Gross domestic product

Gross domestic product is defined by OECD as "an aggregate measure of production equal to the sum of the gross values added of all resident institutional units engaged in production." GDP estimates are commonly used to measure the economic performance of a whole country or region, but can also measure the relative contribution of an industry sector. This is possible because GDP is a measure of 'value added' rather than sales; it adds each firm's value added. For example, a firm buys steel and adds value to it by producing a car; double counting would occur if GDP added together the value of the steel and the value of the car. Because it is based on value added, GDP also increases when an enterprise reduces its use of materials or other resources to produce the same output. The more familiar use of GDP estimates is to calculate the growth of the economy from year to year. The pattern of GDP growth is held to indicate the success or failure of economic policy and to determine whether an economy is 'in recession'.