Gross National Product

Gross national product definition


The gross national product, or GNP, is a measure of the market value of all goods and services manufactured and produced within an economy during a specific time period. GNP figures include:
  • Tangible goods, such as automobiles, appliances, and apparel
  • Services provided, including education, automotive repair, and health care
  • Agricultural production
  • All wages or salaries, excluding that earned by foreign nationals
  • Capital gains from overseas investment
  • Corporate profits
  • Interest earnings
  • Earnings from real estate investments, including rental and leasing fees
  • The value of technological research and development
GNP is the sum of all final products and services in the economy, and excludes the materials used in manufacturing these items; this is necessary in order to avoid double-counting of production. For instance, the market value of a computer system would be included in GNP figures, while the value of the individual computer chips that constitute the system would not be included separately from the overall value of the system itself. Additionally, gross national product excludes the income earned by foreign nationals.

GNP vs. GDP


Gross national product calculations differ from gross domestic product (GDP) figures in two major respects. GNP includes capital gains earned through overseas investment and excludes the income earned by foreign nationals within the economy. GDP, by contrast, excludes capital gains earned overseas and includes all wages and salaries including those earned by foreign nationals. When considering whether to use GNP vs. GDP figures for analysis, it should be noted that the GNP measures the performance of the citizens and nationals of a specific economy, while the GDP indicates the overall strength of the economy itself without regard to the nationality of the contributing individuals.

Calculating GNP


The gross national product figure is calculated in a number of ways. When GDP is known, GNP can be derived by adding the capital gains earned overseas to the GDP figure and subtracting income earned by foreign nationals; this is the simplest method for calculating GNP. When GDP figures are not available, GNP can be calculated in two separate ways: by adding up the market value of the gross national expenditures or by calculating the gross national income.

Expenditure method

GNP is generally equivalent to gross national expenditures, which consist of:
  • The value of exported goods minus the value of imported goods
  • Government spending
  • Investment by businesses
  • Consumption by consumers

Income method

GNP is equal to the gross national income, which includes:
  • All wages and salaries
  • Rental income
  • Earned interest
  • Corporate profits
  • Taxes
  • Depreciation
Either of these methods can be used to calculate the value of the gross national product.

Gross national product by country


Because GNP figures are used to analyze and assess the relative strength of economies, determining the gross national product by country can provide helpful insights into growth areas in global investment. The United States typically leads such lists, with Japan, Germany, France, the United Kingdom, and China generally counted among the top ten. Brazil and India have achieved high rankings on most recent lists and are considered solid prospects for global investment.
Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

Tradingsim.com
Day Trading Simulator

Tradingsim.com provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for...

Send this article to a friend.

Enter multiple addresses on separate lines or separate them with commas.