The GDP (Gross Domestic Product) Measure of Economic Growth, sometimes called the gross domestic product, is a statistical term that indicates the performance of an economy. It can be defined as the value of a particular unit of production measured over time. There are many ways to measure the performance of an economy. The standard deviation is used to determine deviations from the mean, standard deviation being proportional to the variance of random variables. These measurements are used to examine relationships between variables and the benchmark. This allows the evaluation of deviation patterns and their statistical significance.
One of the standard measures of the GDP is the Purchasing Managers Index, or PPI. This index is designed to measure the strength of the purchasing managers of a country. Purchasing manager indices are indicated by the countries current stock of goods and services as well as their level of production. A strong stock of goods and services implies robust demand for the domestically produced goods and services, and robust export performance. A poor stock of goods and services indicates the weaker domestic production, and weak export performance.
Other measures of the GDT include basket-case analysis, which examines the differences between economies based on basket cases. A basket case is a symmetric closed economy with all its domestic products in perfect correlation to each other. A country whose goods and services are more centrally located will have more items in its basket case than its smaller neighbors. On the other hand, economies with a large reliance on exports will have less items in the basket case, reflecting a greater potential for exporting.
Growth in the basket case is normally a negative sign for growth in overall economic performance. This is because the goods and services within a basket case are usually more concentrated in comparison to the size of the economy. A central economy is often able to gain access to specific goods and services at a low price, allowing it to enjoy comparative advantage. However, the high price of basket cases forces exporters to specialize in their local products. As a result, goods and services from a central country become more expensive compared to those available from a basket case country.
This situation results in a dearth of new companies entering the market. The GDT measures the gap between the gaps between the basket case economy and the exporters of these special goods and services. By analysing the behaviour of this gap, the GDT can indicate gaps in potential growth. These gaps can be used by the exporter as a tool to strengthen its domestic business. For example, if an exporter can demonstrate that there are gaps in potential growth between its basket case country and the company's basket case country, then it will have the opportunity to strengthen its domestic production.
A similar strategy is applied to the export function. There are two types of export analysis, the first measuring actual export volumes and the second measuring the potential growth in exports. An exporter needs to obtain both types of analysis in order to determine its domestic position vis a vis its foreign potential position. Measuring actual export volumes gives a better picture of how much the domestic industry is producing and how productive it is.
The second type of analysis that is used is one measuring potential growth in exports of goods and services. The potential for growth refers to the export performance of the exporting firm over time against the . . . . . . performance of the goods and services being sold in the domestic market. Potential growth can be measured by way of comparing current export performance with potential export performance in the future based on the existing export structure. This allows the evaluation of the efficiency of the production process and the marketing mix in relation to the structure of goods and services available in the domestic market.
Analysis of this nature can be used to evaluate both the direct and indirect effects of exporting activities. The extent to which exports help or hurt the domestic production is also examined. As is the case with the former, the later examines the extent to which foreign goods help or hurt the performance of domestic production. Both basket cases have their own advantages and disadvantages. For instance, the basket case scenario has a much greater potential for exporting, but also comes with significant risks. Knowing the potential and the risk in an economic context can help us make better decisions in dealing with externalities such as the risk of losing trade partners due to slower growth in the domestic economy.