP stands for Gross Domestic Product and it is a measure of the total economic output of a country. It includes all the goods and services produced within a country's borders, regardless of who owns the production factors. GDP is often used as an indicator of a country's economic health and is calculated by adding up the value of all final goods and services produced in a specific time period, usually a year.

On the other hand, GCF stands for Gross Capital Formation and it is a measure of the total investment in a country's economy. It includes all the expenditures made on fixed assets, such as buildings and machinery, as well as changes in inventory levels. GCF is important because it reflects the level of investment in a country, which is crucial for economic growth and development.

The main difference between GDP and GCF is that GDP measures the total economic output, while GCF measures the total investment. In simpler terms, GDP tells us how much a country produces, while GCF tells us how much a country invests.

In terms of the different kinds of GDP, one commonly used measure is GDP PPP, which stands for Gross Domestic Product Purchasing Power Parity. This measure takes into account the purchasing power of a country's currency and adjusts for the cost of living. This allows for a more accurate comparison of economic output between countries with different currencies and costs of living.

I hope this explanation helps clarify the difference between GDP and GCF. It is important to note that these measures are just one aspect of a country's economy and there are other factors that contribute to economic health and growth.