Tuesday, December 22, 2009

Are foreign citizens counted in the calculation of GDP?

I assume that you are asking whether the income of a foreign citizen in a given country (for example, a Chinese citizen in the United States) would be counted as part of the GDP of the host country (the US).  If this is what you are asking, the answer is yes.  GDP (gross domestic product) does not take into account who makes goods or services or who owns the factories that make them.  It only takes into account where they are made.


When GDP is computed, every new good or service produced within the borders of a country is counted in that country’s GDP.  It does not matter who made the product or who owned the company that made it.  For example, Toyota, which is a company owned by Japanese people, has a factory in Kentucky.  All the money paid to workers in that factory counts towards US GDP.  It does not matter if the workers are from Kentucky or if they are managers who have come from Japan.


Thus, the income of a foreign citizen is counted in the GDP of the country where that person lives and works.

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