# Is government/public sector percentage contribution to the GDP the same as government expenditure as percentage of the GDP?

As far as I understand, every transaction done in a country counts for GDP. So, if the government is building a road that counts for the GDP, right? So I was looking for a table which shows me the percentage of private and public sector contribution to the GDP and I couldnt find it, but I found a table which shows the government expenditure as % of the GDP. Are these the same things? Do all government expenditures counts as transactions for GDP so the tables are mean to be the same or not?

• If the government makes a transfer, e.g. pays a grant to a company or pays a pension to an individual, that does not get counted for GDP. But if it builds a road or pays a soldier then it does. Jul 16 at 18:36

## 1 Answer

As far as I understand, every transaction done in a country counts for GDP.

Unfortunately no, only every recorded market transaction where final goods or services are purchased count. For us economists, it would be amazing if we could somehow see what is happening to black and grey economy, as well as to the transactions done within households, but unfortunately that is difficult to measure so these are not included in the GDP calculation. Only market transactions count.

So, if the government is building a road that counts for the GDP, right?

It depends. Yes, provided it is done officially by government spending money on this (e.g. in some dictatorships government can perhaps use some forced labor to build some simple roads which would not enter GDP as there would be no government expenditure recorded).

I found a table which shows the government expenditure as % of the GDP. Are these the same things?

GDP by expenditure approach is defined as:

$$Y = C + I + G + NX$$

where $$Y$$ is the GDP, $$C$$ consumption expenditure, $$I$$ investment expenditure, $$G$$ government expenditure and $$NX$$ net exports. Also in all cases only spending on final goods and services is measured.

If the table you found measures $$G/Y$$ then yes. $$G/Y$$ would be often called share of government spending. But if the table is based on other statistics it might not hold.

Do all government expenditures counts as transactions for GDP so the tables are mean to be the same or not?

All government expenditure on final goods and services counts, but this is typically just abbreviated to government expenditure on national accounts.

• "yes, GDP by expenditure approach is literally defined as"... I found another table. Check government expenditure as % of the GDP for US (46,179%) vs percentage added to the GDP of USA by industry , (government 12,6%). How is it possible they differ so much? en.wikipedia.org/wiki/… . VS statista.com/statistics/248004/… Jul 16 at 19:50
• @Pablo I would have to look at the methodology but then I guess the Wikipedia does not just uses government expenditures on final goods and services but also transfers, transfers are not part of the GDP. I also updated my answer to mention this caveat.
– 1muflon1
Jul 16 at 19:53
• @Pablo maybe consider posting the link to the dataset you found to your question I can have look at that and let you know if that’s G/Y or something else
– 1muflon1
Jul 16 at 20:14
• not sure what you mean, the 2 links I found are the ones I posted in the first comment Jul 16 at 22:57
• @Pablo okay I thought those are maybe just some examples since Wikipedia is not typically admissible source, looking at the metadata the source you want is the statista source which is G/Y the Wikipedia one refers to multiple documents so I am not 100% sure but it looks like they count transfers as well
– 1muflon1
Jul 16 at 23:21