the total expenditure used to buy things is a way of measuring production. This is known as the expenditure method of calculating GDP. GDP (Y) is the Gross domestic product (GDP) is a monetary measure of the total market value of all of the final goods and services which are produced and rendered during a specific period of time (usually a year) by a country or countries. GDP is often used to measure the economic activity of a country or region. The major components of GDP are consumption, government spending, net exports (exports minus imports GDP can be determined in three ways, all of which should, theoretically, give the same result. They are the production (or output or value added) approach, the income approach, and the speculated expenditure approach. It is representative of the total output and income within an economy. The most direct of the three is the production approach, which sums the outputs of every class of enterprise to arrive at the total. The expenditure approach works on the principle that all of the products must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers", colloquially) must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes. GDP… In the words of one academic economist, "The actual number for GDP is, therefore, the product of a vast patchwork of statistics and a complicated set of processes carried out on the raw data to fit them to the conceptual framework." China officially adopted GDP in 1993 as its indicator of economic performance. Previously, China had relied on a Marxist-inspired national accounting system. == Determining gross domestic product (GDP) == GDP can be determined in three ways, all of which should, theoretically, give the same result. They are the production (or output or value added) approach, the income approach, and the speculated expenditure approach. It is representative of the total output and income within an economy. The most direct of the three is the production approach, which sums the outputs of every class of enterprise to arrive at the total. The expenditure approach works on the principle that all of the products must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers", colloquially) must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes. Gross mixed income (GMI) is the same measure as GOS, but for unincorporated businesses. This often includes most small businesses. The sum of COE, GOS and GMI is called total factor income; it is the income of all of the factors of production in society. It measures the value of GDP at factor (basic) prices. The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the government has levied or paid on that production. So adding taxes less subsidies on production and imports converts GDP(I) at factor cost to GDP(I) at final prices. Total factor income is also sometimes expressed as: Total factor income = employee compensation + corporate profits + proprietor's income + rental income + net interest === Expenditure approach === The third way to estimate GDP is to calculate the sum of the final uses of goods and services (all uses except intermediate consumption) measured in purchasers' prices. Market goods that are produced are purchased by someone. In the case where a good is produced and unsold, the standard accounting convention is that the producer has bought the good from themselves. Therefore, measuring the total expenditure used to buy things is a way of measuring production. G (government spending) is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchases of weapons for the military and any investment expenditure by a government. It does not include any transfer payments, such as social security or unemployment benefits. Analyses outside the US will often treat government investment as part of investment rather than government spending. X In 2017 Diane Coyle explained that GDP excludes much unpaid work, writing that "many people contribute free digital work such as writing open-source software that can substitute for marketed equivalents, and it clearly has great economic value despite a price of zero", which constitutes a common criticism "of the reliance on GDP as the measure of economic success" especially after the emergence of the digital economy. A 2025 study in the American Economic Journal devised a new GDP measurement (GDP-B) that accounts for the welfare value of new goods and free goods. In 2019, Erik Brynjolfsson and Avinash Collis argued that GDP does not reflect the growing value of many digital goods because they have zero price. Along with several coauthors, they proposed an alternative approach, GDP-B, which is based on measuring the benefits of goods and services, rather than their price or cost. === Health === In 2013 scientists reported that large improvements in health only lead to modest long-term increases in GDP per capita. These inequalities often occur on the lines of race, ethnicity, gender, religion, or other minority status within countries. === Capabilities === In the 1980s, Amartya Sen and Martha Nussbaum developed the capability approach, which focuses on the functional capabilities enjoyed by people within a country, rather than the aggregate GDP within a country. These capabilities consist of the functions that a person is able to achieve. In 1990, Mahbub ul Haq, a Pakistani economist at the United Nations, introduced the Human Development Index (HDI).