Discuss world fruit production & contribution to GDP.
Answers
How is the contribution of fruits and vegetables production on GDP computed?
Hi Shivam, although I am not an expert in economics, I will share my point of view on this, which must bring a certain amount of clarity for you.
GDP is a standard that is used across the globe as one of the indicators for gauging the health of an economy. It is a monetary value of all the goods and services produced in the country. Simple to define and understand, right? However, it is an intricate measure, difficult to calculate.
It includes all of these (and more):
Public & private consumption
Government spending
Investments
Construction of costs
Exports & (Imports) - Imports have a negative effect on the GDP
The GDP is also one of the indicators used to judge the standard of living in a particular nation.
Circling back to your question, fruits and vegetables production is computed in a GDP by estimating the value of produce produced by discarding the intermediary costs that are incurred in the process of production.
For example, if the selling price of an apple is 50 INR and the intermediary costs are amounting to 30 INR, then the contribution of this apple to the country’s GDP is 20 INR.
Fruits and vegetables aide to the GDP in other ways too. Shivam, for instance buys an apple from a store. He is spending money, that becomes somebody else’s income. Income earned by all the factors of production such as labour, rent earned on land, entrepreneur’s profits, etc. they all aide to the national income. Tallying the national income due to sale and production of fruits and vegetables is a contributing factor for the GDP.
Assume that the farmer or the grocer makes international business & earns a profit of 100 INR on one apple. Such an income (trade surplus) contributes positively to the GDP.
The farmer/grocer spending money on producing an apple, buying an apple, marketing an apple, transporting an apple also contributes to the GDP of the country.
Therefore, GDP takes into consideration the factors such as private and public spending, government spending, net exports, etc. Fruits & Vegetables contribute to all of these factors.