GDP vs. GNP: Know the Difference
By Shumaila Saeed || Updated on December 25, 2023
GDP (Gross Domestic Product) measures the value of goods and services produced within a country's borders, while GNP (Gross National Product) measures the value of goods and services produced by a country's residents, regardless of location.
Key Differences
Gross Domestic Product (GDP) is a key economic indicator that measures the total value of all goods and services produced within a country's borders in a specific time period. In contrast, Gross National Product (GNP) assesses the total economic output produced by the residents of a country, regardless of where that production occurs. This fundamental difference highlights GDP's focus on location versus GNP's focus on ownership.
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Dec 16, 2023
GDP includes the economic activities of foreign nationals within the country but excludes the activities of its citizens outside its borders. Conversely, GNP includes the economic activities of its nationals abroad but excludes the activities of foreigners within the country. This distinction makes GDP a measure of domestic economic activity, while GNP is more about the income generated by the citizens.
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Dec 16, 2023
When evaluating an economy's health, GDP is often considered more significant as it reflects the performance of the country's economy itself. GNP, on the other hand, can be influenced by the economic activities of its citizens in other countries, making it less indicative of domestic economic health.
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Dec 16, 2023
The choice between using GDP and GNP as a metric depends on the specific economic analysis. For instance, GDP is more useful for understanding the economic impact of domestic policies, while GNP is better suited for analyzing the comprehensive economic strength of a nation's citizens, including their international investments.
Shumaila Saeed
Dec 16, 2023
In practical terms, GDP tends to be more commonly used globally due to its clear focus on domestic activities. GNP, while informative, can be less relevant for certain types of economic analysis, particularly those focused on the internal market and policy impacts.
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Dec 16, 2023
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Comparison Chart
Definition
Value of goods and services within a country
Value of goods and services by a country's residents
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Location vs. Ownership
Focuses on location of production
Focuses on nationality of producers
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Foreign Activities
Includes foreign nationals' activities in-country, excludes nationals' activities abroad
Excludes foreign nationals' activities in-country, includes nationals' activities abroad
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Dec 16, 2023
Economic Indication
Reflects domestic economic health
Reflects economic strength of nationals, including abroad
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Common Use
More commonly used for policy and market analysis
Used for analyzing comprehensive national economic strength
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Dec 16, 2023
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GDP and GNP Definitions
GDP
An economic indicator of a country's internal market value.
Economists were concerned about the stagnant GDP figures.
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Dec 12, 2023
GNP
An economic metric that includes all production by citizens, regardless of location.
GNP helps in understanding the global economic contributions of nationals.
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Dec 12, 2023
GDP
The total market value of all goods and services produced domestically.
The country's GDP grew by 3% last year, indicating economic growth.
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Dec 12, 2023
GNP
A measure of a country's economic output generated by its residents.
The nation's GNP was positively impacted by overseas investments.
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Dec 12, 2023
GDP
A monetary measure of the market value of all final goods and services in a country.
Policy makers use GDP to gauge the health of the economy.
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Dec 12, 2023
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GNP
The sum of all economic output by a nation's citizens, whether at home or abroad.
Foreign business ventures significantly contributed to the GNP.
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Dec 12, 2023
GDP
A measure of economic production and growth within a country.
The government's new policy aimed to boost the GDP.
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Dec 12, 2023
GNP
The total value of goods and services produced by a nation's residents.
The country's GNP includes income its citizens earn abroad.
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Dec 12, 2023
GDP
The sum value of all produced goods and services within national borders.
An increase in GDP suggests an improving economy.
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Dec 12, 2023
GNP
A national economic indicator accounting for citizen-produced goods and services.
The government used GNP to assess the international economic influence of its citizens.
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Dec 12, 2023
GDP
Measure of the United States economy adopted in 1991; the total market values of goods and services by produced by workers and capital within the United States borders during a given period (usually 1 year)
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Dec 08, 2023
GNP
Former measure of the United States economy; the total market value of goods and services produced by all citizens and capital during a given period (usually 1 yr)
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Dec 08, 2023
Repeatedly Asked Queries
How is GDP calculated?
By summing up the total value of goods and services produced within a country.
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Dec 16, 2023
How is GNP calculated?
By adding the value of all goods and services produced by a country's residents, regardless of location.
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Dec 16, 2023
What does a rise in GDP indicate?
An increase in the country's economic production and growth.
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Dec 16, 2023
Does GNP include international investments by citizens?
Yes, it includes economic activities of nationals abroad.
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Dec 16, 2023
Is GDP a good indicator of individual wealth?
No, it measures overall economic production, not individual wealth distribution.
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Dec 16, 2023
Why is GDP more commonly used than GNP?
GDP provides a clearer picture of domestic economic activity.
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Dec 16, 2023
Can GDP and GNP figures be the same for a country?
Yes, if the income from nationals abroad and foreigners within the country balances out.
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Dec 16, 2023
What does a rise in GNP indicate?
An increase in the total economic output by the nation's residents.
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Dec 16, 2023
Is GNP influenced by the economic performance of other countries?
Yes, through the foreign economic activities of the nation's residents.
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Dec 16, 2023
Which is better for analyzing a country's economic health, GDP or GNP?
GDP is generally better for analyzing domestic economic health.
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Dec 16, 2023
Does a higher GNP always mean a better economy?
Not necessarily, as it doesn't account for debt or income inequality.
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Dec 16, 2023
Does GNP account for the production by foreigners within a country?
No, it only includes the production by the country's residents.
Shumaila Saeed
Dec 16, 2023
What kind of policy decisions can be influenced by GDP?
Domestic economic policies, like taxation and spending.
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Dec 16, 2023
Do GDP and GNP include services as well as goods?
Yes, they include both goods and services.
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Dec 16, 2023
Can GDP growth lead to better living standards?
Potentially, but it doesn't directly measure income distribution or quality of life improvements.
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Dec 16, 2023
Which is more relevant for small, open economies, GDP or GNP?
GDP, as it focuses on internal economic activities.
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Dec 16, 2023
Are GDP and GNP affected by currency fluctuations?
Yes, as they are measured in monetary terms.
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Dec 16, 2023
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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