There is a click all the time whenever we discuss GDP, GNP and GNI. They are actually the indicators that assist to find out the economic condition of the nation. GDP is a short name for Gross Domestic Product while GNP is a contraction for Gross National Product. GNI is an abbreviation for Gross National Income. These terms are identical for a common man and that is the reason they are very often possibly compared. However, you look somewhat more profound, you will come to know that both the terms hold distinctive implications. There is likewise a question with regards to which one is a better indicator to show the economic condition of a country. The main contrasts in GNP, GDP and GNI are discussed in this article.

GDP

GDP (Gross Domestic Product) implies the market value of all items, services and products produced in a country during a particular period. Gross domestic product is the total demand in the economy of a country. To put it plainly, GDP is the aggregate of output of all areas of the economy that includes primary sector, secondary sector and tertiary sector. In Gross Domestic Product, GDP per capita is frequently viewed as indicator of standard of living in country; however it is not a measure of income of any individual. On the other hand, GDP does not include products and services that are produces by the country in different nations. This leads to, GDP measures items just produced locally.

GNP

GNP (Gross National Product) refers to the GDP in addition to any earned income of resident of a nation from abroad venture, minus earned income of abroad residents with the local economy. So, we can say that GNP is the production of the natives of a nation just, wherever they are living. GNP is utilized to gauge how the nationals of a nation are contributing economically. So if an American States resident is living overseas and has earned some wage there then this wage will be included in America’s GNP rather than its GDP.

GNI

Gross National Income is similar to GNP. It includes the value of all goods and services produced by nationals; whether they reside in the country or not. It includes the sum of value added by all resident producers plus all product taxes that are not included in the valuation of output plus net receipts of primary income. It is used instead of GNP by the World Bank.

GDP vs. GNP vs. GNI

There are some main contrasts among these terms which are discussed below:

Stands for

GDP stands for Gross Domestic Product.

GNP stands for Gross National Product.

GNI stands for Gross National Income.

Meaning

The value of goods and services produced inside of the geological restrictions of the nation is known as Gross Domestic Product (GDP).

The worth of products and services produced by the nation’s citizens regardless of the geographical restrictions is known as Gross National Product (GNP).

The total sum of value added by all resident producers of a country is called as the Gross National Income (GNI). It is GDP plus factor incomes earned by foreign residents minus income earned in the domestic economy by non-residents.

Based on

Gross domestic product discusses the production with respect to location.

Gross national product discusses the production with respect to citizenship.

Gross national income discusses the total value added by all resident producers of a country.

Measures

Gross domestic product actually measures the strength of local economy of the country.

Gross national product measures that how citizens are contributing in nation’s economy.

Gross national income shows the degree to which a nation’s GDP represents domestic or international activity. It has actually replaced GNP in international statistics.

Calculated

To calculate the GDP following formula is used.

GDP = consumption+ Investment+ government spending + (exports – imports)

To calculate the GNP following formula is used

GNP = GDP + NR (Net Income Receipts) – NP (Net payments)

To calculate GNI, following formula is used:

GNI=C+I+G+X+NFFI

Where C=consumption, I= investment, G= government spending, X= net exports, NFFI= net foreign factor income.

Methods

Gross domestic product is figured by means of three methods which include Income Method, Output Method, and Expenditure Method.

GNP is figured by means of GDP in addition to net income from abroad.

GNI Provides reliable information about a country’s income in two ways. Firstly, it tells about country’s entire income all at once. Secondly, it tells about country’s income from year to year.

Uses

GDP helps to track the health of a country’s economy. It gives an insight into whether an economy is growing or experiencing a recession.

GNP measures production and welfare of a country in a fiscal year. Real growth in GNP indicates an improvement in living standards.

GNI gives an insight into the growth or decline of an economy over a range of years. It measures economy’s ability to continue minimum production standards i.e. an economy’s ability to give consistent national output of goods and services.

Conclusion

From the above article we come to know about the differences between GDP, GNP and GNI. GDP stands for Gross Domestic Product and it is the value of products that are produced with in a nation while GNP stands for Gross National Product and it is the value of products produced by the citizens of nation. GDP measures the strength of economy while GNP shows the contribution of citizens in economy. Finally there are three techniques used to find out GDP while GNP is calculated with help of GDP. GNI is different from other income calculations because it adds in net income from abroad. Thus, it counts a large part of country’s total income which was otherwise ignored. It give a more accurate picture of a country’s income.