What is the difference between GDP and GNP?

Answer 1

GDP is the value of total goods and services produced by a country in a given year. It includes government spending and net exports

GNP is arrived at by adding the income earned by residents from abroad to the GDP and deducting the income received by foreigners from the domestic market.

Answer 2

GDP (Gross Domestic Product) is a commonly used calculator of national income and measures the economic activity in a country. Essentially, the GDP is a figure which measures the value of the goods and services produced in a country in a given time period (usually one year).

GNP (Gross National Product) is also a calculator of economic activity. However, GNP also encompasses the value of net income made abroad. Moreover, when calculating GNP, the value of what foreign countries earn in the given country is subtracted from the value.

To clarify, let us use an example:

If a US business had a manufacturing plant located in China, any profit made by the plant would not be calculated in the GDP, but would be accounted for in the GNP.

If a Canadian business has a manufacturing plant located in the US, any profit made by the plant would be included in GDP, however it would be subtracted from the value of the GNP.

Consequently, those both GDP and GNP are measures of economic activities, the two values can be extremely different.

Remember, GDP concern is BORDER, whereas GNP concern is PRODUCER.