What is Gross National Product (GNP)?
The total value of all finished goods and services provided by a country's citizens during a given financial year is known as Gross National Product (GNP). It is irrespective of their location. GNP also approximates the output of a country's businesses, whether they are established within the country or abroad. It includes Gross Domestic Product (GDP) and income obtained by the residents from investments made overseas.
Understanding Gross National Product (GNP)
GNP suggests how a country's people pledge to its economy. It reflects citizenship, notwithstanding the site of the ownership. GNP does not include the income of foreign residents within the country. It also does not tally the money earned in India by foreign residents and ignores products that have been manufactured by foreign companies.
In calculation, GNP syndicates government spending, personal consumption spending, net trades, private domestic investments and income generated by nationals overseas It does not look at the income of foreign residents within the domestic economy. Moreover, GNP removes the value of intermediary goods to avoid double counting. This is because these entries are part of the value of final products and services.
Calculation of Gross National Product (GNP)
Formula for GNP = GDP + The Net factor income from abroad
or
GNP = C + I + G + X + Z
Where C is Consumption, I is an investment, X is net exports, G is government, and Z is the net income received by domestic residents from overseas investments minus the net income earned by foreign residents from domestic investments.
