Question #747e9
1 Answer
Feb 5, 2015
GDP measures the total value of goods and services produces within the borders of a country.
GNP measures the total value of goods and services produced by citizens of a country.
The difference between GDP and GNP is that GDP is based on physical boundaries while GNP is based on country of citizenship.
GNP can be calculated by taking GDP, and adding the net income from abroad.
GNP = GDP + net income from abroad
Example 1: GNP of Germany = GDP of Germany + (income earned by Germans outside Germany - income earned by non-Germans inside Germany)
Example 2: income earned by an American citizen in India would be included in India's GDP and America's GNP. It would not be included in America's GDP or India's GNP.
