Gross national product definition
Gross national product
Gross national product (GNP) is an estimate of the total value of all products and services produced by a country in a specific period, often a financial quarter or year.
GNP is calculated by adding personal consumption, private domestic investment, government expenditure, net exports, and income earned by residents from overseas investments. Income earned inside the domestic economy by foreign residents gets deducted.
GNP v GDP
GNP is related to another crucial economic measure: GDP (gross domestic product). GDP calculates all output produced within a country’s borders regardless of who owns the means of production.
GNP begins with GDP. Residents’ investment income from overseas investments gets added, then foreign residents’ investment income earned within a country is subtracted.
GNP and GDP produce different results for total output. In 2019, the US GDP was lower than the GNP at $21.4 trillion to $22.03 trillion, respectively.
GDP is the most commonly quoted measure of a country’s economic activity. GNP is valued because major differences between the two measurements could indicate that a country is more engaged in international trade, production and finance operations.