Key Economic Terms: GDP, Income, Trade, and Industry

Key Economic Terms

GDP (Gross Domestic Product): GDP is the monetary value of all final goods and services produced within an economy over a specific period. It's calculated by summing the value of production across all sectors of the economy, subtracting the value of intermediate goods used in the production process.

Income per Capita: This economic measure is derived by dividing the total income earned by the entire population of a country or region.

Multinational Corporation: A company with production or distribution operations in multiple countries. Multinationals can expand their operations globally and relocate industrial plants from one country to another.

Balance of Payments: A document that records all economic transactions between a country and the rest of the world over a year. These transactions can be real (goods and services) or financial.

SMEs (Small and Medium-sized Enterprises): Companies with fewer than 250 employees and either an annual turnover not exceeding EUR 40 million or an annual balance sheet not exceeding EUR 27 million.

Free Zone: A designated area within a country where special customs regulations apply, such as exemptions from customs duties on foreign goods and various tax advantages (e.g., Zona Franca de Vigo).

R&D (Research and Development): R&D encompasses activities related to research and development, categorized into three types:

• Basic research: Original investigations aimed at acquiring new scientific knowledge.
• Applied research: Original work building upon basic research to gain new knowledge.
• Technological development: Applying knowledge from applied research to create materials, devices, procedures, or services.

Autarky: A set of policies designed to base a national economy on its own resources, limiting foreign trade.

INI (Instituto Nacional de Industria): Established during the Franco era in 1941, its purpose was to promote the creation of new industrial enterprises and foster national development within an autarkic economic vision.

Tech Industries: Industries characterized by a high degree of technological advancement or the use of the most advanced and recent technologies (e.g., microelectronics).

Equipment: All goods necessary for producing consumer and investment goods, which depreciate over the manufacturing process (e.g., machinery).

Base Industries: Industries that convert raw materials into intermediate products used in other industries.

Disposable Family Income: An index that measures the income available to families for spending or saving after accounting for taxes and transfers from the public sector and abroad.

District and Sub-county: A territory that is larger than a town but smaller than a province, defined by physical, economic, historical, or cultural characteristics.