The terms gross national product (GNP) and gross domestic product (GDP) are similar but not interchangeable. GNP measures the sum of all goods and services produced by a country's nationals whether they are in the country or abroad. Thus GNP includes data such as the profits of a country's MNCs. By the same logic, GNP does not include profits from production in one's country by foreign MNCs. GDP includes only income within a country (by both nationals and foreigners) and excludes foreign earnings of a country's nationals. The fact that some countries report only GNP and others report only GDP creates slight statistical comparison anomalies.
The most recent change in calculating a country's production of wealth is the addition of "purchasing power parity" (PPP) to the calculation. Because GDP or GNP is expressed in a single currency, usually the U.S. dollar, it does not fully account for the difference in prices for similar goods and services in different countries. Some countries are more expensive than the United States. Refer to the box GNP-PPP on page 397 for a complete explanation of GNP-PPP. There is certainly value to PPP adjustments, but this book uses unadjusted figures. Using both adjusted and unadjusted figures would created more confusion than clarity, and the reason for using the unadjusted GDP/GNP is that since many of the industrial and technological products that LDCs wish to acquire come from abroad, the cost to the LDC is not affected by PPP. A U.S. tractor that costs $50,000 costs $50,000, whether you buy it in the United States or Kenya. Therefore, PPP masks the gap in international purchasing power between LDCs and EDCs and inflates the economic position of LDCs compared to EDCs in the world economy.
All monetary values in this book are in current U.S. dollars (US$), unless otherwise noted. There are two ways to express monetary values. One is in current dollars, which means the value of the dollar in the year reported. Because of inflation, using current dollars means that, for example, the percentage increase in value of exports will rise faster than the percentage increase in the volume of exports over any period. The second way to express monetary value is in real dollars, or uninflated dollars. This means that the currency is reported in terms of what it would have been worth in a stated year. In this book, monetary value is in current U.S. dollars except where noted. Therefore, you could say either that a car in 2000 cost $15,395 or that (assuming a 4 percent inflation rate) it cost $10,000 in real 1989 dollars. Note that you figure inflation by compounding the rate, that is, multiplying $10,000 by 1.04 x 1.04 x 1.04... The number 100 is used as a baseline in many of the figures in this and other chapters. It is used to show relative change. This number is an abstraction and has no value as such. It simply allows comparisons of later growth or decline. It is used instead of zero to avoid pluses and minuses before subsequent data. For example, if you earned $5,000 in 1989 and a friend earned $7,000, and you wished to compare later earning growth, you would make 1989 earnings for both of you equal to 100. Then, if in 2000 you earned $8,000, but your friend earned only $4,000 (using increments of 10 to equal each $1,000), your earnings would be expressed as 130 and your friend's earnings would be 70. You may find that the data, such as trade expressed in dollars, used in this book for any given year or period varies somewhat from what is cited by another source. Most of the data is based on extensive compilations and complex calculations completed by the sources cited or by the author. But the reporting organizations, such as the U.S. government, the United Nations, the IMF, the World Bank, and GATT all use slightly different assumptions and inputs in calculating their final figures. Most of the major sources used herein include careful discussion of exactly how they arrive at their conclusions. You may refer to these if you wish a detailed explanation of their methodologies. The key, then, usually is not to focus too much on specific numbers, especially if they come from different sources. Rather it is best to concentrate on patterns, such as the rate of growth or decline of trade over a period of years. Unless specifically noted, this chapter relies on the following sources for financial, trade, and other economic data: International Monetary Fund (1999-2000), Direction of Trade Statistics, Washington, DC; IMF (2000), International Financial Statistics; IMF (2000), World Economic Outlook; IMF (2000), IMF Survey; U.S. Central Intelligence Agency (CIA) (1999), The World Factbook, 1999-2000; (U.S.) Bureau of the Census and U.S. Economics and Statistics Administration (2000), Statistical Abstract of the United States, 2000; World Almanac, 2000; World Bank (2000), World Development Report, 2000; World Resources Institute (2000), World Resources, 1999-2000. In addition to these sources, four newspapers--the Financial Times (London), the Hartford Courant (Hartford, Connecticut), the New York Times (New York), and the Wall Street Journal (New York)--were used as sources herein. Several further comments on these sources are appropriate. One is that many are periodic publications. The most current year used is shown, but historical data may also be drawn from various issues in the current or earlier years. Second, some sources of historical data are not shown because of the sheer mounting volume of citation that would be necessary through multiple editions of this study. Where it is not cited herein, historical data sources are cited in earlier editions of International Politics on the World Stage. Third, full bibliographic citations for most of the sources listed here can be found in this volume's bibliography. |
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