How to Calculate Private Investment Spending

Save

Private investment spending is one of the components that make up gross domestic product, or GDP. The other components include consumer expenditure, government expenditure and net exports. If you have data for the rest of these components, calculating private investment spending is relatively easy as it only requires a little bit of arithmetic in addition to a little research.

Obtain your data. For a given year or quarter, you should have data for an economy's GDP, consumer expenditure, government expenditure, total exports and total imports. This data is regularly compiled by governmental statistical agencies. For the United States, this data may be found from the Bureau of Economic Analysis or international agencies such as the World Bank, the Organization for Economic Cooperation and Development or the International Money Fund. All of this data should be in monetary terms, such as the U.S. dollar.

Subtract total imports from total exports to obtain net exports. So, if the economy sold $600 billion worth of exports in 2010, and the same year purchased $200 billion worth of imports, its net exports would be $400 billion. If the value of net exports is negative, the country is a net importer instead of a net exporter.

Subtract total consumer expenditure from the gross domestic product. For example, if in 2010 the GDP was $5 trillion, and consumer expenditure for the same year was $4 trillion, your result would be $1 trillion.

Subtract total government expenditure. Using the same example, and if government expenditure for 2010 was $300 billion, your result would be $700 billion.

Subtract net exports. So, if net exports was $400 billion, subtracting from $700 billion gives $300 billion. This value represent total private investment for 2010. It is called private investment as it represents investment spending not performed by the government.

Tips & Warnings

  • You may calculate any of the components of GDP provided that you have data for the rest of the components. The formula of GDP, where "C" represents consumer expenditure, "I" represents private investment, "G" represents government expenditure, "X" represents exports and "M" represents imports, is written as GDP = C + I + G + (X - M).

Related Searches

References

Promoted By Zergnet

Comments

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!