4.13 Growth of consumption and investment
See Table 4.13 hereAbout the data
Definitions
Data sources
The data here on private consumption in current U.S. dollars and growth rates of private and general government consumption and gross domestic investment are derived from the national accounts and converted using official exchange rates, except as noted in Primary data documentation. The estimate of consumption per capita here differs from that in table 4.14, where purchasing power parity conversion factors have been used to give a better estimate of domestic purchasing power. Consumption and investment as shares of current GDP are shown in table 4.12.
Measures of consumption and investment growth are subject to two kinds of inaccuracy. The first stems from the difficulty in measuring current price levels, as described in the notes to table 4.12. The second arises in deflating current price data to measure growth in real terms, where results are directly dependent on the relevance and reliability of the price indexes used. Measuring price changes is more difficult for investment goods than for consumption goods because of the one-time nature of many investments and because the rate of technological progress in capital goods makes capturing quality change difficult. Many countries estimate investment from the supply side, identifying capital goods entering an economy directly from detailed production and international trade statistics. This means that the price indexes used in deflating production and international trade will determine the deflator for investment expenditures on the demand side.
To obtain government consumption in constant prices, countries may adjust current values by applying deflators that use a weighted index of government wages and salaries, or simply take a government employment index as a measure of output. Neither technique captures improvements in productivity or changes in the quality of government services. Many countries estimate private consumption as a residual that includes statistical discrepancies accumulated from other domestic sources. Deflators for private consumption are usually calculated from consumer price series.
In rescaling constant price national accounts data to a common base year for the purpose of compiling international aggregates, the World Bank assigns discrepancies between the output and expenditure estimates of GDP to private consumption. This may lead to differences between the growth rate of private consumption measured on the basis of the country’s original base year and the growth rates shown here.
Because the methods used to deflate consumption and investment can vary widely among countries, comparisons across countries, perhaps even more than those over time, should be treated with caution.
• Private consumption is the market value of all goods and services, including durable products (such as cars, washing machines, and home computers) purchased or received as income in kind by households and nonprofit institutions. It excludes purchases of dwellings but includes imputed rent for owner-occupied dwellings. In practice, it may include any statistical discrepancy in the use of resources.
• Private consumption per capita is calculated using private consumption in constant prices and World Bank population estimates.
• General government consumption includes all current expenditures for purchases of goods and services by all levels of government, excluding most government enterprises, measured in constant prices. It also includes capital expenditure on national defense and security.
• Gross domestic investment consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories, measured in constant prices. Fixed assets cover land improvements (fences, ditches, drains, and so on); plant, machinery, and equipment purchases; and the construction of roads, railways, and the like, including commercial and industrial buildings, offices, schools, hospitals, and private residential dwellings.
National accounts data for developing countries are collected from national statistical organizations and central banks by visiting and resident World Bank missions. Data for industrial countries come from OECD data files. For information on the OECD national accounts series see OECD, National Accounts, 1960–1994, volumes 1 and 2. The complete national accounts time series is available on the World Development Indicators CD-ROM.