GNP is a tool to measure broadly of a nation’s economy. Gross National Product includes income earned by people and companies in foreign. It doesn’t include income earned by foreigners within the country.
Calculation of Gross National Product(GNP):
It’s an economic statistic which is equal to GDP plus any income earned by residents from overseas investments minus income earned by overseas residents. GNP doesn’t include depreciation and indirect taxes.
GNP- Consumption + Govt. Expenditure + Investments + Exports + foreign Production – Domestic Production by Foreign Companies.
Based on GDP, GNP calculates as per below formula:
GNP- GDP + Net Income Flow from Abroad – Net Income Outflow to Abroad
Differences Between GNP and GDP:
The major differences between GNP and GDP are as follows:
- GNP contains the value of products made by the country’s citizen and companies abroad. GDP only contains products made within the country’s geographical border.
- GNP doesn’t include the value of products made by foreign companies within that country.
- The larger difference between any country’s GDP and GNP means the country is involved more in international trade and finance.
Also, read the definition and calculation of Gross Domestic Product (GDP).
The total output of GNP and GDP will produce a different figure. It depends on capital and labor resources, employed in abroad. GNP needs to define as on Per Capita basis for comparison between country’s economy.
Facts related to GNP:
- The US was using GNP to measure its economic activity until 1991. After that GDP replaces to measure the economy.
- The US GNP was 18.75 Trillion on PPP as per World Bank Report, 2016.
India’s GNP was $8.6 Trillion on PPP as per World Bank Report, 2016.
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