What is the full form of GNP


GNP: Gross National Product

GNP stands for Gross National Product. It displays the total cost of the finished items and the services given to by the resident of the nation for a particular economic year, without concern about the location and other such factors. Hence the Gross Domestic Product (GNP) keeps count of the outcome formulated by the business units set up in India or other foreign countries. The Gross National Product is displayed as a statistic report which contains Gross Domestic Produce (GDP), along with income generated through overseas investments made by the citizens. The GNP considers the value of goods and services provided by the industrial unit of a domestic origin.

GNP Full Form

In easy words, the GNP displays the contribution of the residents of the country to its economy. It takes into account the citizenship, disregarding the location of the owner. Income earned in India by the people residing in foreign countries is not included in the Gross National Product report. The Gross National Product report also does not take into account the income earned by the foreign residents or businesses and also excludes the goods manufactured in the country by any other foreign organization. The production of items such as machines, pieces of equipment, products of agricultural use, vehicles, and some services, such as consultancy, education and health care, are taken into consideration by the GNP report. The value of giving the service is not taken into consideration as it gets included in the value of the final product.

The per capita Gross National Produce is used to make the calculation of the country-to-country comparison of the Gross National Produce (GNP). This, however, becomes an issue when any particular person holds citizenship of two different countries at a given time. In this case, the person's income is seen as the Gross National Produce of each of the two countries, which leads to double counting.

While calculating the Gross National Product, the government expenditure, net exports, personal consumption, private domestic investments and the income earned by NRIs are first added. And after this, the payment of the foreigners in the domestic economy is deducted. Also, it is seen that the GNP skips away the amount of the intermediary goods. This is done in order to avoid double counting, as the entries also get included in the cost for final goods and services.

How is Gross National Product (GNP) calculated?

The formula for GNP is:

Gross National Product (GNP)

= Gross Domestic Product (GDP) + Net factor income from abroad (NFIA)

Or

= C + I + G + X + Z, where C is consumption, I is an investment, G is government, X is net exports, and Z symbolizes the income generated by the residents through overseas investment.

GNP Full Form

What is the difference between Gross Domestic Product (GDP) and Gross National Product (GNP)?

There is not much but little difference in Gross Domestic Product (GDP) and Gross National Produce (GNP). It is also said that the GNP is a superset of GDP. GDP comprises the report and study of data within the nation's geographical boundaries, whereas the GNP increases its reach to inculcate in it the total overseas economic activities taken part in by the citizens. The sole difference between GDP and GNP is the difference in the calculation of total output, taking into account foreigners in a country and citizens outside a nation.

Factors required while calculating the Gross National Product (GNP)

  • Consumption expenditure
  • Government expenditure
  • Investment
  • Net exports
  • Net income

Significance of the Gross National Product (GNP)

Economists consider the Gross National Product report as an important economic indicator. They use it in order to find solutions to financial problems such as inflation and poverty.

The importance of GNP increases in comparison to the GDP, as the GNP is calculated on the basis of one head without considering the location.

The Balance of Payments (BoP) is analyzed by the information received from the report GNP. In many countries or unions, economists use the Gross National Income as the measure.

GNP Full Form

As we know, the exchange rate of foreign currencies keeps changing, hence the calculation of the Gross National Product impacts. So, the actual growth, stagnation or shrinkage of the economy is not determined.


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