No, borrowing and repayment are not included in GDP.
But there are some almost similarly absurd situations. If you paint your garden fence and your neighbor plants some potatoes, that doesn't count into GDP. However, if you buy your neighbors potatoes, and she pays you to paint her fence, those exchanges become relevant (ignoring the fact that small stuff like this is hard to measure).
This is more relevant than one might think. Considering one of the largest economic developments in the last half century was the integration of women into the labour force, growth statistics would look quite different if were to assign a fair value to unpaid housework they used to do.
Yeah, there's a lot of problems with measuring economic productivity. Almost to the point where I wonder if it's informative at all. In Australia, we've had a 10 year slump in measured productivity (MFP). During the same period, commodity prices were at all-time historical highs and we were raking in a tonne of national income (as our exports are heavily weighted towards commodities).
Guess which sector has been the biggest drag on MFP? Yep. Commodities. Because market prices were so high, it was profitable to throw a crap-load of inputs to extract fairly marginal outputs. Hence the drag on MFP. Now that the 'mining boom' is over, our national productivity will probably rise while our living standards fall due to the sharp reduction in national net income.
Productivity should not be seen as an end in itself, although it seems to dominate political discourse on the economy. I wonder if there are more sensible (and calculable) metrics that we could use...
If you need potatoes but don't feel like growing them yourself, and you like (and/or are better at) painting fences, then exchanging favors (whether or not involving currency) creates value - it's a positive-sum game.
Yes, absolutely! It's the tenet No 1 of a market – when people freely exchange something, both are better off. (No 2: there's some stuff that you can't do without cooperation).
But in the potato-case, all the potato-value and great-fence-you-have-there-value gets added to GDP, where realistically, output only grew by whatever the increase of efficiency was.
Yes, but apart from the women's integration into the workforce scenario, how relevant is this? It doesn't feel like that huge trades happen with "transaction of favor", instead all probably use money.
But there are some almost similarly absurd situations. If you paint your garden fence and your neighbor plants some potatoes, that doesn't count into GDP. However, if you buy your neighbors potatoes, and she pays you to paint her fence, those exchanges become relevant (ignoring the fact that small stuff like this is hard to measure).
This is more relevant than one might think. Considering one of the largest economic developments in the last half century was the integration of women into the labour force, growth statistics would look quite different if were to assign a fair value to unpaid housework they used to do.