Domestic territory
Also called: Economic territory · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 12, Ch 2 "National Income Accounting"
Meaning
Domestic territory, also called economic territory, is the area whose production is counted in a country's GDP. It includes the country's political frontiers and its own ships, aircraft and embassies abroad. It excludes foreign embassies located inside the country. All production within this territory counts in GDP, whether it is done by residents or non-residents.
Example
A car made at the Korean-owned Hyundai plant in India is produced inside India's domestic territory, so it counts in India's GDP. Work done in the Indian embassy abroad also counts in India's domestic product. Work done in a foreign embassy in New Delhi does not.
Don't confuse with
- Political frontiers: domestic territory is wider in some ways (it adds ships, aircraft and embassies abroad) and narrower in others (it leaves out foreign embassies at home).
- Normal residents: GDP is based on where output is produced. GNP is based on who produces it.
Related concepts
- Gross National Product
- Net factor income from abroad
- Normal residents
- Net Domestic Product
- NDP at factor cost
- Net National Product
- GNP at factor cost
- National income
- Personal income
- Undistributed profits