GROSS DOMESTIC PRODUCT

GDP is the market value of all the finished goods and services produced within a
country in a year. GDP will increase due to inflation (Nominal GDP) and if the quantity of
goods and services is increased, by producing better or high quality goods and services (Real
GDP). So real GDP is the total increase in price making the price of individual quantity fixed.
Increase GDP is also due to the increased population. We can control the population by taking
the ratio of real GDP to the total population of country at midyear. So Real GDP per capita
gives the average standard for living whereas real GDP gives the health economy of the
country.

GDP simply can be measured commonly in National spending approach and factor
income approach. National Spending approach is the total amount spent on good and services
produced in a nation by firms, government and foreigners. Income approach is the total
income earned by the households in a nation during a year (From land given to cooperation as
rent, labor as wages, capital as interest and entrepretaur (who own their own business) as
profit).

GDP of Nepal is shown in table.

Here, per capita at constant price has decreased significantly on year 2015/16 which is
due to the huge destruction of lives and properties rendered by devastating earthquake of
April 25, 2015. Further, the five-month blockade on border by India is also one of the reason
in decrease for GDP.
 It is seen that our country exports less while imports much more goods and services
which results in the decrease in GDP, it further shows the dependency of our country to other.
The rapid decrease in import and export in the last year is mainly due to blockade on southern
border of Nepal.

The GDP for captia of Nepal is shown below according to 2010 U.S. dollars prepared
by FRED (Federal Reserve Economic Data). This shows the increase pattern of GDP per
capita income and real GDP. Real GDP only show the increase of GDP but do not include the

population but GDP per capita income controls the population so we can say it is more
appropriate for measuring the standard of people.

Here, in the chart 1(g), it is shown that the GDP per capita at constant price has been
increasing yearly but there is decrease in the year 2015/16 from Rs. 27184 to Rs. 26972.This
is mainly due to the high inflation rate compared to the growth rate whereas GDP at constant
prices had increased by
1.7 percent in previous
fiscal year.

The one
of the main
factor in the
apparent
increase in
GDP is due to
the inflation i.e.
increase in
price of any
goods and
services.
During the last
10 years the inflation has been increasing in Nepal rapidly and reached to the apex of 12.6
percent in fiscal year 2012/13. At current it has reached to 9.7 percent. This increase in price
but decrease in GDP per capita or economy in the recent years shows the standard of people
is being decreased or is being poorly increased.

Here, the graph shows the relation between GDP per capita vs life expectancy and
GDP per capita vs life satisfaction. Here, we can see as the GDP per capita has increased
then the life expectancy has also increased. Countries like Japan, U.S. have high life
expectancy of approx. 80 while Nepal has only 66.
 Further
according to
2011 Nepal
has life
satisfaction of
only 4.95 in
10(GDP per
capita 2265.05
us dollar)
which is sad
thing for the
country and
people. Further,
high GDP per
capita also
shows indicates the high human development index.

For the development of any country there should be the development of industry and
contribution of industry in the GDP should be high. Here in our country the contribution of
industrial sector in GDP has always been decreased. Further, from the given chart it shows
that contribution of manufacturing industries to GDP has shrunk from 9 percent to 5.5 percent
from 2000 to 2016 A.D.

This industrial rate of decrease is due to the lack of investment environment in the
industry, labor relations problem, energy crisis i.e. lacks of reliable and regular supply of
electricity, political transition, lack of industrial infrastructures.
 So,
finally we
can say that
the GDP is
one of the
important
factor for
determining
the economy,
happiness,
life
expectancy,
standard of life moreover the human development index.