What is the difference between gross domestic product and gross national product?

Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country's borders in a specific time period, usually a year. It includes the output of foreign-owned firms operating within the country, but excludes the output of domestic firms operating abroad.

Gross National Product (GNP) measures the total value of all goods and services produced by a country's residents, regardless of where they are located. It includes the output of domestic firms operating abroad, but excludes the output of foreign-owned firms operating within the country.

In summary, GDP measures the total economic output within a country's borders, while GNP measures the total economic output by a country's residents, regardless of location.

Gross Domestic Product (GDP)

- Measures the total value of goods and services produced within a country, regardless of the nationality of the producers.
- Includes output from foreign-owned companies operating within the country.

Gross National Product (GNP)

- Measures the total income earned by citizens of a country, regardless of where the income is generated.
- Includes income earned by citizens working abroad.
- Excludes income earned by foreign nationals working within the country.

Key Differences:

- Scope: GDP measures production within a country, while GNP measures income earned by its citizens.
- Income Inclusion: GDP includes income from foreign-owned companies, while GNP includes income earned by citizens.
- Ownership: GDP focuses on the location of production, while GNP focuses on the nationality of the producers.

Formula:

GDP = Consumption + Investment + Government Spending + (Exports - Imports)

GNP = GDP + (Income earned abroad by citizens - Income earned by foreign nationals in the country)