asked the Minister for Finance whether growth in gross domestic product is a better guide to true economic growth than growth in gross national product; the factors which differentiate gross national product and gross domestic product; if he will give growth figures for both in respect of each of the last five year for which they are available; and his expectation for the out-turn for both in the current year.
Written Answers. - Gross Domestic Product.
87.
Economic growth may be defined as growth in any gross domestic product, gross national product or, of course, gross national disposable income. A detailed statement of the constituent elements of each is incorporated each year in the Central Statistics Office publication "National Income and Expenditure".
In layman's terms gross domestic product, GDP, is a measure of the total income derived from output within the economy — but without regard to the ultimate ownership of that income.
Gross national product, GNP, is a measure of the total income derived by Irish-resident entities, individuals and corporations, from output — but without regard to the location of the output. Unlike GDP, it includes trading and investment income payable to Irish-resident entities from overseas output, and excludes trading and investment income payable out of Irish output to foreign resident entities.
Gross national disposable income, GNDI, is a measure of the total income at the disposal of Irish-resident entities. It differs from GNP by including current transfers to Irish resident entities from abroad, and excluding current transfers to foreign resident entities from Ireland.
Each concept, when expressed in real terms, is a valid measure of economic growth, of course, subject to the obvious difficulties of compilation. Which represents "true" growth depends on the concept of "economic growth" relevant to the issue at hand.
The following table sets out annual volume change in GDP and GNP from 1984 to 1988 as published by the Central Statistics Office, average of output-based and expenditure-based estimates; and the forecasts for 1989 published by my Department in Economic Review and Outlook, expenditure-based estimates. For completeness, the table includes the Central Statistics Office' estimates of annual volume change in GNDI, from 1984 to 1988.
Table
Annual Volume Change in GDP, GNP and GNDI
|
Year |
GDP |
GNP |
GNDI |
|
% |
% |
% |
|
|
1984 |
4.0 |
1.9 |
1.8 |
|
1985 |
1.4 |
-0.2 |
1.2 |
|
1986 |
0.1 |
-0.7 |
2.9 |
|
1987 |
4.6 |
5.2 |
4.3 |
|
1988 |
4.0 |
1.6 |
1.3 |
|
1989 |
4.5 |
4.0 |
— |