When considering GDP indicators, purchasing power must be taken into account.

(Baonghean) -GDP is an indicator in the national accounts system, which is the gross domestic product calculated for each country, determined by many methods, but the most common, easy to calculate and accurate is: GDP = C + I + G + (Ex-Im), that is = Consumption + Investment + Government spending + Net exports (export - import). However, this indicator can also be calculated for each locality (mainly at the provincial level), but must add up and exclude all non-GDP items created by the province.

In absolute terms, GDP represents the economic potential of a country but does not fully reflect the social development of that country. Nowadays, the world is paying more attention to the national happiness index. A country's total GDP may not be high, but issues of social security, safety, cultural development, etc. are rated higher than GDP. On the other hand, a country may have a high total GDP but low per capita income (like China) or high prices of goods and services compared to other countries in the world. A high total GDP is not what workers expect, because it reflects the quantity of economic growth but does not reflect the quality, which is social development.

Regarding GDP per capita, this is an indicator that directly reflects the living standards of the population. In fact, in most countries in the world, when considering the quality of life of the people, people are more concerned about the average income per capita. There are countries with low total GDP but small population, but GDP per capita is still high (such as Singapore, Hong Kong, etc.). On the contrary, there are countries with high total GDP but large population, but GDP per capita is still low (such as China, India, etc.). Thus, when evaluating the economic development of a country, it is necessary to consider two indicators: total GDP and GDP per capita. If total GDP is high but per capita income is low, that country is not really fully developed. On the contrary, countries with low GDP but high GDP per capita are the goals and expectations of most people.
When considering GDP, it is necessary to take into account the purchasing power in each country.

It is also important to note that when calculating GDP per capita, it is necessary to consider the purchasing power of money, that is, the price of goods and services. When calculating GDP for a poor province, because prices (especially food prices) in most provinces are low, in these provinces the economy still bears the mark of self-sufficiency, so when comparing GDP with the whole country and internationally, the real GDP (guaranteed by the amount of goods purchased) will be higher. For example, a cup of coffee abroad can cost 10 USD, but in Nghe An it is only 6000 VND - 10000 VND, the purchasing power in this particular case increases more than 33 times; a bunch of water spinach for 5 people to eat in some countries can cost 5 USD, but in the mountainous districts and plains of Nghe An it is only 1000 VND - 2000 VND. Prices for other services such as hotels, restaurants... in Nghe An are all low, so a foreign expert was surprised to learn that with an income of 15 - 20 USD/month/person, people in the mountainous areas still have a normal life. Thus, when considering GDP per capita, it is necessary to take into account purchasing power, that is, real income. In Vietnam, although GDP per capita is not high, if calculated according to purchasing power, that income must be multiplied by many times to reflect and compare correctly with the GDP of countries in the world, especially high-income countries but also very high prices, such as European countries, America...

Dr. Duong Xuan Thao (Principal of Nghe An College of Economics and Technology)