I see, I thought that ppp had also into account the differences in local prices. For instance let’s say that we have country A and country B. In country A a car cost 20k and in country B 25k, both in the same currency. If country A produces 2 M cars and country B 1.7M cars, the GDP due to car production will be 40000M for country A and 42500M for country B. But a car is a car and country B produces less cars, should it have more GDP due to cars?
This makes me think. The day has come and I’m playing Vic 3. I am producing 100k furnitures that are sold at 100 each amounting to a “furniture” GDP of 10M My industries can be profitable with a lower price and I could import more furniture to improve SOL. So I import it and prices reduce to 80. Now my GDP is reduced by 2M even if my pops are richer. Is that correct? It feels a bit strange to me.
In any case thank for your replies. I’m probably not alone if I say that this responses by devs are highly appreciated, specially in Saturday. Thank you very much.
I feel like you are attempting to be a bit too reductive in this example and look at this statically, when there are a few dynamics thatwould result that can make the change.
While your lowered prices of goods would mean that the standard of living of your pops would go up - there is no guarantee it would stay up. As you have lowered the selling price of your domestic factories (in this scenario) and they may adjust wages of your domestic market relative to this, which will as a result mean they have a lower purchasing power and see their standard of living drop despite prices having dropped (it is entirely dependent upon the relative elasticity of their consumption basket of goods relative to the elasticity of the goods produced that supply their income).
This is the problem with single industry examples, your workforce is locked into this industry here and thus the attempts to create clarity create unknowns.
If you could import furniture at a lower cost than you can domestically produce it, your standard of living would go up assuming you could move that part of your labor force that is out of the job into profitable industires equal or or greater than the furniture factories. This is the zero-sumness of trade with comparative advantage. It can sometimes be hard to wrap one's head around because it necessitates a lot of moving parts but it also assumes things like the flexibility of our economy.
If you could not move your labor force after importing cheaper furniture, your SOL would quickly start dropping to reflect your lesser GDP.