Úr þjóðarbúskapnum - 01.06.1962, Page 37

NATIONAL PRODUCT OF ICELAND
during the years 1952—1955. It may also be
held for certain that the development was in
the reverse from 1949 to 1951.
The total increase over a span of 15 years
is 64 per cent. It corresponds to a growth rate
of 3.4 per cent a year. The increase from
1952 to 1960, on the other hand, is 57 per cent
over 8 years, corresponding to 5.6 per cent a
year. Neither of these figures would probably
be considered as representing a basic Jong
run growth trend, as the economy went trough
a cycle of an extraordinary character, of which
1952 was the trough. If the year 1950 is taken
as a point of departure, the result is inter-
mediate. The total increase is then 49.5 per
cent, which corresponds to a growth rate of
4.1 per cent a year.
In the diagrams in figures 3 and 4, which
only carry Icelandic texts, the development
of the national product is compared with the
development of three other sets of variables.
Comparison is made with the main compon-
ents of national expenditure, with the aggre-
gates of external trade and with other con-
cepts of total national production. A glance
at these diagrams reveals that public consump-
tion and capital formation were always, with
only one exception, higher than production
relative to 1945. Private consumption on the
other hand was considerably lower than pro-
duction and this difference kept growing most
of the period.
Both imports and exports increased very
much more than the national product, in a rela-
tive sense. The increase of exports in excess of
the increase in production was 34 per cent
at the close of the period, but that of imports
12.5 per cent. This difference begins to be
formed in 1951 as regards exports, but im-
ports start growing faster than national prod-
uct by the year 1953, although the volume
index of imports does not rise above that of
national product until in the year 1955. These
development relations give rise to the ques-
tion whether a fast growth of the national
product is conditioned by a still faster increase
of external trade. This, however does, not
explain the causation of the accelerated growth
of imports and exports. Such explanations
could refer to the conditions of extemal mark-
ets, the fish catches, foreign military invest-
ments and the eonditions created by the ad-
ministration of exchange rates and export
subsidy systems. It would lead too far in the
present context to attempt an appraisal of
these explanations.
The growth of exports in excess of the
growth of imports is also noteworthy. That
difference has grown to 19 per cent in the
year 1960. But this is only a measure of the
development of physical quantities not of ex-
port revenues. The real export revenue devel-
oped very much less favourably than the phy-
sical volume due to a deterioration of the terms
of trade with the rest of the world. The real
export revenue again is a decisive factor de-
termining the purchasing power vis-a-vis im-
ports. The difference in terms of trade as
compared with the year 1954 is assessed in
terms of amounts in line 11 of table 3. This
difference is calculated in accordance with
standard international practise by deflating
the export values of table 1 by the price index
of imports and subtracting exports at their
own constant prices. Corrected for this diff-
erence, exports are revalued to exchange val-
ue and the national product is revalued to
constant value in use instead of constant
value in production. Revalued in this way the
national product has a much clearer meaning
as real income and is shown in table 3 to 5
under the name gross national income.
The terms of trade developed in quite a
dramatic way over the first half of the period.
The difference is greatest between the years
1946 and 1951, 303 million kronur valued at
1954 prices. Throughout the intervening period
the terms of trade deteriorated. In spite of a
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