Net material product


Net material product

Net Material Product (NMP) was the main macroeconomic indicator used for monitoring growth in national accounts of socialist countries during the Soviet era. These countries included the USSR and all the Comecon members. NMP is the conceptual equivalent of Gross Domestic Product (GDP) in the United Nations System of National Accounts, although numerically the two measures are calculated differently.

NMP is calculated for the material production sectors only, and excludes most of the service sectors, which are part of GDP. The material production sectors include manufacturing industries, agriculture and forestry, construction, wholesale and retail trade, supply of material inputs, road maintenance, freight transport (but not passenger transport), communication and information services supporting material production, and other material production activities. It is calculated by subtracting the value of all production costs (including the cost of material inputs, depreciation, and labor in production) from the value of output produced in the material production sectors.

For comparison with GDP, it is necessary to add back to NMP the value of fixed asset depreciation (which is not subtracted in GDP calculations) and the total value of all services classified as “non-productive” in the socialist system of national accounts (which are part GDP). These “non-productive” services include health care, education, housing, public utilities, consumer services, communication in the non-productive sector, passenger transport, financial services (banking, credit, insurance), government services, the defense establishment, and social organizations. The tax components subtracted in the calculation of GDP should also be added back to obtain NMP.

The economic term that corresponds to Net Material Product in Russian is Национальный доход (literally: national income). Unfortunately, none of the accepted meanings of national income in English matches the meaning in Russian, and Net Material Product was introduced into English usage as the best alternative.

Contents

GDP and NMP for USSR 1980-1990

GDP began to be calculated in the USSR in 1988, based essentially on the United Nations System of National Accounts. The table compares the new GDP estimates with the traditional NMP numbers (in billions of current rubles). GDP is seen to be 25%-30% higher than NMP due to depreciation and the "non-productive" service sectors included in GDP but not in NMP.

Indicator 1980 1985 1990
GDP 619 777 1000
NMP 462.2 578.5 700.6
NMP in % of GDP 75 74 70
Source: Narodnoye khoziaystvo SSSR 1990, statistical yearbook of the USSR, p. 5.

NMP growth for Comecon countries

Change in NMP (in constant prices) 1980-1990 (in percent of 1980)

Indicator Bulgaria Cuba Czecho-
Slovakia
East
Germany
Hungary Mongolia Poland Romania Vietnam USSR
NMP in 1990
(1980=100)
141 143 117 139 112 156 108 144 153 127
Source: Statistical Yearbook of Comecon Countries 1989, Table 21, p. 59.

References

  • Tatiana Khomenko, Estimation of Gross Social Product and Net Material Product in the USSR, Hi-Stat Discussion Paper Series No.172, Institute of Economic Research, Hitotsubashi University, Tokyo (July 2006). [1].
  • GDP (Валовой внутренний продукт) in Finansovo-Kreditnyi Slovar, Finansy i Statistika, Moscow (1984), vol. I, p. 185 (Russian).
  • Narodnoye khoziaystvo SSSR 1990, statistical yearbook of the USSR, State Committee of Statistics, Finansy i Statistika Publ. House, Moscow (1990), definition of национальный доход (NMP) on p. 687; definition of валовой национальный продукт (GDP) on p. 684 (Russian).
  • Statistical Yearbook of Comecon Countries 1989, Comecon Secretariat, Finansy i Statistsika Publ. House, Moscow (1989), definition of произведенный национальный доход (NMP) on p. 449 (Russian).

See also


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