Distinguish between GDP and GNP.

Subject Economics
NU Year Set: 3.(d) Marks: 4 Year: 2012

Gross Domestic Product (GDP) and Gross National Product (GNP) both try to measure the market value of all goods and services produced for final sale in an economy. The difference is how each term interprets what constitutes the economy.

Key Differences Between GDP and GNP

The major differences between GDP and GNP are explained in the given below points:

  1. The monetary value of all the goods and services produced within the geographical limits of the country is known as GDP. GNP is the money value of all the goods and services made by the citizens of the country, no matter where they dwell.
  2. GDP gauges production of products within the country’s boundary. Conversely, GNP measures the production of products by the companies and industries owned by the residents of the country.
  3. The basis for calculating the GDP is the location, whereas GNP is based on citizenship.
  4. In the case of GDP, the measurement of productivity is done on a local scale while if we talk about GNP, it measures the productivity on an international level.
  5. GDP focuses on measuring domestic production, but GNP focuses on production by the nationals, i.e., individuals or corporations, of the country.
  6. GDP outlines the strength of the domestic economy of a country. On the other hand, GNP outlines how the residents are contributing towards the economy of the country.
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