Dr. Anamika Shrivastava NCERT Economics · Class 11 & 12

Glossary term

Gross National Product (GNP): Meaning and Definition

Reviewed and approved by Dr. Anamika ShrivastavaPublished Last updated

Gross national product (GNP) is the market value of all final goods and services produced by a country’s normal residents in a year, wherever they produce. It equals gross domestic product plus net factor income from abroad. It measures income earned by a nation’s people rather than output within its borders.

In more detail

Whether GDP or GNP is larger depends on a country’s links with the world. A country whose citizens earn a lot abroad, through remittances or foreign assets, has GNP above GDP. A country that hosts many foreign firms taking profits home has GNP below GDP. For India, net factor income from abroad has usually been negative, so GNP is slightly below GDP.

Example

If GDP is ₹200 lakh crore, factor income earned abroad is ₹6 lakh crore and factor income paid to foreigners is ₹9 lakh crore, GNP is 200 + 6 − 9 = ₹197 lakh crore.

Key points

  • GNP = GDP + net factor income from abroad.
  • Net factor income = income received from abroad minus income paid abroad.
  • Subtract depreciation for net national product.

Common mistake

Mixing up the two. GDP is by location; GNP is by residence of the owners.

Gross domestic productValue added

Where it is explained

This term is explained in Class 12 Macroeconomics Chapter 2: National Income Accounting.