Appendix - Definitions, Sources, and Methods

A country's Gross Domestic Product (GDP) represents the sum of value added by all producers in that country.  Value added is the value of the gross output of producers less the value of intermediate goods and services used in production.  It is generally used to measure the size of an economy.  However, it should not be interpreted as necessarily measuring the wealth and well-being of the residents of that country.  A better measure of the latter is Gross National Income.

Gross National Income (GNI), which was previously called Gross National Product (GNP), measures the total domestic and foreign value added claimed by residents.  It includes GDP plus net receipts of primary income from non-resident sources, where "primary income" is defined as compensation of employees and property income.  For many countries, the inflows and outflows of primary income tend to balance out, leaving little difference between GDP and GNI.  However, for some countries, the difference can be substantial.  For example, GDP was 15 percent higher than GNI in Ireland in 2006.  Purchasing Power Parities (PPPs) are currency conversion rates that allow output in different currency units to be expressed in a common unit of value.  A PPP is the ratio between the number of units of a country's currency and the number of U.S. dollars required to purchase an equivalent basket of goods and services within each respective country.

GDP per capita (charts 1.1, 1.2, and 5.4)

GDP per capita converted at PPP rates (charts 1.1 and 5.4).  The comparisons shown in charts 1.1 and 5.4 are based on measures of GDP converted at PPP rates and on population size.  Measures for chart 1.1 are taken from the data underlying a periodic report published by BLS for the United States, Canada, Australia, Japan, the Republic of Korea, Austria, Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, and the United Kingdom.  For the remaining countries, the measures are based on data published by the World Bank.  For chart 5.4, BLS data are used for the United States while the comparisons shown for the emerging economies are based on World Bank data. 

Source:  BLS, "Comparative Real Gross Domestic Product Per Capita and Per Employed Person, Sixteen Countries, 1960–2006," July 11, 2007, <http://www.bls.gov/fls/>; and World Bank, World Development Indicators Database, <http://www.worldbank.org/>.

Average annual growth rates for real GDP per capita (chart 1.2). Real GDP is GDP that has been adjusted for overall price changes over time, in order to remove the effects of inflation.  Change in real GDP per capita over time is the result of changes in both a country's real GDP and in its population.  For chart 1.2, the estimates of real GDP are based on data from BLS, OECD, and national sources.

Measures are taken from the data underlying a periodic report published by BLS for the United States, Canada, Australia, Japan, the Republic of Korea, Austria, Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, and the United Kingdom.  Data for Hong Kong are from the Hong Kong Census and Statistics Department; for Singapore, from Statistics Singapore; and for the remaining countries, from OECD.

Source:  BLS, "Comparative Real Gross Domestic Product Per Capita and Per Employed Person, Sixteen Countries, 1960–2006," July 11, 2007, <http://www.bls.gov/fls/>; OECD, STAN Database, <http://www.oecd.org>; Hong Kong Census and Statistics Department, <http://www.info.gov.hk/censtatd/>; and Statistics Singapore, <http://www.singstat.gov.sg/>.

GDP per employed person (chart 5.5)

This indicator gives GDP measured in 1990 U.S. dollars converted at PPP rates divided by the number of employed persons.  For an extensive discussion of the indicator, including details of its construction and some limits to comparability, see the source document.

The use of employed persons in the denominator of the indicator does not standardize sufficiently the measure of labor input.  The number of hours worked, on average, by each employed person can vary markedly across countries and over time.

This indicator may be viewed as giving the amount of GDP attributable on average to each employed person, working in tandem with all other inputs or factors of production.

Source:  ILO, Key Indicators of the Labor Market software, 5^th Ed., Geneva, 2007, table 18a, <http://www.ilo.org/kilm>.