Economics
Gross National Product (GNP)
Gross National Product (GNP) is the total value of all goods and services produced by a country's residents, both domestically and abroad, within a specific time period. It includes the income earned by citizens and businesses from foreign investments. GNP is a key indicator of a country's economic performance and is used to compare the economic output of different nations.
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8 Key excerpts on "Gross National Product (GNP)"
No longer available |Learn more- (Author)
- 2014(Publication Date)
- White Word Publications(Publisher)
The difference is that GDP defines its scope according to location, while GNP defines its scope according to ownership. In a global context, world GDP and world GNP are therefore equivalent terms. GDP is product produced within a country's borders; GNP is product produced by enterprises owned by a country's citizens. The two would be the same if all of the productive enterprises in a country were owned by its own citizens, and those citizens did not own productive enterprises in any other countries. In practices, however, foreign ownership makes GDP and GNP non-identical. Production within a country's borders, but by an enterprise owned by somebody outside the country, counts as part of its GDP but not its GNP; on the other hand, production by an enterprise located outside the country, but owned by one of its citizens, counts as part of its GNP but not its GDP. To take the United States as an example, the U.S.'s GNP is the value of output produced by American-owned firms, regardless of where the firms are located. Similarly, if a country becomes increasingly in debt, and spends large amounts of income servicing this debt this will be reflected in a decreased GNI but not a decreased GDP. Similarly, if a country sells off its resources to entities outside their country this will also be reflected over time in decreased GNI, but not decreased GDP. This would make the use of GDP more attractive for politicians in countries with increasing national debt and decreasing assets. Gross national income (GNI) equals GDP plus income receipts from the rest of the world minus income payments to the rest of the world. ____________________ WORLD TECHNOLOGIES ____________________ In 1991, the United States switched from using GNP to using GDP as its primary measure of production. The relationship between United States GDP and GNP is shown in table 1.7.5 of the National Income and Product Accounts .
eBook - PDF- Bradley A. Hansen(Author)
- 2006(Publication Date)
- Greenwood(Publisher)
The process necessary to create chain weighted estimates is much more complicated than simply using the prices from a prior year, but the objective is the same, to remove the effects of inflation from our estimates of pro- duction and income. The phrase final goods reminds us that we need to be careful not to count goods twice. For example, if a furniture manufacturer buys $1,000 worth of lumber from a lumber mill and then produces tables that are sold for $2,000, we count only the $2,000 table, the final good, as part of GDP. If we count both the $1,000 of lumber and the $2,000 table, we are counting the lumber twice because its value is included in the value of the table. The phrase within a country distinguishes Gross Domestic Product from a similar measure called Gross National Product. Gross Domestic Product measures the production within a country regardless of who does it. Gross National Product measures the production of a country’s citizens regardless of where they are located. GDP is now the measure most commonly used in the United States, but you may still find some comparative data that refers Measuring the Performance of the American Economy 23 to GNP. It does not really make much difference which is used. For the United States, GNP is about 0.3 percent higher than GDP. The last part of the definition of GDP states that we are measuring the production over a specific period of time. The goods and services produced in a year do not exist at a single point in time, such as at the end of the year. Many services disappear as they are consumed. We say that GDP is a flow variable rather than a stock variable. The amount of water in a bathtub is stock variable, but a shower is measured by its flow, the amount of water that flows through it in a certain amount of time. Flow variables like GDP can be measured only over a specific period of time. The same sectors of the economy used in the circular flow diagram (Figure 1.4) are used in national income accounting.
eBook - PDF- Kevin D. Hoover(Author)
- 2011(Publication Date)
- Cambridge University Press(Publisher)
The sum of national income and these four items is gross national income defined as the total income received by the residents of a country . In principle, gross national income should equal gross national product. In practice, there are measurement errors reflected in the statistical discrepancy . To get gross domestic product (i.e., the total production of final goods and services generated within the borders of a country), we subtract income receipts from the rest of the world – that part of the income earned abroad (e.g., profits from U.S. ownership of a foreign factory or interest on foreign bonds) – and add income payments to the rest of the world (income gener-ated from U.S. production but owned by foreigners). In other words, we work backward from GNP to GDP, where in the text we worked forward. It may be helpful to explain some puzzling terms that appear in the table. Inventory Valuation Adjustment (lines 6, 7, and 8). If a firm counts the cost of using an inventory item at its historic purchase price rather than a higher replacement cost, it will record a profit from the use by an amount unconnected to current production and, therefore, to GDP. The adjustment corrects for the discrepancy. Capital Consumption Adjustment (lines 6 and 7). The adjustment corrects for dif-ferences between depreciation allowances as reported for tax purposes and eco-nomically based measures of depreciation. Using 2009 data (billions of dollars), identity ( 2.1 ) is Y = C + I + G + ( EX − IM ) $14 , 256 = 10 , 089 + 1 , 629 + 2 , 931 + (1 , 564 − 1 , 957) . 7-28 7-29 7-33 7-43 7-41 7-42 (The numbers below the dollar values refer to the account number and line number from which the entry was drawn. For example, “7-28” means Table 3.7 , line 28.) 3.7.2 The Personal-Income-and-Outlay Account Table 3.8 is almost a rearrangement of the disposable-income identity: YD ≡ Y − T + TR ≡ C + S . (2.2) 3.7 Putting It All Together: Reading the NIPAs 103 Table 3.8.
eBook - PDF- Manzur Rashid, Peter Antonioni(Authors)
- 2015(Publication Date)
- For Dummies(Publisher)
In short, people tend to want to move to countries with high levels of capital and not many people, because their MPL will be high, assuring a relatively high real wage. 61 Chapter 4: Gross Domestic Product Calculating GDP: Assessing an Economy’s Health GDP is probably the single most useful statistic in appraising the health of an economy, so calculating it accurately is vitally important. Unfortunately, working out a country’s GDP is no simple matter. In this section we look at how GDP is calculated in the UK, why it’s not always 100 per cent accurate and also how to take into account improvement in the quality of goods. Other developed economies calculate GDP in a similar way. Introducing the basics In the UK, the Office for National Statistics (ONS) is responsible for calculat‑ ing GDP. It does so on a quarterly basis (every three months) by using three different ways of measuring GDP: ▶ ✓ Calculating total income: Basically adding up everyone’s income in the UK, including people’s wages from work and firms’ profits paid out as dividends to their owners/shareholders. This figure is estimated by using data on firms’ profits, individuals’ weekly earnings, employer surveys and data from the UK tax authority (HMRC). ▶ ✓ Calculating total output: Working out the value of all final goods that firms produce. This is done by surveying thousands of firms to obtain a detailed picture of exactly what they’re producing, in what quantities, using what inputs and for what price. To avoid double counting, only the value added by each firm is included. For this reason, this measure is often called gross value added (GVA). (See the section ‘Adding up total value added’ earlier in the chapter.) ▶ ✓ Calculating total expenditure: Adding up the amount of money that consumers, firms, the government and overseas buyers spend on final goods and services in an economy.
- Chandrika Kaul, Valerie Tomaselli-Moschovitis, Chandrika Kaul, Valerie Tomaselli-Moschovitis(Authors)
- 1999(Publication Date)
- Greenwood(Publisher)
It shows the economic capacity of a country. It is a complex indicator, determined by various factors in- cluding the physical wealth (land, minerals, forests, etc.), human resources (employees, employers, and their skill levels), and capital development (internal infrastructure, production-related machinery, etc.). Given the factors that go into the GDP, it is easy to see why many poor coun- tries tally low GDP statistics: with limited and/or under- performing physical, human, and capital resources, a capacity for healthy economic development will be lim- ited as well. GDP growth rates help to measure the progress of economic development over time. Growth in GDP for all countries in the designated income categories shows that, on the whole, economic capacity is on the rise. Clearly, as summary totals, the growth rates only aver- age out the change in GDP; therefore, the upward trends can mask the economic performance of individual coun- tries (Cl.l). The sectoral breakdown on GDP is a measure of the components of a country or group of countries' economic output. Least-developed countries often have a higher share of their GDP rooted in agriculture than higher- income or more-developed countries do. Analyzing the sectoral breakdown helps analysts to understand, in raw terms, what drives economic activity and growth (Cl .2). Gross Domestic Product per Capita: GDP per Capita is the GDP of a country divided by its popula- tion; it helps to relate a country's economic output to the size of its population and therefore acts as an important qualifier to the cruder GDP measurement. Consequently, it is a more valuable tool in analyzing the economic well- being of a country: it can tell us whether a country's output is in proportion to its population (C2.1-C2.6). Consumer Price Index (CPI): CPI represents the volatility of prices experienced by the population within a country.
eBook - PDF- William Boyes, Michael Melvin(Authors)
- 2015(Publication Date)
- Cengage Learning EMEA(Publisher)
3. Other measures of output and income include gross national product (GNP), net national product (NNP), national income (NI), personal income (PI), and disposable personal income (DPI). National Income Accounts GDP ¼ consumption þ investment þ government spending þ net exports GNP ¼ GDP þ receipts of factor income from the rest of the world — payments of factor income to the rest of the world NNP ¼ GNP capital consumption allowance NI ¼ NNP statistical discrepancy PI ¼ NI income earned but not received þ income received but not earned DPI ¼ PI personal taxes disposable personal income (DPI) Personal income minus personal taxes. 5. What is the difference between nominal and real GDP? nominal GDP A measure of national output based on the current prices of goods and services. real GDP A measure of the quantity of final goods and services produced, obtained by eliminating the influence of price changes from the nominal GDP statistics. Chapter 5 National Income Accounting 93 Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Because we prefer more goods and services to higher prices, it is better to have nominal GDP rise because of higher output than because of higher prices. We want nominal GDP to increase as a result of an increase in real GDP. Consider a simple example that illustrates the difference between nominal GDP and real GDP. Suppose a hypothetical economy produces just three goods: oranges, coconuts, and pizzas. The dollar value of output in three different years is listed in Figure 7.
eBook - PDFPostindustrial Possibilities
A Critique of Economic Discourse
- Fred L. Block(Author)
- 1990(Publication Date)
- University of California Press(Publisher)
155 three parts. The first considers the dimensions of economic output that have been excluded from the GNP measure and suggests that recent changes in some of these factors would overwhelm changes in measured output. The second part focuses on problems that are internal to the GNP measure. The argument is that for both meth-odological and theoretical reasons, GNP is a decreasingly accurate indicator of general trends in economic output. The final part exam-ines an additional set of factors that create a gap between trends in measured GNP and popular perceptions of changes in economic well-being. The purpose of this critique of the GNP concept is to reopen old debates about the nature and purpose of economic output. 3 Reli-ance on the GNP data as the measure of economic output makes it difficult to raise a whole series of important questions about what is and what should be produced. What GNP Measures It is a commonplace among economists that the Gross National Product is not a measure of the welfare of the population. 4 It cannot be this because it lacks a distributive dimension; a given level of GNP could be linked to a highly egalitarian or a highly inegalitarian distribution of income. Moreover, there are many other elements of the population's well-being that are excluded from the GNP data—such as environmental quality and life expec-tancy. Defenders of the GNP measure argue that even though it does not measure welfare, it does provide the best available indica-tor of the rate of growth of the economy over time. Although this argument has carried the day and has contributed to the extraordi-nary respect for the GNP reports, it cries out for reevaluation. 3. Some of these debates are not even very old, but they seem to have been forgotten in the 19805. In response to the social movements of the 19605 and 19705, some mainstream economists elaborated a critique of the GNP concept.
eBook - PDF- Andrew M. Kamarck(Author)
- 2016(Publication Date)
In contrast, in less developed countries with large subsistence sectors, over time the growth of the more easily measurable sectors may on balance reduce the present very large margins of fuzziness. Total GNP and per capita GNP figures are widely used for comparisons among countries and over time. The size of GNP per capita may determine, for example, whether a less developed country is eligible to receive economic aid as grants or soft loans or can only borrow on hard terms from the international financial institutions. It does matter then whether people realize how rough the absolute magnitude of gross national product is. World Development Indicators, published annually by the World Bank, is probably the best single source of data on the economic position of the less developed countries. Between the publication of the Indicators for 1978 and the one for 1979, owing to revision of population and national accounts estimates, the figures for GNP per capita and its real growth changed drastically for many countries: Guinea's population decreased from 5.7 million to 5.0 million; per capita GNP went up by 47 per cent from 54 National Income and Product Accounts $150 to $220; the per capita annual real growth rate since 1960 more than tripled. For the low-income countries as a whole, the 1978 volume reported 0.9 per cent as the average annual growth rate of real GNP per capita over the period 1960-76. The 1979 volume gave a figure of 1.4per cent for the slightly longer period, 1960-77, that is, an increase in the rate of 57 per cent. The pre-cision of these figures is impressive but spurious. The underlying data, as has been pointed out, are far from accurate. Realistically, it is doubtful if GNP or population figures are significant beyond the first or second digit, and certainly not to the first decimal.
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