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A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11Gross national product (GNP) measures income earned by a country’s residents, including net primary income from abroad. In current international statistics, the World Bank uses the term gross national income (GNI) for the measure formerly called GNP. The formula is GNP/GNI = GDP + primary income receivable from abroad − primary income payable abroad.
What is gross national product?
GNP is a national-accounting measure of the income attributable to a country’s residents. It starts with gross domestic product (GDP), which measures production within the country’s territory, then adjusts for primary income flowing between residents and the rest of the world.
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The World Bank DataBank glossary defines GNI (formerly GNP) as “the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad.” World Bank DataBank glossary
Here, primary income includes items such as compensation of employees and property income. GNP is not simply a tally of everything earned by citizens, nor does this formula mean that every household transfer or personal receipt is included; it is an accounting measure built from national-accounting categories.
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What is the GNP formula?
GNP = GDP + primary income received by residents from abroad − primary income paid by residents to nonresidents.
In current World Bank terminology, write the same relationship as GNI = GDP + net primary income from abroad. “Net” means receipts from abroad minus payments abroad. If residents receive more primary income from the rest of the world than they pay to nonresidents, GNP/GNI is higher than GDP; if they pay more than they receive, it is lower.
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How does GNP differ from GDP?
| Measure | Main question | Cross-border primary income | Depreciation |
|---|---|---|---|
| GDP | What production took place within the economy’s territory? | Does not adjust the measure into resident income by adding net primary income from abroad. | Not deducted in the gross measure. |
| GNP / GNI | What income is earned by residents? | Adds primary income received from abroad and subtracts primary income paid abroad. | Not deducted in the gross measure. |
| Net national measure | What remains after accounting for capital consumption? | Begins with the corresponding gross national measure. | Depreciation is deducted. |
The distinction is about whether the measure follows the location of production or residents’ income—not whether a company is “domestic” in a casual sense. For example, the IMF explains that output from a German-owned factory located in the United States counts in U.S. GDP, while it is included in German GNP. IMF, “Back to Basics: Gross Domestic Product”
Why is GNI used instead of GNP?
GNI is the current term used by the World Bank for the measure formerly called GNP. The World Bank says the terminology changed following the 1993 System of National Accounts. Older textbooks and references may still use GNP, but when reading current international data, look for GNI. World Bank: “What is the difference between GNI and GNP?”
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What does “gross” mean in GNP?
“Gross” means depreciation—also called consumption of fixed capital—has not been subtracted. A net national measure accounts for that capital consumption by deducting it. The gross/net distinction is separate from the GDP/GNI distinction: GDP versus GNI concerns territory versus residents’ income, while gross versus net concerns whether depreciation is deducted. OECD, “Measuring the Stock of Capital for Wealth Accounting”
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