Gross domestic product (GDP) is the measure of the market volume of all the final goods and services produced within a country’s borders in a given year. GDP is measured in terms of a country's national currency or its equivalent in a foreign currency according to the exchange rate.
The location of manufacturing facilities is not factored in the calculations of a nation's GDP. This means that the indicator includes goods and services produced by companies of various economic sectors on a territory of a given country. Intermediate goods and services used to produce other products are not included as well. That is, the indicator consists of only those goods and services that are intended for direct consumption or use.
There is nominal and real GDP. Nominal GDP is calculated at current prices in a given year. Therefore, it may be distorted by periods of inflation or deflation. Real GDP is calculated using the prices of a selected base year, that is, any year before or after the estimated period required for calculations.
Oftentimes, economists use per capita GDP to assess the economic development of a country. This indicator is calculated by dividing the GDP of a country by its population.