Gross national product

Gross national product (GNP) is the market value of all the products and services produced in one year by labor and property supplied by the citizens of a country. Unlike gross domestic product (GDP), which defines production based on the geographical location of production, GNP indicates allocated production based on location of ownership. In fact it calculates income by the location of ownership and residence, and so its name is also the less ambiguous gross national income.

GNP is an economic statistic that is equal to GDP plus any income earned by residents from overseas investments minus income earned within the domestic economy by overseas residents.

GNP does not distinguish between qualitative improvements in the state of the technical arts (e.g., increasing computer processing speeds), and quantitative increases in goods (e.g., number of computers produced), and considers both to be forms of "economic growth".[1]

When a country's capital or labour resources are employed outside its borders, or when a foreign firm is operating in its territory, GDP and GNP can produce different measures of total output. In 2009 for instance, the United States estimated its GDP at $14.119 trillion, and its GNP at $14.265 trillion.[2]

The term gross national income (GNI) has gradually replaced the Gross national product (GNP) in international statistics.[3][4] While being conceptually identical, the precise calculation method has evolved at the same time as the name change.[5]

Use

The United States used GNP as its primary measure of total economic activity until 1991, when it began to use GDP.[6] In making the switch, the Bureau of Economic Analysis (BEA) noted both that GDP provided an easier comparison of other measures of economic activity in the United States and that "virtually all other countries have already adopted GDP as their primary measure of production".[7] Many economists have questioned how meaningful GNP or GDP is a measure of a nation's economic well-being, as it does not count most unpaid work and counts much economic activity that is unproductive or actually destructive.[8]

See also

References

  1. ↑ Daly, Herman E. (1996), Beyond Growth. Beacon Press
  2. ↑ "Flow of Funds Accounts of the United States" (PDF). Board of Governors of the Federal Reserve System. 17 September 2010. p. 9.
  3. ↑ World Bank. "GNI, Atlas method". data.worldbank.org. Retrieved 2016-06-23.
  4. ↑ World Bank. "GNI, PPP (international $)". data.worldbank.org. Retrieved 2016-06-23.
  5. ↑ "Glossary:Gross national income (GNI)". Eurostat statistic explained. Eurostat. Retrieved 2016-06-23.
  6. ↑ "BEA: Glossary "G"". Bureau of Economic Analysis. 5 September 2007.
  7. ↑ "Gross Domestic Product as a Measure of U.S. Production" (PDF). August 1991.
  8. ↑ "Beyond GDP". The Economist. ISSN 0013-0613. Retrieved 2016-07-27.

Further reading

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