How to Calculate Gross Private Domestic Investment

by Edriaan Koening; Updated September 26, 2017
Gross private domestic investment measures the national capital level.

The gross private domestic investment refers to a measurement of capital of a nation's economy. It adds up all the values of the new capital in which the nation's private sector has invested during a certain period of time. Capital includes all the manufactured resources that businesses buy, including machinery, equipment and real estate. The gross private domestic investment figure usually covers a period of one year. You may find the data for this calculation from the national statistics authority.

Calculate the amount by which businesses in the country have increased or decreased the value of their inventory compared to the previous year. Inventory refers to the stock of goods businesses have to sell. For example, the inventory of a food manufacturer would be the finished, packaged food products ready for sale. Depending on economic conditions, this figure may be positive or negative.

Determine the value of new real estate construction in the country. Include all types of buildings, such as single-family homes, multi-family apartments and office buildings.

Add up the value of all the capital items businesses purchase to generate value. These items include office equipment, manufacturing machinery, software and tools.

Find the total of the three figures that represent all the new capital in which businesses invest throughout the year. The resulting figure is the country's gross private domestic investment.

About the Author

Edriaan Koening began writing professionally in 2005, while studying toward her Bachelor of Arts in media and communications at the University of Melbourne. She has since written for several magazines and websites. Koening also holds a Master of Commerce in funds management and accounting from the University of New South Wales.

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