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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
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