The OECD defines GDP as "an aggregate measure of production equal to the sum of the gross values added of all resident and institutional units engaged in production and services (plus any taxes, and minus any subsidies, on PRODUCTS not included in the value of their outputs).The ratio of GDP to the total population of the region is the per CAPITA GDP and the same is called Mean Standard of Living. GDP is considered the "world's most powerful statistical indicator of national development and progress". GDP = compensation of employees + gross operating surplus + gross mixed income + taxes less subsidies on production and imports GDP = COE + GOS + GMI + TP & M – SP & M Compensation of employees (COE) measures the total remuneration to employees for work done. It includes wages and salaries, as well as employer contributions to social security and other such PROGRAMS. Gross operating surplus (GOS) is the surplus due to owners of incorporated businesses. Often called profits, although only a subset of total costs are subtracted from gross output to calculate GOS. Gross mixed income (GMI) is the same measure as GOS, but for unincorporated businesses. This often includes most small businesses.The sum of COE, GOS and GMI is called total factor income; it is the income of all of the factors of production in society. It measures the value of GDP at factor (basic) prices. The difference between basic prices and final prices (those USED in the expenditure calculation) is the total taxes and subsidies that the government has levied or paid on that production. So adding taxes less subsidies on production and imports converts GDP(I) at factor cost to GDP(I) at final prices.Total factor income is also sometimes expressed as: Total factor income = employee compensation + corporate profits + proprietor's income + rental income + net interestIF IT'S AN EFFECTIVE MEASUREMENT OF PROGRESSMany environmentalists argue that GDP is a poor measure of social progress because it does not take into account harm to the environment.Although a high or rising level of GDP is often associated with increased ECONOMIC and social progress within a country, a number of scholars have pointed out that this does not necessarily play out in many instances. For example, Jean Drèze and Amartya Sen have pointed out that an increase in GDP or in GDP growth does not necessarily lead to a higher standard of living, particularly in areas such as healthcare and education. Another important area that does not necessarily improve along with GDP is political liberty, which is most notable in China, where GDP growth is strong yet political liberties are heavily restricted.SO IN MY OPINION, GDP HAS IT'S PROS AND CONS.