Gross National Product- GNP


GNP = GDP + Net factor income from abroad

(Net factor income from abroad = Factor income earned by the domestic factors of production employed in the rest of the world – Factor income earned by the factors of production of the rest of the world employed in the domestic economy).

This is the ‘national income’ according to which the IMF ranks the nations of the world in terms of the volumes – at the Purchasing Power Parity (at PPP).

It indicates about the ‘quantitative’ as well as the ‘qualitative’ aspect of the economy, i.e., the ‘internal’ as well as the ‘external’ strength of the economy.

 

Gross National Product at FC (Factor Cost)—

It is the sum total of factor incomes earned by normal residents of a country along with depreciation, during an accounting year.

GNP FC = NNP FC + Depreciation

 

Gross National Product at MP (Market Price)—

It is the sum total of factor incomes earned by normal residents of a country during an accounting year including depreciation and Net Indirect Taxes (NIT).

GNP MP = NNP FC + Depreciation + NIT