Introduction
Gross domestic product (GDP) also referred to as gross domestic income (GDI) is a way of measuring the national output and national income of an economy of a country. Gross domestic product has various definitions but they are all having similar meanings and are seen to be identical. One of the definitions is that it is the sum of all expenditures for the total production of goods and services that have been made in the country for a given period, most countries use a year for the period. The other definition is that it is the total added value at all levels of production by the various industries in a given country; taxes are then added to the value and then the subsidies are then lessened. The third is that GDP is equivalent to the total income got from the country’s production during a certain period. The GDP is mostly calculated over a period of three sixty five days (Amann, 2000).
GDP is mostly calculated using the expenditure method which is given by:
GDP= Consumption+ Investment + Government expenditure + net imports
Or in a more graphical equation definition:
GDP=C+I+G+(X-M).
The word gross is used because during the calculation capital stock depreciation is not subtracted from the gross domestic product. When it is subtracted, then the equation is known as Net Domestic Product. Investment and consumption are referred to as expenditure on the final goods and services. Modern economists have split the general consumption into private consumption and the public sector which stands for the government (Baer, 1990).
Case Study of Brazil gross domestic product
Brazil’s gross domestic is fairly above a trillion dollars. This has helped the country to be among the biggest economies in the world. Currently, Brazil is ranked tenth in the world as one of the leading economies in the world. This is when the GDP is calculated nominally. When the GDP is calculated using Purchasing Power Parity, it is estimated at about $1.9 trillion also indicating a very strong economy which is ranked eight worldwide (Payne, 1994).
Gross domestic product structure
The service sector compromises the largest revenue source and it contributes to sixty nine percent of the Gross Domestic Product of the country. The industrial sector is also a very important part of the country’s economy. This is because the country is well endowed with technological advancement and this ensures that the industrial sector of the country makes a thirty percent component of the Gross domestic product. Another important sector is the agriculture which is barked by a good climate and very fertile soils. This sector contributes three percent of the gross domestic product. Brazil has a workforce estimation of more than one hundred million. Agriculture employs ten percent of the workforce, while the industrial sector employs nineteen percent. The rest which is seventy one percent of the entire country’s labor force is employed by the service sector (Amann, 2000).
Growth Factors
One of the leading growth factors of the economy of Brazil is the abundant work force that is available in the country. This means that the labor force has contributed greatly to the current economic status of the country. One of the greatest resources any country would have is the labor force and this has helped Brazil on the realization of the country’s dream of being one of the leading economies of the world. With a stable government and a working economy, the labor force has not been wasted and there have been creation of jobs within the various sectors of the economy. Most of the labor force in the country is employed by the service sector, which is the leading revenue earner for the country. The service sector takes up seventy one percent of entire labor force. The rest of the labor force is employed on the other sectors of the economy with agriculture taking up ten percent of the labor force and the industrial sector taking up nineteen percent. There is an abundance of jobs in the country in various sectors. The labor force of the country includes both skill and unskilled labor. However, the education system in the country is sufficient so most of the labor force is skilled labor force This would not have happened at a better time especially considering that the country is one of the most advanced countries as far as technology is concerned (Baer, 1990).
The country’s economy is also favored by a well structured technological industry. This can be evidenced by the fact that Brazil exports include some of the products that need a well established technological structure. Some of the exports according to the CIA fact book include automobiles, transport equipment along a contingent of other finished products. This means that the country is well advanced and is among the leading nations as far as technology is concerned. This has played a very important role in the industry sector and hence has seen to it that the industrial sector of the country contributes to about nineteen percent of the country’s gross national product. Education has played a very important role in the advancement of the technology and the government’s policy on education is highly influential within the country and across the border (Pereira, 1996).
The country is well endowed with natural resources and this account for the thriving agricultural sector in the country. The country has abundant rainfall; it has a lot of minerals including iron, very fertile soils and one of the most vegetative forests in the world. This sees to it that the agricultural sector is very thriving and also other sectors like mining and tourism. The country having abundant tourist attractions also has a good share of the world tourism and this have helped it in boosting its gross domestic product and this have resulted in the economy of the country being one of the leading economies in the world (Amann, 2000).
The company also has some of the largest companies in the world. In the year 2008, thirty four Brazilian corporations were in the Forbes Global 2000 list. These companies have boosted the economy via the gross domestic product by a good elevation level. This is through employing the abundant work force and also through taxation. Some of the large companies in the country include Petrobras, Vale, Branco Bradesco, Branco do Brasil and Banco Itau. These are the top five companies in the country and they have boosted the country’s economies to significant levels in the world market. The companies have also helped the country to be recognized as one of the forces in the international market arena because they deal with exportation and importation of their products (Payne, 1994).
Elements of growth
One of the factor that the country has been experiencing sustainable growth since it was discovered in the year 1500. However, the country did not start building its industries until after the Portuguese government gave it permit in the year 1808. It has undergone a long road from then until today to be among the top ten world economies. Initially, its export was mainly raw goods which were also primitive and this includes rubber, sugar and gold. It has grown and today most of its exports are fully processed and manufactured goods. Brazil started its economic transformation in the year 1875 and this was witnessed for a whole century up to 1975. The last ten years the domestic production of the country increased by 32.3 percent (Baer, 1990).
Another factor is control and reform factor. Brazil has taken a lot of measure in an effort to balance the country’s economy. One of the reforms taken was in the social security and taxation. In this respect, the government enacted the Law of Fiscal Responsibility which oversees the public expenditure of the various branches of government and in particular the executive of the Federal Government, State Government and Municipal levels. The country also invested in the efficiency of the administration. In the same respect, the government came up and implemented policies which encourage exportation, industrial development and trade development and this resulted in the creation of opportunity windows. These attracted both international and local investors (Pereira, 1996).
This control reforms have helped in reducing the countries vulnerability. The country does not import the oil it consumes and has also made efforts of reducing its domestic debt and to this end it has succeeded in reducing the domestic debt by half. This has been achieved through encouraging exports growth through rate linked certificates (Amann, 2000).
GDP Forecasting
Brazil is the largest market in Latin America. It is also the fifth country in the world in terms of population. In terms of gross domestic product, it is the tenth biggest country in the world. Above average gross domestic product growth, this will allow real incomes to be higher and continue rising but at a more moderate pace unlike what has been witnessed in the recent years. Income inequality will be lower and this will be because the country is implementing policies of income support. This makes the perfect ingredients for a very attractive market in the international market. The countries economic policies will continue to ensure that Brazil does not loose its ground in its rankings all over the world although its competitiveness will be constrained by not too strong effectiveness of the country’s institutions. However, the government will have to come up with better taxation policies because the current policies are very burdensome and this have been one of the downfalls of the Brazilian economy (Payne, 1994).
Brazil has been very successful economically and this has helped the country to be one of the leading economies of the world. The developing countries can learn from this country that was discovered and colonized by Portugal and yet it is more powerful economically than its colonizer. This shows that the leadership of the country has been very instrumental in their policies and these have helped the country to be one of the leading economies of the world (Payne, 1994).
Works cited
Amann, Edmund and BAER, Werner (2000). ‘The Illusion of Stability: The Brazilian Economy under Cardoso’. In: World Development, 2000, pp. 1805-1819.
Baer, Werner (1990). The Political Economy of Brazil. University of Texas Press.
Payne, Leigh (1994). Brazilian Industrialists and Democratic Change. John Hopkins University Press.
Pereira, Luiz Carlos Bresser (1996). Economic Crisis and State Reform in Brazil. Boulder, Lynne Rienner.