Maryland's Genuine Progress Indicator

What are the Gross Domestic/State Products

Graph of Gross State Product (Billion, Actual $) 

Gross State Product (Billion, Actual $)

Gross State Product (Billion, 2000 $) Gross State Product Growth Per Year
Gross State Product (Billion, 2000 $) graph Gross State Product Growth Per Year graph


The Gross Domestic Product (GDP) is the monetary measure of all final goods and services produced within a given country. Calculating the GDP is to sum a country’s total expenditures, primarily through consumption, investment, government purchases, and net exports. Similarly, the Gross State Product (GSP) is the same equation within a given State; in this case, Maryland. The GDP is simple to track, quantifiable, and easy to convey as a measure of economic activity, though the GSP is a bit less concrete because the movement of goods, services, and workers across state lines are not perfectly tracked.

The GSP of Maryland generally grew for the last 50 years – from about 40 billion dollars to 220 billion dollars (inflation adjusted) – with especially fast growth during the 1980s and somewhat slowing in the early 1990s. Still, Maryland households are some of the wealthiest in the United States and somewhat shielded from the recent economic slowdown.

Shortfalls of Using the GSP as an Indicator of Social Well-Being

To be clear, the GSP is an important indicator of the economic development of a state and region. It is often considered the main measure and key target of economic policy at all levels of government. The state accounting for the GSP in general also tracks the elements of GSP in detail, revealing information on the composition of the economy, the importance of different industries, and the distribution of income.

Yet while the GSP provides valuable information on the progress of a state, it does not fully capture its prosperity due to many omissions of both damages and values. The challenge for policymakers and the public alike is to not assume that economic exchange equates to higher social well-being. To do so is fundamentally flawed for several reasons, as the GSP/GDP:

  • Does not separate ‘goods’ and ‘bads’ of economic activity and impacts;
  • Rewards short-term gain while disregarding long-term effects;
  • Does not discern between luxury goods and basic necessities;
  • Infers and overstates social well-being;
  • Does not address equity and wealth distribution; and,
  • Disregards negative environmental degradation and social impacts.

Further, there are the methods in which the GDP/GSP and other economic gauges are calculated. For instance, initial economic figures are positive, until the details are unraveled. One element of the GDP is the stock of businesses’ inventories. While companies slowed their barn burning of inventories, that is primarily because they already sold them off in the spring. But the slowdown helped spur the GDP. Also, profits increased, but because companies are decreasing expenditures rather then enjoying higher revenues. So while the GDP is increasing, families are still challenged to feel the benefits.

In sum, increasing the GSP/GDP may give the illusion of higher social well-being, when in fact families are doing more with less, people are sitting longer in traffic, state coffers are having to go to restoring environmental degradation, we are spending more money on pollution abatement, and generally society is paying for the long-term negative consequences of short-term economic gains.

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