INDUSTRIAL ORIGIN APPROACH

According to Writer (2020), the industrial origin approach is an approach to computing a nation's GNP
based on adding up the gross value of primary, secondary and tertiary industries. In addition, primary
industries are the industries that are related to farming, fishing and mining. Another is secondary
industries that are related to manufacturing such as car factories, plastic factories and etc. so they
convert raw materials into products or goods. Lastly is tertiary industries that are related to services
that helps the process of production and distribution like teaching and healthcare services. In
conclusion, we can see that these three industries are connected to each other because they are all
working to make goods and services.
IMPORTANCE:
1. This particular approach can be use to seek and create an evaluation of the true GNP (Gross
National Product) of a specific country.
2. People can know that the value of the product that they buy is depend on all contributions of each
industries in a country in terms of producing goods and services.
PURPOSE:
The purpose of this approach is basically to calculate the GNP of a country. The contributions
of each country are the factors to obtain the value of a product. So when all the values of a product
are summed up, the total domestic production or GDP (Gross Domestic Product) is going to be
obtain.
FORMULA:
GDP= A (Agriculture) + I (Industry) + S (Service)
GNP= GDP + NFIFA

Where:
A= Agriculture
I= Industry
S= Service

NFIFA= Net Factor Income From Abroad

EXAMPLE:
A= 4,000,000
I= 5,000,000
S= 5,000,000
NFIFA= 9,000,000

GDP
GDP = 4,000,000 + 5,000,000 + 5,000,000
GDP = 14,000,000
GNP
GNP= 14,000,000 + 9,000,000
GNP= 23,000,000

REFERENCE FOR COMPUTATION:

https://www.youtube.com/watch?v=1ylVel-94NY&t=741s
EXPENDITURE APPROACH
As defined by MasterClass (2021), expenditure approach is another way to calculate the GDP
(Gross Domestic Product) of a particular country by adding all goods and services that were
produced within the economy. Including in this approach are consumer spending, investment,
government spending, import and exports. This approach assumed that the GDP is equals to the total
amount of money that were spent in goods and services within the country.
IMPORTANCE:
1. This is a mostly used approach in terms of calculating the GDP (Gross Domestic Product) of a
specific country.
2. This approach also bring out the nominal GDP, which should then be adjusted for inflation to
outcome in the real GDP
PURPOSE:
The purpose of expenditure approach is to calculate the GDP (Gross Domestic Product) with
regards to the money that were spent inside of a particular country

FORMULA:
GDP= C + I + G + (X−M)
GNP= GDP + NFIFA

Where:

GDP= Gross Domestic Product

GNP= Gross National Product

C= Consumer spending on goods and services (final consumption expenditure or personal

consumption)

I= Investor spending on business capital goods (gross investment)

G= Government spending on public goods and services (government consumption)

X= Exports of goods

M= Imports of goods

NFIFA= Net Factor Income From Abroad

EXAMPLE:
C= 3,000,000
I= 5,000,000
G= 7,000,000
X= 10,000,000
M= 11,000,000
NFIFA= 9,000,000

GDP
GDP= 3,000,000 + 5,000,000 + 7,000,000 + (10,000,000 - 11,000,000)
GDP= 3,000,000 + 5,000,000 + 7,000,000 – 1,000,000
GDP= 15,000,000 – 1,000,000
GDP= 14,000,000

GNP
GNP= 14,000,000 + 9,000,000
GNP= 23,000,000

REFERENCE FOR COMPUTATION:

https://www.youtube.com/watch?v=1ylVel-94NY&t=741s
INCOME APPROACH
The income approach is also a way to calculate the GNP (Gross Domestic Product) of a
particular country. Unlike expenditure approach that measures the expenditure, this approach
measuring the earnings of the four factors of production such as labor earns wages or salaries,
Capital earns interest, Land earns rent and Entrepreneurship earns profit.

IMPORTANCE:
1. This approach can also use to calculate the GDP (Gross Domestic Product) of a specific country.
2. In real estate, this approach can also determine the value of a commercial property.
3. In investment, investor can find out the future value of a property and the cash flow that the said
particular property could generate.

PURPOSE:
The purpose of income approach in economics is also to calculate the GDP (Gross Domestic
Product) of a specific country in terms of adding all sources of income, by that a quick estimate can
be made of the total production value of economic activity. Therefore adjustments can be made for
taxes, depreciation, and foreign-factor payments.

FORMULA:
NI= KEM + KEA + KK + KP
GNP= NI + CCA + IBT

Where:
NI= National Income
KEM= Kita ng mga Empleyado at Manggagawa
KEA= Kita ng Entrepreneur at Ari-arian
KK= Kita ng mga Kalakal
KP= Kita ng Pamahalaan
GNP= Gross National Product
CCA= Consumption Capital Allowance
IBT= Indirect Business Taxes

EXAMPLE:
KEM= 2,000,000
KEA= 4,000,000
KK= 3,000,000
KP= 5,000,000
CCA= 5,000,000
IBT= 4,000,000

NI
NI= 2,000,000 + 4,000,000 + 3,000,000 + 5,000,000
NI= 14,000,000

GNP
GNP= 14,000,000 + 5,000,000 + 4,000,000
GNP= 23,000,000

REFERENCE FOR COMPUTATION:

https://www.youtube.com/watch?v=1ylVel-94NY&t=741s