Net domestic product is the value of all final goods and services produced in an economy after subtracting depreciation.
It begins with gross domestic product, which records final production within a country’s borders. Economists then subtract consumption of fixed capital, the national-accounts term for the value of machinery, buildings, vehicles, and other fixed assets used up during production. The result estimates how much output remains after replacing worn-out capital.
This distinction matters because gross measures count production before allowing for capital deterioration. A country can report strong GDP growth while some of its productive equipment is aging rapidly. NDP gives a more maintenance-adjusted view, although depreciation is itself an estimate rather than a directly observed single total.
NDP is a domestic measure, so it differs from net national product. Net national product also considers income flows connected with residents’ ownership abroad and foreign ownership at home.