What is the Similarity or Difference in Gross Domestic Product (GDP) and Gross National Product (GNP)?
Similarities: Both GDP and GNP measure “the market value of all goods and services produced for final sale in an economy”. The difference is in how we define “the economy”.
GDP focuses on domestic production. In other words, it defines a nation’s economy in geographical terms. Whatever is actually produced inside the country, regardless of who is doing the producing or who owns the productive capital that produces it.
GNP however focuses on the production by nationals. GNP defines the nation’s economy in people or resident terms. It counts whatever is produced by the residents or citizens of a nation regardless of where those people may be doing the producing.
Example:
A firm's "nationality", it's production location and its contribution to GDP / GNP is summarised below.
Adapted from: http://econproph.com/2010/11/26/gdp-vs-gnp/
Similarities: Both GDP and GNP measure “the market value of all goods and services produced for final sale in an economy”. The difference is in how we define “the economy”.
GDP focuses on domestic production. In other words, it defines a nation’s economy in geographical terms. Whatever is actually produced inside the country, regardless of who is doing the producing or who owns the productive capital that produces it.
GNP however focuses on the production by nationals. GNP defines the nation’s economy in people or resident terms. It counts whatever is produced by the residents or citizens of a nation regardless of where those people may be doing the producing.
Example:
A firm's "nationality", it's production location and its contribution to GDP / GNP is summarised below.
Adapted from: http://econproph.com/2010/11/26/gdp-vs-gnp/
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