Question

Distinguish between Gross National Product and Net National Product

Answer 1

GNP (Gross National Product)

It is the GDP of a country added with its income from abroad.

GNP= GDP + Income from Abroad
Or,
GNP = GDP – Income from abroad

Income from abroad= trade balance + interest on External Loans+ Private Remittance

Private remittance= inflows and outflows on account of private transfer e.g. NRI

Trade balance = net outcome at the year end of the total import and export.

Interest on external loans= balance of the inflow of interest payment (on money lend out of economy) – outflow of interest payment (on the money borrowed by the economy)

In case of India, GNP is negative. This is because of heavy outflows on account of Trade Deficit and interest payment on foreign loans.

NNP or Net National Product

NNP= GNP – Depreciation
Or,
NNP= GDP+ income from abroad- depreciation

NNP or Net National Product is the purest form of Income. It is the National Income or NI.

We can find the per capita income of a country if we know the NNP and total population.

e.g. (NNP/ total Population) = per capita income

Answer 2

Gross National Product (GNP):

1. In case of GDP, we calculate the market value of all the final goods and services produced within the country.
2. This is measured by the Gross National product.
3. It is measured as the GDP plus the Net Factor income from Abroad.
4. GNP = GDP + ‘Net’ factor income from abroad.

Net Factor income from abroad = income earned by the domestic factors of production employed in the rest of the world – Factor income earned by the factors of production of the rest of the world employed in the domestic economy.

Net National Product (NNP) :

1. The net values of all goods and services produced in a country in a year is called as NNP.
2. NNP can be obtained by deducting depreciation on capital goods.
3. NNP = GNP – Depreciation charges.