The total value of goods and services produced by the labour and capital of a country’s citizens. It should be noted that goods and services must be produced within the country. For example, China’s GDP is $300 billion greater than its GNP, according to public data available at various platforms, due to the large number of foreign companies Producing in the country, whereas the GNP of the U.S. is $250 billion greater than its GDP, because of the greater amounts of production that take place outside of the country’s borders. By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to our Privacy Policy, Halloween Offer - All in One Financial Analyst Bundle (250+ Courses, 40+ Projects) View More, All in One Financial Analyst Bundle (250+ Courses, 40+ Projects), 250+ Courses | 40+ Projects | 1000+ Hours | Full Lifetime Access | Certificate of Completion. GDP, along with GNP and GNI (Gross National Income) are used to determine the ‘National Income’ of a country.

Gross domestic product focuses on calculating domestic production, but GNP only considers the production by the individuals, firms, and corporations, of the country. GDP measures the overall economic output of a country and also determines the local income of a nation.

The values used in calculating GDP are the market values of final goods and services—that is, the value of the vehicle engine that Toyota makes is not explicitly included in GDP; their value is included in the final prices of Vehicles that use the engines. Gross Domestic Product (GDP) can be defined as the total value of goods and services produced in the country within a certain time period. You may also have a look at the following articles to learn more, All in One Financial Analyst Bundle (250+ Courses, 40+ Projects). GDP considers the production of products within the boundaries of the country. The formula for the expenditure is expressed as follows: GDP = C+ I + G + (X-M), where ’C’ is consumption, ‘I’ is gross investment, ‘G’ is government spending, ‘X’ is exports and ‘M’ is imports. ALL RIGHTS RESERVED. On the other hand, National income is the sum of all the income a country makes including GDP, GNP, GNI and income from abroad.

To study how the residents are contributing to the economy. Below is the top 6 difference between GDP vs GNP.

Difference between GDP vs GNP. Gross national product considers the market value of all final goods and services produced by factors of production such as capital and labor supplied by citizens of a country, regardless of whether this similar production takes place internally within the province or outside of the country. The Net National Income is defined as the net national product (NNP) minus indirect taxes. The transfer of payments made by the government such as unemployment, retirement, and welfare benefits are not economic output and are not included in the calculation of GDP. GDP is calculated on basis of location while GNP is calculated on basis of citizenship, The primary focus of GDP is on domestic production while the primary focus of GNP is on production by labour and capital by country’s nationals i.e. The goods and services provided by the government are covered in GDP even though they are not explicitly priced in markets. I = Business investment (capital equipment, inventories), Under the income approach, GDP is calculated by summing the following three factors –, GDP = National Income + Capital Consumption Allowance + Statistical Discrepancy. GDP is calculated using expenditure and income approaches. GDP measures productivity on a local scale while GNP measures productivity on an international scale. For products produced abroad, Gross National Product (GNP) is used to determine the income. GDP vs National Income “GDP” or Gross Domestic Product and National Income are financial terms that are related to the finance of a country.. National Income is the total value of all services and goods that are produced within a country and the income that comes from abroad for a particular period, normally one year.. GDP measures the strength of a country’s domestic economy.

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