DifferencesEconomicsManagement

Difference Between GDP and GNP

In this article, we will understand what is GDP and GNP and their differences.

Gross Domestic Product (GDP)

GDP is defined as the total market value of the final goods and services produced in an economy over a period of time, usually, one year is known as the Gross Domestic Product.

GDP = private consumption + gross private investment + government investment + government spending + (exports – imports).

Gross National Product (GNP)

GNP is the total monetary value of the final goods and services in an economy over a period of time plus the net factor income from abroad. It includes only those goods, which are produced using domestic factors of production.

GNP=GDP+Net Factor Income from Abroad

The Difference Between GDP and GNP

GDP

  • It is the market value of the final goods and services produced in a country during a period of time
  • It is a narrow concept.
  • It focuses on the value produced within a territory.
  • It excludes the net factor income from abroad.
  • GDP is more widely used for international comparisons than GNP.
  • The formula for GDP = private consumption + gross private investment + government investment + government spending + (exports – imports).

GNP

  • It is the market value of final goods and services produced by the ordinary citizens of a country over a period of time.
  • GNP is a broader concept than GDP.
  • It focuses on the value produced by the citizens of the country. The focus is on citizens, not boundaries.
  • It includes the net factor income from abroad.
  • GNP is less used in international comparisons than GDP.
  • GNP = GDP+net factor income from abroad.
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