Gross National Product (GNP)

Updated July 2, 2021

What Is GNP?

Gross national product (GNP) is the sum of all domestic and foreign output generated by citizens of a given country. It can be measured by spending or by income. GNP includes activities by citizens and companies abroad, but it excludes activities by foreigners within the country.

GDP vs. GNP

Gross domestic product (GDP) is another common metric that’s used to measure the economic activity of a country. The main difference is that GDP is limited to activity within a country’s borders. The simplest way to understand the difference between GDP and GNP is with the following breakdown:GNP vs GDP

How to Calculate GNP

Gross national product measures the total value of all goods and services produced by a country's residents, regardless of production location.

GNP Formula

The GNP formula consists of gross domestic product plus income earned by foreign residents living abroad (minus domestic income generated by non-residents).

 

GNP formula

Example of GNP

Assume that Country ABC spends a total of $100 million on consumption, $75 million on investments, and $200 million on government expenditure. Additionally, the country spends $50 million on imports and sells $25 million of exports. 

Country ABC also has multiple citizens and businesses in foreign countries which generate another $150 million in income. The foreign businesses that operate within the country earn $50 million (which is sent back to their home countries). 

What Is Included in GNP? 

Using the full form of GNP (above), we can calculate Country ABC’s GNP as follows:

GNP = C + I + G + X + Z

Where:

Consumption = $100 million

Investments = $75 million

Government expenditure = $200 million

X [Net Exports (Value of exports - value of imports)] = -$25 million

Z [Net Income (Net income inflows from abroad - net income outflows)] = $100 million

GNP = 100m + 75m + 200m + -25m + 100m = $450 million

Therefore, we can conclude that Country ABC’s GNP is $450 million.

What Is GNP Per Capita?

GNP per capita reflects a country’s average productivity per person. It is calculated by dividing a country's GNP by its population. This metric is useful for country-to-country comparisons since it reflects the economic usefulness of a country relative to its population. 

Factors like population size, productivity, and resources can affect overall GNP, so putting it into “per capita” terms allows for a more accurate comparison between countries.

GNP Per Capita Formula

To calculate GNP per capita, the formula is extremely straightforward:

GNP Per Capita = GNP/Population
 

Example of GNP Per Capita 

At the end of 2019, the United States’ GNP was $21.85 trillion and its population was 329.45 million. Using the formula above, we can calculate the GNP per capita for 2019:

GNP Per Capita 2019 Example

Therefore, we can conclude that the 2019 US GNP per capita was $66,322.66.

Why Is the Concept of GNP Important?

Unlike GDP (which focuses on the output created within the borders of a country), GNP measures the output generated by its citizens, regardless of their location. Since residents currently have greater opportunities to earn money from both domestic and foreign sources, GNP is a more accurate indicator of average productivity.

However, the two measures are often used together. A large gap between GDP and GNP indicates significant involvement in international trade and finance – or that a large proportion of citizens live and work abroad. A small gap likely indicates that most output is generated within the country’s borders.
 

Ask an Expert
All of our content is verified for accuracy by Rachel Siegel, CFA and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Gross National Product (GNP).

What's the Difference Between NNP and GNP? 

Net national product (NNP) is is similar to GNP. However, it also considers the loss in value of physical capital. In other words, net national product is gross national product minus depreciation.

What's the Difference Between GNI and GNP? 

Gross national income (GNI) also measures the amount of money earned by a nation's people and businesses, however, GNI measures income rather than output. You can calculate GNI by adding foreign income earned by citizens to GDP, then subtracting domestically generated income sent to foreign citizens.

Rachel Siegel, CFA
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Rachel Siegel, CFA is one of the nation's leading experts at ensuring the accuracy of financial and economic text.  Her prestigious background includes over 10 years of experience in creating professional financial certification exams and another 20 years of college-level teaching.

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