EconGuru Economics Guide » Net Domestic Product, NDP

NDP

NDP, or Net Domestic Product, unlike GDP, takes account of capital depreciations, capital goods or part of capital goods that have been consumed over the year in forms of housing, vehicle, machinery deterioration and so forth. By subtracting the annual capital depreciation from the GDP, NDP is more accurate in measuring economic output.

The reason we use GDP rather than NDP to estimate an economy's performance despite NDP is closer to truth is that the capital depreciation is too difficult to spot from capital goods investments.