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Facts :

*Algeria's GDP is 230 B$,
*Oil & Gas account for 30% (70 B$)

My simplistic reasoning would say : Substract 70 from 230 and get a new GDP of 160 B$.

But I know that the concept of GDP is more complex than that: it also includes government spending :

*Government consumption accounts for 30% (70 B$)
*60% of the budget comes from Oil & Gas : 42 B$

So I'll continue substracting: 160 - 42 = 118 B$, the new GDP...

But still, I think it's too high: the household consumption accounts for 35%. Most purchasing power comes from fake jobs created by the government, if there were no Oil & Gas these fake jobs would not exist.

Should I still substract this component from the total GDP?

Is my reasoning correct?

NB: All data come from this website (and I'm not sure if I picked up the right values):

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  • $\begingroup$ Welcome to Econ.SE. It is very clear here that most questions and answers - unless emphasized - are positive, not normative. Your added disclaimer, while noble, was hence irrelevant, and I removed it. $\endgroup$
    – FooBar
    May 3, 2015 at 14:54

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If I interpret your question correctly, you're asking what percentage of Algerian national income is derived from oil and gas extraction. The answer appears to be 30% from the website.

I think the problem is you're assuming that the 30% figure means something like '30% of private spending', and so you're trying to account for government spending as well.

The website says 30% of GDP comes from oil and gas, that means 30% of income in Algeria is derived from oil and gas. It should already include government spending, which is taxed from income. And government spending should already include the fake jobs you mention.

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  • $\begingroup$ So your answer to the question is: 160 B$ (230-70)? That would be the new GDP of Algeria if there were no hydrocarbons? $\endgroup$
    – EcoNoob
    May 3, 2015 at 14:56
  • $\begingroup$ If 30% does not account for indirect oil revenues (fake jobs) then you would need an input-output model to estimate the indirect effects of the loss of oil. More on input-output models: economictheories.org/2008/08/… $\endgroup$
    – Giskard
    May 3, 2015 at 19:08
  • $\begingroup$ EcoNoob -- my answer is an answer to the question 'What percentage of national income in Algeria is due to oil and gas?' The answer to that question is 160B$. denesp's answer is trying more to address the question 'What would happen if all oil and gas production disappeared from Algeria tomorrow?' That is a very difficult problem to answer, because the loss of oil and gas might have effects on the rest of the economy. An input-output model is one way to try to get at those effects. $\endgroup$
    – NickJ
    May 4, 2015 at 18:49

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