How does gross domestic product differ from gross national income

1 answer:

5 0

GDP (Gross market value) measures the market value of all final goods and services produced within a country in a given period of time.

GNP (Gross National Product) measures the market value of all final goods and services produced by a country's citizens or residents. The difference is subtle but important.

GNP excludes economic activity that occurs for example in the U.S. but is owned by foreigners and includes American economic activity that occurs in other countries.

GDP is place based whereas GNP is ownership based. Thus if a foreigner starts a company in Silicon valley, this will count as GDP, but not GNP. If General Electric opens a new plant in India, this investment will be included in GNP but not GDP.

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