Friday, August 22, 2008

Gross National Product (GNP)

Gross National Product

Another measure of a country’s output is gross national product. Gross national product (GNP) is the total value of all final goods and services produced in a given period (usually a year) by businesses owned by citizens of a country.

Gross means total. Product means output. Both GDP and GNP measure the total output produced by a country. GDP measures the final output produced in a country, regardless of ownership of the businesses. Thus, the key to GDP is location, not ownership. The key to GNP is ownership, not location. For example, if a Japanese company operates in the United States, the value of its output in the U.S. is included in U.S. GDP and Japanese GNP. Yet, the output of a Japanese company’s operations in the U.S. would not be included in U.S. GNP or Japan’s GDP.

The U.S. Commerce Department used GNP to measure U.S. output from 1900 to 1991. Since then, GDP has been used. Most countries in the world use GDP to measure their output. A few countries in the world still use GNP, however.

Economic Growth - Topics

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