Gross private investment is the amount of money spent by private companies to create more capital. Since gross domestic product calculates the amount of goods and services produced in a country, then the gross private investment becomes important. Private investment is non-government investment. For example, Microsoft spending would be private investment, whereas spending by the Department for Transport is public investment. This calculation is more theoretical than practical, as gross private investment is a statistic released by the Office for National Statistics, but this method is handy if given a set of numbers needing to compute gross private investment.
- Skill level:
Rewrite the gross domestic product formula to equal gross private investment. Therefore, gross private investment equals gross domestic product minus consumer spending minus government spending minus net exports.
Fill in the variables for the formula. For example, if a country has a gross domestic product of £650, consumer spending of £325, government spending of £130 and net exports of £13, then gross private investment equals £650 minus £325, minus £130, minus £13.
Solve the equation. In the example, the answer is £182.
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