• Skip to primary navigation
  • Skip to main content
  • Skip to footer
WallStreetMojo

Wallstreet Mojo

Wallstreet Mojo

MENUMENU
  • Resources
        • Investment Banking Guides

          • Investment Banking
          • What is LBO?
          • What is Pitch Book?
        • Investment-Banking-Guides
        • Investment Banking Careers

          • IB Interview Q&A
          • Get into Investment Banking
          • IB Job Description
        • Investment-Banking-Careers
        • Mergers and Acquisitions

          • What is M&A?
          • Hostile Takeover
          • Golden Parachute
        • Mergers-and-Acquisitions
        • Financial Modeling

          • What is Financial Modeling
          • Financial Modeling Excel
          • Financial Model Types
        • Financial-Modeling
        • Valuation

          • Discounted Cash Flow
          • Dividend Discount Model
          • Terminal Value
        • Valuation
        • Others

          • Resources (A to Z)
          • Accounting
          • Financial Statement Analysis
          • Equity Research
          • Private Equity
          • Excel
  • Free Courses
  • All Courses
        • Certification Courses

          Certificate
        • All in One Financial Analyst Bundle

          Financial-Analyst-Bundle
        • Investment Banking Course

          Investment-Banking-Training
        • Financial Modeling Course

          Financial-Modeling-Course
        • Others

          • Equity Research Course
          • M&A Course
          • Valuation Course


          • Private Equity Course
          • Venture Capital Course
          • View All
  • 250+ Courses All in One Bundle
  • Login

GDP vs GNP

Home » Learn Economics » Macroeconomics Basics » GDP vs GNP

By Tejswini Bhosale Leave a Comment

GDP VS GNP

To measure country’s annual output, both Gross domestic product (GDP) and Gross national product (GNP) are considered where gross domestic product (GDP) is a measure of national production during the whole year whereas gross national product (GNP) is the measure of annual output or production by country’s citizen whether in home country or abroad and hence country’s border is not considered in GNP calculation.

Differences Between GDP and GNP

Gross domestic product considers the market value of all final goods and services produced by factors of production such as capital and labor located within a country or economy during the given period of time, generally a yearly or a quarterly. However, 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.

In this article, we look at the differences between GDP and GNP in detail.

What is GDP?

The total market value of the goods and services produced in a country within a certain time period is known as a Gross domestic product (GDP). it is the most widely used measure of the size of a nation’s economy. It includes only purchases of newly-produced goods and services and does not include sale or resale of goods produced in previous periods. 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.

Popular Course in this category
Cyber Monday Sale
All in One Financial Analyst Bundle (250+ Courses, 40+ Projects) 250+ Courses | 40+ Projects | 1000+ Hours | Full Lifetime Access | Certificate of Completion
4.9 (1,067 ratings)
Course Price

View Course

Related Courses
Financial Modeling CourseM&A CourseLBO Modeling Course
  • 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. Similarly, the value of a Rembrandt painting that sells for 15 million euros is not included in the computation of GDP, as it was not produced during the period.
  • The goods and services provided by the government are covered in GDP even though they are not explicitly priced in markets. For instance, the services provided by police or the judiciary, and goods such as highways, dams and infrastructure improvements, are included Because these goods and services are not sold at market prices, GNP vs GDP is valued at their cost to the government.
  • The gross domestic product stands for the monetary measure of all the finished goods and services produced within a country’s borders in a specific time period. Though GDP is usually calculated on an annual basis, or it can be calculated on a quarterly basis as well.

GDP can be calculated by the following formula:

GDP = C + I + G + (X – M)

Where,

  • C= Total Private Consumption
  • I= Total Investment Amount
  • G= Government Spending
  • And, X – M= Difference between the export and import of a country. 

What is GNP?

Gross national product (GNP) stands for an estimate of total measure of all the final products and services produced out in a given period by the means of production owned by the country’s residents. GNP is usually calculated by taking the sum of individual consumption expenditures, private domestic investment, government expenditure, net exports and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents. Net exports represent the difference between what a country exports minus any imports of goods and services.

GNP= GDP + NR – NP

Where,

  • NR= Net Income Receipts
  • NP= Net outflow to foreign assets

GDP vs GNP Infographics

GDP-vs-GNP

Examples

Depending on certainty, the GDP of a country can be either higher or lower than its GNP. It depends on the ratio of domestic to foreign producing in a given 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.

Key Differences Between GDP and GNP

  • The aggregate of all the goods and the services generated within the the country’s geographical limits is known as GDP and the aggregate of all the goods and services generated by the citizens of the country is known as GNP.
  • GDP considers the production of products within the boundaries of the country. and on the other hand, Gross national product measures the production of products by the companies, industries and all other firms owned by the country’s residents.
  • The fundamentals for calculating the gross domestic product is the location, while GNP is based on citizenship.
  • With the case GDP, the calculation of productivity is done on a country’s scale while we talk about a gross national product, its calculation is the productivity on an international level.
  • 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 strength of a country’s domestic economy. On the other hand, the gross national product measured how the residents are contributing towards the country’s economy.

Comparative Table

Basis for Comparison GDP GNP
Definition Gross domestic product considers the market value of all final goods and services produced by factors of production such as capital and labor located within a country or economy during the given period of time, generally a yearly or quarterly.  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.
Measurement Measures only domestic production. Measures production by the nationals.
Includes The production of goods and services by foreigners within that country. The production of goods and services by its citizens outside of the country.
Excludes The production of goods and services by its citizens outside of the country. The production of goods and services by foreigners within that country.
Widely used To study the outlines of the domestic economy. To study how the residents are contributing to the economy.

Conclusion

The key to the distinguishing point between these two is that while calculating GDP, we have to take into consideration all the things which are produced within the borders of the country and that it includes the goods and services which are produced by the foreign nationals also. While we talk about the GNP, we only consider the production done by the country’s resident, whether they are within or outside the country and the production of foreign citizens are not included.

Recommended Articles

This has been a guide to GDP vs GNP. Here we discuss key differences between GDP and GNP along with infographics and comparison table. You may also have a look at the following articles –

  • Top Best Differences Between Assessed Value vs Market Value
  • Top Best Differences Between Corporation vs LLC
  • Top Differences Between Expense vs Expenditure
  • Deficit vs Debt Differences
  • CPI vs RPI (Top Differences)
  • Budget Deficit
  • Recessionary Gap
  • Elastic vs Inelastic Demand
3 Shares
Share
Tweet
Share

Filed Under: Learn Economics, Macroeconomics Basics

Reader Interactions
Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Footer
COMPANY
About
Reviews
Blog
Contact
Privacy
Terms of Service
FREE COURSES
Free Finance Online Course
Free Accounting Online Course
Free Online Excel Course
Free VBA Course
Free Investment Banking Course
Free Financial Modeling Course
Free Ratio Analysis Course

CERTIFICATION COURSES
All Courses
Financial Analyst All in One Course
Investment Banking Course
Financial Modeling Course
Private Equity Course
Business Valuation Course
Equity Research Course
CFA Level 1 Course
CFA Level 2 Course
Venture Capital Course
Microsoft Excel Course
VBA Macros Course
Accounting Course
Advanced Excel Course
Fixed Income Course
RESOURCES
Investment Banking
Financial Modeling
Equity Research
Private Equity
Excel
Books
Certifications
Accounting
Asset Management
Risk Management

Copyright © 2019. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. CFA® And Chartered Financial Analyst® Are Registered Trademarks Owned By CFA Institute.
Return to top

Free Investment Banking Course

IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials

By continuing above step, you agree to our Terms of Use and Privacy Policy.

Free Investment Banking Course

IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials

By continuing above step, you agree to our Terms of Use and Privacy Policy.
WallStreetMojo

Free Investment Banking Course

IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials

By continuing above step, you agree to our Terms of Use and Privacy Policy.

* Please provide your correct email id. Login details for this Free course will be emailed to you

WallStreetMojo

Free Investment Banking Course

IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials

By continuing above step, you agree to our Terms of Use and Privacy Policy.

* Please provide your correct email id. Login details for this Free course will be emailed to you

WallStreetMojo

Free Investment Banking Course

IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials

By continuing above step, you agree to our Terms of Use and Privacy Policy.

* Please provide your correct email id. Login details for this Free course will be emailed to you

Limited Period Offer - All in One Financial Analyst Bundle (250+ Courses, 40+ Projects) View More