Gross National Product (GNP)
Candlefocus EditorMeasuring GNP is key in understanding the level of global integration of a nation, as a large difference between a nation’s GNP and GDP can signify a great deal of integration into the global economy. When a country’s GNP is higher than its GDP, it means that the nation produced more output and income than what it consumed, and the remaining output was earned by citizens and entities of the nation even if the economic activity took place in another country. On the other hand, when a country’s GDP is higher than GNP, it indicates that the nation consumed more than what it produced and had to plug up this difference with foreign investments.
Total income from overseas investments by a country’s citizens and entities are counted in GNP, and foreign investment within a country’s borders are not taken into account when calculating GNP.
GNP is an important metric in economics, as it tells much more than an isolated GDP measurement. GNP reflects a nation’s broader economy which correlates with the global economy and not just the isolated activities within a country’s borders. By tracking GNP, governments and policy makers can better assess their economic integration into the global economy and develop strategies to ensure sustainability and growth.