Gdp vs. Gnp Essay

1213 Words Apr 28th, 2012 5 Pages

GDP (or Gross Domestic Product) and GNP (Gross National Product) represent the size and strength of the economy. While both concepts are similar, their definition, calculation and applications are different from each other.
Comparison chart
All attributes Differences Similarities Improve this chart | GDP | GNP | Definition: | An estimated value of the total worth of a country’s production and services, calculated over the course on one year | GDP (+) total capital gains from overseas investment (-) income earned by foreign nationals domestically | Stands for: | Gross Domestic Product | Gross National Product | Formula for Calculation: | GDP = consumption + investment + (government spending) + (exports −
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In some cases GNP will also be calculated by subtracting the capital gains of foreign nationals or companies earned domestically. Through GNP an accurate portrait of a nation’s yearly economy can be analyzed and studied for trends since GNP calculates the total income of all the nationals of a country. This gives a far more realistic picture than the income of foreign nationals in the country as it is more reliable and permanent in nature. Gross National Product can also be calculated on a per capita basis to demonstrate the consumer buying power of an individual from a particular country, and an estimate of average wealth, wages, and ownership distribution in a society. edit Calculation of GDP vs GNP edit How GDP is calculated
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) edit How GNP is calculated
There are various ways of calculating GNP numbers. The expenditure

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