What Is Real GNP?

GNP is the final result of the initial distribution of income of all resident units in a country (or region) within a certain period (usually one year). It is the total value of the final products and services possessed by the owner of the production factors of the country in a certain period. Equal to GDP plus net factor income from home and abroad. The formula is: GNP = GDP + net factor income from abroad = GDP + production tax and import tax minus production and import subsidies (net from abroad) + employee compensation (from abroad Net) + property income (net from abroad). ^[1]

Gross national product

The main advantages of using GNP as a comprehensive economic indicator are: first, it only calculates the value of the final product, not the value of the intermediate product, so it does not include the repeated calculation. Second, it not only counts

The shortcomings of the GNP indicators are:

First, it cannot reflect

Potential GDP means that the economic resources available to a country in a certain period

The gross national product reflects the economic level of a country. press

GNP is more representative of the real economic situation of a country than GDP, because GDP is the principle of territories. GDP contains the income generated by foreign companies in their own countries, and these incomes will eventually flow into foreign countries. ^[3]

GNP is different from social output and national income. The first is that the accounting scope is different. Both social output and national income only calculate the labor results of the material production sector, while GNP is a measure of the material production sector and non-material production. The department's labor results are calculated. The second is the difference in value composition. The total social output value calculates the total value of social products; the gross national product calculates the value added in the process of producing products and providing labor services, that is, value added, without calculating the value of intermediate products and intermediate labor services inputs, and national income. It does not calculate the value of intermediate products, nor does it include the depreciation value of fixed assets, that is, only the net output value is calculated. The similarities and differences between the two are explained in detail:

GDPGNP Similarities and differences between GDP and GNP

(I) The similarities between GDP and GNP

1. GDP and GNP have the same effect. Both are used to reflect the total value of national wealth created by a country or region in the current period, and are the most important total indicators to measure the economic scale of a country or region. By calculating GDP growth rate or GNP growth rate, you can measure the speed of economic growth of a country or region; by calculating GDP per capita or GNP per capita, you can measure the degree of economic development of a country or region, or reflect the level of national income and living standards .

2. The composition of GDP and GNP is the same. Both are represented as "added value" in terms of value composition.

(II) Differences between GDP and GNP

1. The caliber of GDP and GNP is different. The GDP calculation uses the "territory principle", that is, as long as the value is produced or created in the country or the region, whether it is the value created by a foreigner or a national, it is included in the GDP of the country or the region. The GNP calculation uses the "national principle", that is, as long as you are a resident of the country or the region, the value produced or created by you in the country or the region, or in a foreign or foreign region, is counted in the country or the region GNP.

2. The focus of GDP and GNP is different. GDP emphasizes the added value created and is the concept of "production". GNP emphasizes the original income earned.

Relatively speaking, under the conditions of an open economy, the GDP of a country's total wealth is getting better and better than GNP. Therefore, before the 1990s, countries in the capitalist world mainly focused on the use of GNP and GNP per capita. However, since the 1990s, 96% of countries have abandoned GNP and GNP per capita, and have begun to focus on using GDP and GDP per capita to measure the speed of economic growth and the strength of economic strength. Generally, the gross national income GNI (GrossNationalIncome, refers to a country or region) The final result of the initial distribution of income of all resident units within a certain period of time is regarded as GNP. Countries (including China) also only publish GDP and GNI data. GNP data is no longer statistically released and released.

From the perspective of international organizations, due to different functions, the IMF only focuses on GDP to analyze the economic growth of countries around the world; while the World Bank focuses on both GDP and GNI (GNP), and to a certain extent, GNI (GNP). Analyze the differences between rich and poor countries around the world.

GDPGNP(GNI Differences in Economic Growth Modes Caused by GDP and GNP (GNI)

American economist Samuelson believes that GDP is one of the greatest inventions of the 20th century. He compared GDP to a satellite cloud picture describing the weather, which can provide a complete picture of the economic situation, and can help leaders determine whether the economy is shrinking or expanding, whether it needs stimulation or control, whether it is in a severe recession or under threat of inflation. Without aggregate indicators like GDP, policy makers would be trapped in a chaotic ocean of numbers.

However, the call to change the mode of extensive economic growth and the expansion of domestic demand has also led to a debate over whether economic policy is to pursue GDP or GNP. The mainstream view is that pursuing GDP or GNP in economic policies will lead to different economic growth models, that is, endogenous economic growth models or imported economic growth models.

(1) If a country or region pays more attention to GDP in terms of economic policy, it will pay more attention to the maturity and development of its own industry, rather than whether it is domestic or foreign enterprises that support the development of these industries. Of course, as GDP grows, the government will also have corresponding taxes. If we pay more attention to GNP in economic policy, not only the domestic industry should be developed, but also the domestic enterprises should support the development of the domestic industry, not only to increase taxes, but also to have real profits. As a result, the former will be more interested in attracting investment, and will take investment as the top priority of economic work, while the latter will attach importance to the development of domestic enterprises, including state-owned enterprises and private enterprises.

(2) Taking GDP or GNP as the main pursuit of economic policy, at a certain level of GDP, it will lead to different levels of wealth for the people in the country. A typical case in this regard is the comparison between the new South Jiangsu model and the Wenzhou model. In 2004, as Suzhou's economy continued to sing along, the total GDP surpassed Shenzhen's, and the new South Jiangsu model reached the commanding heights of China's economic development model. But these cannot cover up the shortcomings of the new Sunan model. They are described as "only bones but not meat." GDP has gone up, government revenue has gone up, the pockets of ordinary people are still unable to bulge, and large profits have been taken away by foreign companies The locals only get a little part-time wages. In 2004, Suzhou s GDP was twice that of Wenzhou, but Suzhou s per capita income was half that of Wenzhou.

(3) The respect for GNP implies an endogenous growth model. The driving force for the endogenous growth model (4.58, -0.02, -0.43%) comes from the impulse of the people to develop the economy. The respect for GDP is actually an input growth model. The source of its power comes from the government. It is driven by local governments to develop local economies, including performance appraisals, and to attract investment on favorable terms. The endogenous economic growth model is relatively solid. Due to the optimizing nature of capital, if there is a better investment area, capital will flow away.