What is the difference between the gross domestic product and gross national product?

Answer 1

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.

Answer 2

Gross Domestic Product (GDP) is the total market value of goods and services produced within a country's borders.

Gross National Product (GNP) is the total market values of goods and services produced by enterprises owned by a country's citizens.

The two would be exactly the same if all of the productive enterprises in a country were owned by its own citizens, but foreign ownership makes GDP and GNP two different things.

Production within a country's borders, but by an enterprise owned by somebody outside the country, counts as part of its GDP but not its GNP. Production by an enterprise located outside the country, but owned by one of its citizens, counts as part of its GNP but not its GDP.

GDP = Consumption + Investment + Government Spending + (Exports - Imports)

GNP = GDP + Net Income from Assets Abroad

GNP adds back (or subtracts away) from the GDP income made by domestic people in foreign countries minus income bade by foreigners domestically.

GDP concern is BORDER, whereas GNP concern is PRODUCER.

Answer 3

GDP is the total production within a geographical area in a given time period

National Income is the total production of all agents of an economy, irrespectively of where (geographically) they are located.

Answer 4

GNP = GDP + income transactions from foreign sources to domestic firms - income transactions from domestic sources to foreign firms

Answer 5

GNP counts the earnings in the homeland of the owner of the asset, while GDP counts the earnings of a manufacturer in the country in which the assets exists.

Answer 6

Gross Domestic Product (GDP) is the total market value of good and service produced within a country border

Answer 7

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