“basta ako puzzled talaga ako. tito vic and joey have probably earned more individually than willie and yet i don’t see them driving ferraris.”

but Tito Sotto owns a BMW dealership!

this should clear up all these prententious display of expertise in gdp when one has not even gone to the fies original source to determine how much it accounts as a component of the national income measurement, and for treating the survey (oh, but were you not flag down for suggesting that a survey of sort even exist?) as if it were a longitudinal study (“hey monsod did not factor in increases in family membership”).

of course you know where am coming from, up n.

How is it conducted?

Other related information

where:
pce -> Personal Consumption Expenditure
gc -> Government Consumption
cf -> Fixed capital formation
x -> Exports
m -> Imports

Again, Philippine 2006 GDP is about $115Billion
(while FIES reports total 2006-family income at P3-trillion (nominal), or about US$62Billion (using 48-to-1 exchange).)

http://www.cvjugo.blogspot.com/2008/01/tale-of-two-statistics-family-income.html

If as you say…

“Another important feature of measuring incomes or consumption alone by this method misses the income gains through capital gains. This is for the rich and landlords.”

…then that means our Gini coefficient understates the level of inequality.

Upn, i agree that GDP is a measure of Business Income + Family income. A portion of that business income should go to households (as dividends or reduction in equity). You’re therefore right to point out that there is a big portion of business (or non-family) income.

It could be possible, as you say, that a portion of that 115 billion are business profits that are repatriated to foreign nationals. (hvrds mentioned above that it is ofw remittances that facilitates this repatriation)

It could also be additions to retained earnings, but if this is the case, we have to question why this does not show up as an increase in capital formation.

This leads us to a third (non-mutually exclusive) possibility that it reflects capital gains on real estate that hvrds has mentioned in his post. If so, then this is probably one area of the economy that needs to be considered for further taxation.

I agree that both figures are most likely the obtained from the best efforts of the government statisticians who have no political agenda. However, i disagree that we can simply accept the discrepancy without understanding where these come from. It makes sense to understand what goes behind each of this conflicting descriptions of economic reality in order to evaluate the normative claims that are made in conjunction with these statistics.

For example, you notice that the present administration has been emphasizing one aspect, i.e. Growth in gdp as an economic achievement while downplaying the fact that since 1997, average family income has been falling back to late 1980′s levels.

It is a broad estimated measure of expenditures of the three main agents in the economy. Business, government and households and the glaring statistical discrepancy that comes with it that will reach 5% of the total figure estimated. It does not measure whether expenditures are made by cash or credit. The statistical discrepancy to round off figures includes the informal sector – smuggling.

In the Philippine context

GNP which includes income flows from abroad minus income flows outbound + GDP= PCE (includes annual household, government and business consumption) +public and private capital formation + export -import of goods and services. (almost always negative)

It is the net income that comes from OFWs that covers the merchandise trade deficit and sometimes the service trade deficit.

If there was an honest to goodness audit of the volume of smuggled items it would reach close to $5-10 billion dollars.

The value added method measuring of economic activity is easier to do since formal producers have to file their reports to the government. Out total exposure to foreign trade is over $90 billion (exports +imports)officially.Our OFW incomes also pay for the cost of foreign capital being repatriated abroad apart from profits from foreign investments on top of imports.

You add the net inflows of hot money in the financial markets and you have a strong peso.

It is in the expenditure report where government is hard pressed to get data. That is what fiscal policy is all about. But only 2M+ out of a potential labor force of 45+ million file an income tax return and pay income taxes.

Another important feature of measuring incomes or consumption alone by this method misses the income gains through capital gains. This is for the rich and landlords. . Their peso assets are more valuable today than two years ago. They can buy more dollars with less pesos. Housing prices in the Bay area (S.F.) of the U.S. and in Manhattan are as strong as ever. Foreign money is keeping valuations up.

A lot of rich people are now turning over their properties to be liquefied through property developments. Foremost of them is Mar Roxas of the Araneta Center. Megaworld is building condos and office spaces for BPO services on the property of Mar Roxas and family. Hence he has to protect his interest and ask for a strong dollar because if the currency bubble in pesos strength were allowed to fester they would lose their markets for BPO and condos for OFW would become too expensive.

The capital gains in land valuations for the Mar Roxas family in the Araneta Center will not show in the expenditure report nor in the value added report through production.

As for mining : December 2004 is when the Phil Supreme Court handed down a ruling permitting foreign investments in the Philippine mining sector.