Gross National Product (GNP) is the market value of all products and services produced in one year by labor

and property supplied by the residents of a country. Unlike Gross Domestic Product (GDP), which defines production based on the geographical location of production, GNP allocates production based on ownership. 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".
Contents
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[1]

1 GNP vs. GDP 2 Use 3 List of countries by GNP(GNI) (nominal, Atlas method) (millions of US$)[5] (Top 10) 4 See also 5 References 6 Sources 7 External links

[edit]GNP

vs. GDP

See also: Gross domestic product#GDP vs GNP Gross National Product (GNP) is often contrasted with Gross Domestic Product (GDP). While GNP measures the output generated by a country's enterprises - whether physically located domestically or abroad - GDP measures the total output produced within a country's borders - whether produced by that country's own firms or not. 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]

GNP, or Gross National Product, refers to the market value of all goods and servicesproduced by a nation during a specific time period. It's simply the GDP of the country, plus income earned from overseas investments by residents, minus income earned within the domestic economy by overseas residents. GNP measures a nation's economic performance, rather than GDP does that with a geographic region's; it's what its citizens produced, no matter where they produce it.

The more GNP differs from GDP, the more a country is involved in international trade and finance. For instance, Japan stands out in this type.

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jeanleen...

How to compute for GNP?

HOW and wHAT is the formula? thnx..^^
4 years ago Report Abuse

sensekon...

Best Answer - Chosen by Voters

Computation of GNP is easy if you compute GDP. What is GDP and how do you compute that? The Gross Domestic Product measures the value of economic activity within a country. Strictly defined, GDP is the sum of the market values, or prices, of all final goods and services produced in an economy during a period of time. There are, however, three important distinctions within this seemingly simple definition: GDP is a number that expresses the worth of the output of a country in local currency. GDP tries to capture all final goods and services as long as they are produced within the country, thereby assuring that the final monetary value of everything that is created in a country is represented in the GDP. GDP is calculated for a specific period of time, usually a year or a quarter of a year. Taken together, these three aspects of GNP calculation provide a standard basis for the comparison of GDP across both time and distinct national economies. Computing GDP Now that we have an idea of what GDP is, let's go over how to compute it. We know that in an economy,

GDP is the monetary value of all final goods and services produced. For example, let's say Country B only produces bananas and backrubs. Figure 1.1: Goods and Services Produced in Country B In year 1 they produce 5 bananas that are worth $1 each and 5 backrubs that are worth $6 each. The GDP for the country in this year equals (quantity of bananas X price of bananas) + (quantity of backrubs X price of backrubs) or (5 X $1) + (5 X $6) = $35. As more goods and services are produced, the equation lengthens. In general, GDP = (quantity of A X price of A) + (quantity of B X price of B) + (quantity of whatever X price of whatever) for every good and service produced within the country. In the real world, the market values of many goods and services must be calculated to determine GDP. While the total output of GDP is important, the breakdown of this output into the large structures of the economy can often be just as important. In general, macroeconomists use a standard set of categories to breakdown an economy into its major constituent parts; in these instances, GDP is the sum of consumer spending, investment, government purchases, and net exports, as represented by the equation: Y = C + I + G + NX Because in this equation Y captures every segment of the national economy, Y represents both GDP and the national income. This because when money changes hands, it is expenditure for one party and income for the other, and Y, capturing all these values, thus represents the net of the entire economy. Let's briefly examine each of the components of GDP. Consumer spending, C, is the sum of expenditures by households on durable goods, nondurable goods, and services. Examples include clothing, food, and health care. Investment, I, is the sum of expenditures on capital equipment, inventories, and structures. Examples include machinery, unsold products, and housing. Government spending, G, is the sum of expenditures by all government bodies on goods and services. Examples include naval ships and salaries to government employees. Net exports, NX, equals the difference between spending on domestic goods by foreigners and spending on foreign goods by domestic residents. In other words, net exports describes the difference between exports and imports. GDP vs. GNP GDP is just one way of measuring the total output of an economy. Gross National Product, or GNP, is another method. GDP, as said earlier, is the sum value of all goods and services produced within a country. GNP narrows this definition a bit: it is the sum value of all goods and services produced by permanent residents of a country regardless of their location. The important distinction between GDP and GNP rests on differences in counting production by foreigners in a country and by nationals outside of a country. For the GDP of a particular country, production by foreigners within that country is counted and production by nationals outside of that country is not counted. For GNP, production by foreigners within a particular country is not counted and production by nationals outside of that country is counted. Thus, while GDP is the value of goods and services produced within a country, GNP is the value of goods and services produced by citizens of a country. For example, in Country B, represented in Figure 1.1, bananas are produced by nationals and backrubs are produced by foreigners. Using figure 1, GDP for Country B in year 1 is (5 X $1) + (5 X $6) = $35. GNP for country B is (5 X $1) = $5, since the $30 from backrubs is added to the GNP of the foreigners' country of origin. The distinction between GDP and GNP is theoretically important, but not often practically consequential. Since the majority of production within a country is by nationals within that country, GDP and GNP are usually very close together. In general, macroeconomists rely on GDP as the measure of a country's total output. A region's gross domestic product, or GDP, is one of the ways of measuring the size of its economy. The GDP of a country is defined as the total market value of all final goods and services produced within a

country in a given period of time (usually a calendar year). It is also considered the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time. The most common approach to measuring and understanding GDP is the expenditure method: GDP = consumption + investment + (government spending) + (exports imports), or, GDP = C + I + G + (X-M) "Gross" means depreciation of capital stock is not included. With depreciation, with net investment instead of gross investment, it is the net domestic product. Consumption and investment in this equation are the expenditure on final goods and services. The exports minus imports part of the equation (often called cumulative exports) then adjusts this by subtracting the part of this expenditure not produced domestically (the imports), and adding back in domestic area (the exports). Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector (or government) spending. Two advantages of dividing total consumption this way in theoretical macroeconomics are: Private consumption is a central concern of welfare economics. The private investment and trade portions of the economy are ultimately directed (in mainstream economic models) to increases in long-term private consumption. If separated from endogenous private consumption, government consumption can be treated as exogenous, so that different government spending levels can be considered within a meaningful macroeconomic framework. GDP can be contrasted with GNP or gross national product, which the United States used in its national accounts until 1992. The two terms GDP and GNP are almost identical - and yet entirely different; GDP (or GDI - Gross Domestic Income) being concerned with the region in which income is generated. That is, what is the market value of all the output produced in a nation, the United States, for example, in one year. GDP concerns itself with where the output is produced and not who produced it. Meanwhile, GNP (or GNI - Gross National Income) is a measure of the accrual of income or the value of the output, produced by the "nationals" of a region. GNP concerns itself with who "owns" the production. If we take the USA as an example again, GNP measures the value of output produced by American firms, regardless of where the firms are located. This compares to GDP which is concerned with where the production takes place and not if the company is an American firm or not. Supposing that a firm can be defined as American in an economic world where most large firms are actually global groups. [edit] The components of GDP Each of the variables C, I, G and NE (where GDP = C + I + G + NE as above): (Note: * GDP is sometimes also referred to as Y in reference to a GDP graph) C is private consumption in the economy. This includes most personal expenditures of households such as food, rent, medical expenses and so on but does not include new housing. I is defined as business investments in capital. Examples of investment by a business include construction of a new mine, purchase of software, or purchase of machinery and equipment for a factory. Spending by households on new houses is also included in Investment. Unlike general meaning, 'Investment' in GDP is meant very specifically as non-financial product purchases. Buying financial products is classed as 'saving' , as opposed to investment. The distinction is (in theory) clear: if money is converted into goods or services, it is investment; but, if you buy a bond or a share, this transfer payment is excluded from the GDP sum. Although such purchases would be called investments in normal speech, from the total-economy point of view, this is simply swapping of deeds, and not part of the real economy or the GDP formula. G is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government. It does not include any transfer payments, such as social security or unemployment benefits. X is gross exports. GDP captures the amount a country produces, including goods and services produced

for overseas consumption, therefore exports are added. M is gross imports. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign supply as domestic. NE are "net exports" in the economy: gross exports gross imports. There is a fixed relation: NE = X M. It is important to understand the meaning of each variable precisely in order to: 2b. Examples of GDP component variables Examples of C, I, G, & NX: If you spend money to renovate your hotel so that occupancy rates increase, that is private investment, but if you buy shares in a consortium to do the same thing it is saving. The former is included when measuring GDP (in I), the latter is not. However, when the consortium conducted its own expenditure on renovation, that expenditure would be included in GDP. If the hotel is your private home your renovation spending would be measured as Consumption, but if a government agency is converting the hotel into an office for civil servants the renovation spending would be measured as part of public sector spending (G). If the renovation involves the purchase of a chandelier from abroad, that spending would also be counted as an increase in imports, so that NX would fall and the total GDP is unaffected by the purchase. (This highlights the fact that GDP is intended to measure domestic production rather than total consumption or spending. Spending is really a convenient means of estimating production.) If you are paid to manufacture the chandelier to hang in a foreign hotel the situation would be reversed, and the payment you receive would be counted in NX (positively, as an export). Again, we see that GDP is attempting to measure production through the means of expenditure; if the chandelier you produced had been bought domestically it would have been included in the GDP figures (in C or I) when purchased by a consumer or a business, but because it was exported it is necessary to 'correct' the amount consumed domestically to give the amount produced domestically. (As in Gross Domestic Product.) 3. National accounting formulae (expenditure approach) C = Personal consumption expenditures I = Gross private domestic investment G = Government consumption expenditures X = Gross exports of goods and services M = Gross imports of goods and services Total = Gross Domestic Product (GDP) NR = + or - Net income from assets abroad (net income receipts) Sub Total = Gross National Product (GNP) CC = Depreciation IBT = Indirect business taxes NDP = Net Domestic Product NI = National Income PI = Personal Income DI = Disposable income Note: (X - M) is often written as "NX," which stands for "Net Exports" GDP = C + I + G + (X - M) GNP = C + I + G + (X - M) + NR GNI = C + I + G + (X - M) + NR - IBT NI = C + I + G + (X - M) + NR - IBT - CC The Flow of Income NDP = GNP - CC NI = NDP - IBT + net foreign factor income PI = NI - corporate taxes - retained earnings - social security + transfer payments + net interest

DI = PI - Personal taxes National income and output (Billions of dollars) Period Ending 2006 Gross national product 11,059.3 Net U.S. income receipts from rest of the world 55.2 U.S. income receipts 329.1 U.S. income payments 273.9 Gross domestic product 11,004.1 Private consumption of fixed capital 1,135.9 Government consumption of fixed capital 218.1 Statistical discrepancy 25.6 National Income 9,679.7 Need further help? See below: National Income Calculations 1999 Gross Domestic Product (Table B-1) Relation of GDP, GNP, NNP, and NY (Table B-26) GDP = C + I + G + X NNP = GNP - Dep C 6268.7 GNP=GDP + V I 1650.1 G 1634.4 GDP 9299.2 X -254.0 V -11.0 Dep 1161.1 GDP = 9299.2 GNP= 9288.2 NNP= 8127.1 Relation of GDP, GNP, NNP, and NY National Income by Type of Income (Table B-26) (Table B-28) NY = GNP - Dep - S&ETx - BTrf - StatD + GBS NY = CE + PI + CP + NI + RI GNP 9288.2 CE 5299.8 Dep 1161.1 PI 663.5 S&ETx 718.1 CP 856.0 BTrf 39.7 NI 507.1 StatD -72.0 RI 143.3 GBS 28.4 NY = 7469.7 NY = 7469.7 Relation of NY to PY (Table B-27) PY = NY - SS - RE + NBI + G&BTr NY 7469.7 SS 662.1 RE 1368.3 NBI 1334.1 G&BTrf 1016.2 PY = 7789.6 Disposition of PY (Table B-30) YD = PY - T PY 7789.6 T 1152.0 YD = 6637.6 Disposition of PY (Table B30) YD = PO + PS PO 6490.1

PS 147.5 YD = 6637.6 Source(s): http://www.sparknotes.com/economics/macr http://en.wikipedia.org/wiki/Measures_of http://www.sonoma.edu/econ/sdlewis/webcl

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The income approach

The income approach equates the total output of a nation to the total factor income received by residents of the nation. The main types of factor income are: Employee compensation (= wages + cost of fringe benefits, including unemployment, health, and retirement benefits); Interest received net of interest paid; Rental income (mainly for the use of real estate) net of expenses of landlords; Royalties paid for the use of intellectual property and extractable natural resources.

All remaining value added generated by firms is called the residual or profit. If a firm has stockholders, they own the residual, some of which they receive as dividends. Profit includes the income of the entrepreneur - the businessman who combines factor inputs to produce a good or service. Formulae: NDP at factor cost = Compensation of employees + Net interest + Rental & royalty income + Profit of incorporated and unincorporated firms + Income from self-employment. National income = NDP at factor cost + NFIA (net factor income from abroad). [edit]The

expenditure approach

The expenditure approach is basically an output accounting method. It focuses on finding the total output of a nation by finding the total amount of money spent. This is acceptable, because like income, the total value of all goods is equal to the total amount of money spent on goods. The basic formula for domestic output combines all the different areas in which money is spent within the region, and then combining them to find the total output. GDP = C + I + G + (X - M) Where: C = household consumption expenditures / personal consumption expenditures I = gross private domestic investment G = government consumption and gross investment expenditures X = gross exports of goods and services M = gross imports of goods and services Note: (X - M) is often written as XN, which stands for "net exports"