Definition of Gross National Product (GNP)

Gross national product (GNP) is a reckoned figure of total value of all the final products and services transpired over a given period, by the means of production owned by a country's residents and businesses, notwithstanding location of production.

GNP generally is calculated to measure the total value of the output produced by a country’s resident in monetary terms.

GNP is commonly calculated by taking the sum of personal 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.

Points to remember:

• Though GDP is popularly followed to measure a country’s economic activity, GNP is also used because; the difference between the GDP and GNP will show the extent of a country’s participation in international trade.
• The real GNP takes nominal GNP measured in current year prices and sets off for any changes in price level for goods and services included in the calculation of GNP.
• Calculating both GNP and GDP can show varying in terms of total output.