What is:
O Gross National Product (GNP) it is a broad indicator of a nation's economic activity. It is the value of all goods and services produced in a country in one year by its companies.
How it works:
The GNP includes income earned by citizens and companies abroad, but it does not include income earned by foreigners within the country.
The amounts used to constitute the GNP include the manufacture of material goods (cars, furniture and agricultural products) and the provision of services (education, health and financial services). GNP does not include the value of services performed to produce material goods, because their value is included in the price of the finished product. In addition, it also does not include depreciation and indirect business taxes, such as sales tax.
The formula for calculating the GNP is:
THE Net Income Sent Abroad (RLEE) it is the difference between amounts sent abroad and amounts received from abroad from production factors.
GNP can be adjusted to make yearly comparisons within a country or across countries. For year-to-year comparisons, the GNP needs to be adjusted for the period's inflation. For cross-country comparisons, it needs to be established on a per capita basis, ie GNP is divided by the country's population.
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Difference between GDP and GNP
The difference between GNP and the Gross Domestic Product (GDP) is that the GNP includes the value of goods and services produced and carried out by citizens and companies of a country abroad, while the GDP represents only what was produced within the borders of the parents. Thus, the GNP excludes the value of goods and services produced and carried out by foreign companies in the country.
Because it's important:
Due to nature increasingly globalized of national economies and the interdependence of labor forces, production networks and the transnationalization of companies, the GNP provides a more efficient benchmark to assess a country's market position global.
By Amarolina Ribeiro
Graduated in Geography
Would you like to reference this text in a school or academic work? Look:
RIBEIRO, Amarolina. "Gross National Product (GNP)"; Brazil School. Available in: https://brasilescola.uol.com.br/economia/produto-nacional-bruto-pnb.htm. Accessed on June 27, 2021.
