Sandy Smith of Womble Carlyle: Gross Domestic Product
Sandy Smith of Womble Carlyle has been helping businesses attract financing and go public for many years. He is an expert in legal and business matters.
Gross domestic product, or GDP, is the number that shows the value of all products and services created in a certain country during a certain period of time. In most countries, there is a special organization in the government that tracks the GDP and releases information about it as the data becomes available. This data gives people and organizations an idea about how much economic activity happened in the country during a given period of time.
GDP is a very important number because, generally speaking, the more people have, the happier they are. This doesn’t mean that the economists believe that money is the only thing that matters in life. However, they do believe that money can buy food, education, entertainment, health, and many other products and services that make people happier. Because people consume goods and services, measuring the GDP allows economists to see how well citizens of a country are maximizing their happiness. A growing GDP shows that a country is finding new ways to create products and services that are making people happy.
The GDP only counts transactions that involve money. It doesn’t count activities such as looking after your parents or taking care of your children unless these activities involve financial spending.
In the developed countries, GDP shows the total output with great precision because in market economies almost everything that’s being produced is being sold. In agrarian societies, most of the consumption happens within the households and never reaches the official statistic, which becomes a problem when experts like Sandy Smith of Womble Carlyle try to understand what is going on by looking at the numbers.