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Anybody else remember when Italy's economy was bigger than the UK's?

Take away Scotland and I bet England is behind Spain. Too bad Spain doesn't have an Armada anymore.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Jan 14th, 2008 at 12:33:19 PM EST
The UK also includes Northern Ireland and Wales.

Now the problem is that regional GDP data has been discontinued, instead, they track GVA (gross value added), and I'm not sure what everything constitutes the difference.

  • UK 2006 GVA: £1,155 billion
  • Scotland 2006 GVA: £91 billion
  • England 2006 GVA: £969 billion

From this, in Euros at £1 = €1.32:
  • UK 2006 GVA: €1,525 billion
  • UK minus Scotland 2006 GVA: €1,404 billion
  • England 2006 GVA: €1,279 billion

Now for comparison, according to Eurostat:
  • UK 2006 GVA: €1,779 billion (at the 2006 exchange rate!)
  • France 2006 GVA: €1,600 billion
  • Spain 2006 GVA: €874 billion
  • Spain 2006 GDP: €981 billion

...so England is still comfortably ahead of Spain. You forgot that much of the UK economy is not production or local services, but financial sevices in the City.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Jan 14th, 2008 at 01:06:46 PM EST
[ Parent ]
I'm not sure that GVA quite captures the wealth that Scotland generates.

Think of all that oil and gas. It's not England's.  I'm therefore quite sure GVA understates Scotland's contribution to GDP.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Jan 14th, 2008 at 01:19:29 PM EST
[ Parent ]
  1. Could you define GVA for me? At least in terms of the difference that might be important for both Scotland and England? Wiki is no help here.

  2. Will you submit that even just the England's GVA is the major part of the UK GDP (and larger than Spain's even at today's exchange rate), or does GVA include something GDP doesn't and which is significant for England?


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Jan 14th, 2008 at 01:31:10 PM EST
[ Parent ]
Gross Value Added is a UN stat, if memory serves. It's like value added for the purposes of VAT, ie selling amount less cost of production/inputs, but with an added twist for national accounting - it also deducts national consumption of the good or service produced.

Since much of UK production of gas and oil is also used as intermediate production inputs for other goods and services, this would discount the portion of oil and gas production on those portions not consumed (ie not ending up in another state as finished goods or services) or exported. And, since much of the transformation of oil and gas as intermediate good occurs in England, then the understating is simply compounded.

Account for it the way countries are accounted for rather than regions within the UK (and, perhaps for further measure, put Scotland on the Euro) and I strongly suspect Scotland's GDP would be closer to Norways' than the GVA statistic London puts out.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Jan 14th, 2008 at 01:46:25 PM EST
[ Parent ]
Actually, if I am not mistaken Gross Value Added is a little easier to understand than GDP.

Suppose you just take the prices and quantities of all goods and services exchanged over a reference period within a reference region, and add them up. The problem with that is that tehre is double-counting. If I produce a piece of cloth and sell it to you for 100 and you make a shirt out of it and sell it on for 150, the sum of the exchange values is 250, but the 100 of materials is double-counted.  So, you can do one of two things. Either you only count the goods and services purchased for comnsumption (i.e., that don't get used to produce something else that is then sold) or you consider the value added which is 100 for me, but 50 for you.

So each transaction has a price, but also a value added which is the price minus the cost of all the inputs that were used in producing the good or service traded.

So you tally not price and volume traded, but value added and volume traded. That is GVA.

GDP requires you to subtract imports, add exports, and so on, so it is not quite as simple to understand as "just tally everything and add it up".

We have met the enemy, and he is us — Pogo

by Migeru (migeru at eurotrib dot com) on Mon Jan 14th, 2008 at 01:47:32 PM EST
[ Parent ]
Nevermind:

National Statistics Online

How does GVA relate to GDP?
The link between GVA and GDP can be defined as:
GVA (at current basic prices; available by industry only)
plus taxes on products (available at whole economy level only)
less subsidies on products (available at whole economy level only)
equals GDP (at current market prices; available at whole economy level only).

Digging further, I find that the oil & gas contribution to the GDP was just £2.3 billion in 1998, it shan't be higher now (I found no newer data on that crappy site). At least the mining industry index was decreasing.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Jan 14th, 2008 at 02:01:28 PM EST
[ Parent ]
Are you using the GVA stat?

I'd have a hard time believing that number. Look accross the north sea to Norway to triangulate.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Jan 14th, 2008 at 02:05:04 PM EST
[ Parent ]
No, that was a GDP stat, but now I got suspicious, too. Let's try something different, though crude: let's take the 2.9 million boe/day for 2006, that's c. 1 billion barrels, should mean $60 billion or £30 billion. Now half of that production is not oil but gas, and I don't know what's the benchmark for the UK.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Jan 14th, 2008 at 02:15:20 PM EST
[ Parent ]
Would GDP subtract expenditures in the oil & gas sector?

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Jan 14th, 2008 at 02:16:52 PM EST
[ Parent ]
No. Simply put, GDP measures the sum total of private Consumption, business and private Investment and Goverment expenditures (the so-called "CIG") plus exports less imports.

My point here is that, if Scotland were an independent country, then Scottish oil and gas consumed in England, as either an investment (business input into production of other goods and services) or as private consumption, would be classified as an Export. And, if the UK did proper GDP by country (England, Scotland, Wales and the part of Ulster they still occupy) then this consumption or investment as input in England would also be classified as GDP. However, calculating via GVA, it would be classified as intermediate consumption and thus excluded, which understates Scotland's prosperity generation and overstates that of England.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Jan 14th, 2008 at 02:29:03 PM EST
[ Parent ]
Here is something I don't understand about GDP.

If an exchange is internal to the unit under analysis it is counted as GDP. If the same exchange happens between two units it is added to the GDP of the exported and subtracted to the GDP of the importer, so on a net basis it is zero.

For instance, Scotland selling oil products to England counts as UK internal trade and so increases the UK's GDP. However, if the UK broke up, Scotland selling oil products to England would add to the GDP of Scotland and subtract from that of England.

Therefore, Scotland selling oil to England contributes to world GDP through the UK's GDP, but Scotland selling oil to Ireland doesn't have a net effect on world GDP. Unless, of course, world GDP is the sum of national GDPs plus the value of international trade. Is that how world GDP is calculated?

We have met the enemy, and he is us — Pogo

by Migeru (migeru at eurotrib dot com) on Mon Jan 14th, 2008 at 05:51:08 PM EST
[ Parent ]
GWP or gross world product is defined as the sum of all national GDP accounts.

GDP = C + I + G + (X-M)
The X-M (export - import) difference is there just to adjust for the trade balance of the economy for a single country. Imports are in fact counted in the consumption (C) portion of the equation i.e. the exported Scottish oil to Ireland is consumed by the Irish and therefore raises their GDP at the C part.

Another way to write it would be to split consumption into endogenous and imported i.e.:

GDP = (Ce + M) + I + G + (X-M)
GDP = Ce + I + G + X

Hence trade does not need to be added again as it would be double counting.

Orthodoxy is not a religion.

by BalkanIdentity (balkanid _ at _ google.com) on Mon Jan 14th, 2008 at 07:59:49 PM EST
[ Parent ]

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