With a national economy, the value of GNP shows whether the economic market of that country is strong, efficient and vibrant. When it comes to GNP, people often think of GDP. So what is the concept of GNP and what is GDP, the following information will answer for you.
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What is GNP? What is Gross National Product?
What is GNP
?GNP stands for Gross National Product, which means Gross National Product. GNP is the market value of all final goods and services produced by factors of domestic production during a given period, usually a year.
Final products and services used to calculate GNP are products that are directly consumed, not intermediate products for the production of other products.
GNP is Gross National Product.
For example: If a motorbike is sold to consumers, that motorbike is the final product. Parts of motorcycles such as saddles, wheels, frames, rims, etc. are called intermediate parts.
If those wheels and rims are sold directly to consumers for use, then it is also considered the final product. Therefore, the market value to calculate GNP is only for the final product.
GNP Classification
The Gross National Product (GNP) is divided into different categories such as:
Nominal GNP (GNPn). GNP values are calculated based on current market prices relevant only, no adjustments for inflation are taken into account.
Real GNP (GNPr). The calculated GNP value is made taking into account the volatility of prices and inflation. That is, calculated at the fixed price at the base period.
The bridge between GNPn and GNPr is the price index, also known as the inflation index (D) in terms of GNP. GNPn and GNPr are often used for different analytical purposes.
When we want to study the relationship between finance and banking, we often use GNPn. When we need to analyze economic growth, we use GNPr.
GDP per capita. This GNP value more accurately reflects the state of the economy. Because it represents the number of national products connected to each citizen of that country.
How to determine GNP
Cam must determine exactly what products and services are included in GNP. GNP
does not include domestic products produced by foreign-owned factors of production in the domestic economy. But GNP also includes products produced by factors of production owned by domestic residents abroad.
This means that GNP is all final products and services produced by a citizen of that country, whether that citizen is abroad or at home. GNP is not a product of foreign nationals produced in the country.
GNP calculation
The Gross National Product Index (GNP) of a country for 1 year is calculated as follows:
Formula 1:
GNP = (X – M) + NR + C + I + G
In there:
X = Net exports of goods and services. M = Net imports of goods and services. NR = Net income from overseas assets (net income). C = Personal consumption expenditure.I = Gross domestic private investment.G = State consumption expenditure.
Formula 2:
GNP = GDP + PI(R) – PI(P)
Or
GNP = GDP + NPI
In there:
GDP is income per capita. PI (R) is Income from assets created by domestic factors abroad. PI (P) is Income from assets created by foreign factors abroad. domestic.NPI = PI(R) – PI(P). Is net income from assets abroad.
Importance and limitations of GNP
The GNP value tells us the size of the income and standard of living of a country’s residents. When we study the time series of GNP at constant prices, we get to know the situation of income growth and improvement of living standards of a country’s residents.
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However, if the actual growth rate of GNP is lower than the population growth rate, the level of income per capita will decrease. Therefore, when analyzing and comparing international standards of living, people often use the indicator of national income per capita (GDP). This is a metric that is calculated by subtracting the amortization (D) GNP from the factor cost and then dividing it by the population.
What is gdp?
GDP is an acronym for the phrase Gross Domestic Product, which is understood as gross domestic product (gross domestic product). Gross domestic product is the total monetary value or market value of all goods and services produced within a country’s borders during a particular time period.
GDP is Gross Domestic Product.
GDP is an overall measure of domestic production. It is a comprehensive reflection of the economic health of a given country.
What is GDP per capita
?GDP per capita is an economic statistical indicator showing the average production and business results per capita of a land. water for a year.
To calculate the GDP per capita of a country at a particular time, we divides the country’s GDP at that time by the country’s total population at that time. (GDP/person).
It is necessary to clearly define GDP and GDP per capita to avoid confusion when using economic terminology and reading documents.
Differentiate between GNP and GDP
What is the difference between GNP and GDP?
Difference in nature
GNP Gross National Product Revenues from products produced outside the territory. Nationals of that country only GDP Gross Domestic Product Revenues from domestically produced (domestic) products. Including foreign nationals, as long as the product is locally produced.
To put it simply, GNP is gross national product (products made by citizens of that country, whether at home or abroad) and GDP is gross domestic product (products made within the country). territory of that State, whether made by nationals of that State or of another State).
For example: If a food factory in Vietnam is invested by a foreigner (American), the revenue is included in GDP.
If a food factory in a foreign country (the United States) is invested by Vietnamese people, the income is included in GNP.
Difference in calculation formula
The formula for calculating GDP is gross domestic product: GDP = C + I + G + NX
The formula for calculating GNP is gross national product: GNP = C + I + G + (X – M) + NR
In there:
C = Cost of personal consumption I = Total personal investment G = Cost of the state NX = “net exports” of the economy X = Exports of goods and services M = Imports of goods and servicesNR = Net income from goods and services invested abroad (net income)
Relation between GNP and GDP
GNP, the international economic role is not as high as the domestic one.” width=”600″ height=”347″ srcset=”https://riclix.com/gnp-la-gi/imager_6_2424_700.jpg 600w, https://riclix.com/wp-content/uploads/2020/11/ gnp_la_gi_5-300×174.jpg 300w” sizes=”(max-width: 600px) 100vw, 600px” title=”What is GNP? The concept, classification, calculation formula, distinguishing GNP from GDP, GNI 14″>GDP > GNP, the international economic role is not as high as the domestic one.
Talking about the relationship between GDP and GNP we see, GDP tells the economic reality in the territory of a country, not to mention the subject of that reality; and GNP shows the true economic of a country, the true economic capacity of its citizens. Therefore, to assess the strength of a country’s economy, people often rely on the GDP index.
If GDP > GNP, it means that the international economic role of the home country is not high compared to the international economic role in the home country, simply understood that the economic strength of the country is still weak. If GDP
Gross National Product (GNP) is defined as gross domestic product (GDP) plus the income generated by the domestic population abroad and minus the income generated by foreigners in the country.
The difference between the income remitted abroad and remitted in the country is called net asset income from abroad, in English it is called Net Foreign Factor Income (NFFI) or Net Factor Income from Abroad (NFIA/NIA). ).
Can GNP be calculated from GDP data
Distinguish between GNI and GNP
GNI is an acronym for Gross National Income, ie Gross National Income or Gross National Income. The GNI value is equivalent to the value of GNP. However, because the approach to the problem is based on different bases, it needs to be determined separately. GNP is based on the production of new products, while GNI is based on the income of citizens.
This is important to approach the concepts of NNP and NNI. Amortization and indirect taxes must then be taken into account, and the NNI will always be less than the NNP by an amount equal to the value of the indirect taxes.
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Thus, GNP is the gross national product, which has income from its citizens regardless of domestic or foreign production. GDP is the gross domestic product, with income from domestic production… With the above content, you will have more understanding of what GNP is and distinguishing GNP from GDP. Stay tuned for new content from La Factoria Web.
