What is Gross National Product?
It is total value of Goods and Services Produced by Country Residents
Hence, It includes factor income earned by Citizens from outside the country.
Also it reduces factor income earned by foreign citizens in India
Formula for GNP
GNP = GDP + Factor Income of Citizens working Outside Country - Factor Income of Foreign Citizens working in country
GNP = GDP + Net Factor Income from Abroad
GDP
Gross Domestic Product
It is
Total value of Goods and Services Produced
in Domestic Territory
It includes
Income earned by Indian Citizen in India
Income earned by Foreign nationals in India
It does not include
Income earned by Indian Nationals Outside India
GNP
Gross National Product
It is
Total value of Goods ansd Services Produced
by Normal Residents
It includes
Income earned by Indian Citizen in India
Income earned by Indian Nationals Outside India
It does not include
Income earned by Foreign Nationals in India
Example
Income earned by Indian Citizen in India
Income earned by Foreign nationals in India
Income earned by Indian Nationals Outside India
1000
600
200
What Is GDP And GNP?
GDP
Total value of Goods ansd Services
Produced in Domestic Territory
= 1000 + 600
= 1600
GNP
Total value of Goods and Services Produced
by Normal Residents
= 1000 + 200
= 1200
Second Method
NFIA
= 200 - 600
= -400
GNP
= GDP + NFIA
= 1600 + (-400)
= 1600 - 400
= 1200
GROSS NATIONAL PRODUCT
Total Value
Income of all Normal residents
Production of Final Goods and Services only
(Without Any deduction of Depreciation)
(Whether in India or Outside India)
(Doesn’t have Income of Foreign Citizens working in India)
(Not Intermediate Goods)
Suppose in a country ,there are only 3 persons A,B and C
A and B are working in the country while C is Outside Country
Also D is a foreign Citizen working in the country
Aggregate Value of Final Goods Produced of A,B, C and D is 1000, 2000, 2500, 4000 respectively
What is GDP and GNP of Country?
GDP
Total value of Goods and Services Produced
in Domestic Territory
=A +B +D
=1000+2000+4000
=7000
GNP
Total value of Goods ansd Services Produced
by Normal Residents
=A +B +C
=1000+2000+2500
=5500
Second Method
NFIA
= Income of C - Income of D
= 2500-4000
= -1500
GNP
GDP + NFIA
= 7000 - 1500
= 5500
Made by
Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 12 years. He provides courses for Maths and Science at Teachoo.