There are various economic indicators that can be safely called relevant. But not all of them are known to ordinary people. And to the question “GRP is what?” not everyone can give an intelligible answer. Therefore, in order to understand such a difficult topic, this article will examine the essence and structure of this indicator.
Gross regional product
GRP can be defined as an indicator of a generalizing type that characterizes the economic activity of a particular region and the process of production of services and goods in particular.
Market prices are typically used to publish GRP data. But it is possible to form this indicator with the help of basic prices. In this case, the main difference will be reduced to the sum of net taxes on products (subsidies on goods are deducted). If we talk about the GRP of the regions of Russia at basic prices, then it should be noted that this is the sum of the added values by type of economic activity.
The Importance of Gross Regional Product
In order to correctly assess the economic state of the CIS, it is necessary to use certain indicators that will reflect the dynamics of key processes. And if we consider the GRP of Russia, it can be argued that this indicator is extremely important, especially given the constantly growing independence of the regions.
The bottom line is that as the basis for a comprehensive assessment of the characteristics of the generalizing type in a market economy, you can determine the SNA (system of national accounts) and the CDS (system of regional accounts), which is a logical continuation of the first. Moreover, in the first system, the gross domestic product occupies a key position, and in the CHP, respectively, regional. A simple conclusion follows from this, which helps to answer the question “GRP - what is this?”: Without this indicator, it is not possible to build the SDR, and, therefore, a full analysis of the economic condition of the region and the country as a whole is also impossible. This means that it is mandatory in the process of assessing the economy.
Key Terms
First of all, it is worth deciding what the main price is, which was discussed above. This term is used to describe the value that the manufacturer assigns to a specific unit of goods, taking into account the subsidy for products, but without taxes.
By the release of goods and services it is understood their total cost, which is formed as a result of the production activities of residents. The inclusion of the manufactured and sold product in the release takes place at the actual market price. If we talk about unsold goods, they are included in the issue at average market prices. This factor, like the others given in this section, includes the structure of the GRP.
It is important to pay attention to such an indicator as intermediate consumption. In this case, we are talking about the price of services and goods fully consumed or transformed in the production process within a specific reporting period.
There are also costs associated with the final consumption of GRP. They consist of indicators such as government spending on collective and individual services, as well as household spending on final consumption. This category includes the expenses of nonprofit organizations that provide services to households.
How is GRP of Russia calculated
There are several ways to determine gross regional product.
This indicator can be calculated at the level of sectors and industries. For this, the production method is used, which is to identify the difference between the output of services and goods and intermediate consumption, which is formed from the cost of production. Moreover, this calculation is made before the consumer fixed capital is deducted.
Understanding that GRP is what, and how to determine it, it makes sense to pay attention to the formation of this indicator in the production stage. In this case, we are talking about the amount of gross value added that was created through the activities of all institutional units-residents located in the economic territory of the region. It is worth noting that in this case net taxes on products are not taken into account.
Sources used to calculate
The volume of GRP in the CIS countries is calculated using the following sources of information:
- companies reporting on the sale of services, products and production itself, as well as the cost of producing goods;
- specialized regional and special sample surveys;
- company registers.
If we touch on the topic of registers in more detail, it should be noted that they contain various information, including the location of enterprises. It is this information that is used to generate special statistical reporting on key performance indicators of companies in the region.
Production method of calculus
Before moving on to the method itself, it is worth noting that GRP per capita can be reckoned with macroeconomic indicators. It can be considered at several stages: production, income generation and, of course, the use of income.
At the production stage, GRP is used to characterize the value added that was created by residents in the process of releasing goods and services within the current reporting period.
Taking into account the stage of income generation, it is worth noting that in this case, GRP per capita is calculated by summing up the primary income received by residents in the process of production of goods. This amount is distributed among the participants in the production process.
As for calculating GRP at the stage of using incomes, we are talking about reflecting the sum of expenditures of all sectors of the national economy on final accumulation and consumption, as well as on net export of services and goods.
Calculation by distribution
GRP per capita of the local population (meaning regions) can also be calculated at the stage of income generation. In this case, this indicator can be defined as the sum of primary incomes that are subject to distribution among residents directly involved in the production process.
This group includes the following income received in the production process:
- Remuneration of employees (both residents and non-residents). It is defined as remuneration in kind and in cash and is paid to employed employees for their work. In this case, all amounts that are accrued to employees before income taxes and other deductions are excluded from wages are taken into account. The deductions of insurance contributions to social funds are also taken into account.
- Gross profit and mixed income that were received for the right to use borrowed non-financial and financial non-productive assets in the process of release of goods.
- Net taxes on imports and production, which are state revenues. The GRP structure includes this element. In this case, in addition to subsidies and taxes on products, those types of taxation that relate to production units as participants in the production process are taken into account.
