Gross National Product
Essay title: Gross National Product
Gross National Product
GNP Top 10 (2004) (currency exchange rate)
Country
GNP ($ mill)
United States
10,945,792
Japan
4,389,791
Germany
2,084,631
United Kingdom
1,680,300
France
1,523,025
China
1,417,301
Italy
1,242,978
Canada
756,770
Spain
698,208
Mexico
637,159
Gross National Product (GNP) is the total value of final goods and services produced in a year by domestically owned factors of production.
Final goods are goods that are ultimately consumed rather than used in the production of another good. For example, a car sold to a consumer is a final good; the components such as tires sold to the car manufacturer are not; they are intermediate goods used to make the final good. The same tires, if sold to a consumer, would be a final good. Only final goods are included when measuring national income. If intermediate goods were included too, this would lead to double counting; for example, the value of the tires would be counted once when they are sold to the car manufacturer, and again when the car is sold to the consumer.
Only newly produced goods are counted. Transactions in existing goods, such as second-hand cars, are not included, as these do not involve the production of new goods.
Income is counted as part of GNP according to who owns the factors of production rather than where the production takes place. For example, in the case of a German-owned car factory operating in the US, the profits from the factory would be counted as part of German GNP rather than US GNP because the capital used in production (the factory, machinery, etc.) is German owned. The wages of the American workers would be part of US GNP, while the wages of any German workers on the site would be part of German GNP.
Gross Domestic Product
GDP Top 10 (2004) (currency exchange rate)
Country
GDP ($ mill)
United States
10,435,284
China
5,409,852
Japan
4,326,444
Germany
2,400,655
United Kingdom
1,794,858
France
1,747,973
Italy
1,465,895
Canada
958,390
Spain
836,100
Mexico
626,888
Gross Domestic Product (GDP) is the total value of final goods and services produced within a countrys borders in a year.
GDP counts income according to where it is earned rather than who owns the factors of production. In the above example, all of the income from the car factory would be counted as US GDP rather than German GDP.
To convert from GNP to GDP you must subtract factor income receipts from foreigners that correspond to goods and services produced abroad using factor inputs supplied by domestic sources. To convert from GDP to GNP you must add factor input payments to foreigners that correspond to goods and services produced in the domestic country using the factor inputs supplied by foreigners.
GDP is a better measure of the state of production in the short term. GNP is better when analysing sources and uses of income.
Exports
In economics, an export is any good or commodity, shipped or otherwise transported out of a country, province, town to another part of the world, typically for use in trade or sale. Export products or services are provided to foreign consumers by domestic producers.
Export is the legitimate transportation of domestic or nationalized goods and services from a country intended for use or consumption rendered abroad. Exports can be any good that is shipped out of a governments border for commercial