How to Calculate Private Domestic Investments

PDI includes goods that are produced but not yet consumed.

PDI includes goods that are produced but not yet consumed.

Private domestic investment measures how much a country's private sector spends on physical capital. This physical capital helps industries produce future goods, but is not immediately bought or used by consumers. For example, machinery that companies build to manufacture further goods counts as private domestic investment. Private domestic investment also covers the production of finished goods that join a company's inventory rather than being sold. You can calculate private domestic investment from macroeconomic metrics related to the gross domestic product.

Subtract the nation's net exports from the gross domestic product. For example, if a nation has a trade surplus of $500 billion and a GDP of $13.82 trillion, subtract $500 billion from $13.82 trillion to get $13.32 trillion.

Subtract the government's gross spending from this sum. For example, if the government spends $2.61 trillion in combined consumption and investment, subtract $2.61 trillion from $13.32 trillion to get $10.71 trillion.

Subtract the combined value of all personal consumption, which includes what private citizens spend on goods and services. For example, if the nation's personal consumption reaches $8.43 trillion, subtract $8.43 trillion from $10.71 trillion to get $2.28 trillion. This is the nation's gross private domestic investment.

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Ryan Menezes is a professional writer and blogger. He has a Bachelor of Science in journalism from Boston University and has written for the American Civil Liberties Union, the marketing firm InSegment and the project management service Assembla. He is also a member of Mensa and the American Parliamentary Debate Association.

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