Net domestic product (NDP) represents the net book value of all goods and services produced within a nation’s geographic borders over a specified period of time.
Net domestic product provides insight into the age or obsolescence of a country’s assets, as well as how much the country has to spend to maintain its current GDP. After all, if the country does not replace the capital value lost to depreciation, GDP will fall.
Net domestic product (NDP) adjusts this figure by subtracting depreciation on the country’s capital assets (housing, machinery and vehicles, for example). The depreciation is officially referred to as the “capital consumption allowance.”
A common equation used to calculate NDP is as follows:
NDP = Gross domestic product (GDP) – Depreciation Similarly, NDP = Consumption + Government Expenditures + Investment +Exports – Imports – Depreciation
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