Gross Domestic Product (GDP)

Gross domestic product or GDP is the sum of market values of all the goods and services produced in a specific time period. This aggregate measure of production is usually defined for a state or country in a given quarter or year. It is used by experts to compare economic progress of different states and countries as applicable.

Gross National Product (GNP)

Gross national product or GNP is the sum of market values of all the goods and services produced in a specific time period by means of production owned by the residents of the country. Investments by the residents of a country in other countries are taken into account while calculating GNP and the investments done in the country by entities owned by foreign nationals or organizations are excluded while calculating GNP.

Difference Between GDP and GNP

Both GDP and GNP are most commonly used measures of state’s or country’s economy reflecting total market value of all the goods and services produced over the specified period. However there are key differences between the two measures which can be cited as follows:

  1. GDP limits the assessment to the defined geography of the country where as GNP takes into account the production made in other countries as well.
  2. GNP limits the assessment to residents or citizens of the particular country where as GDP considers nationals and foreigners alike.

If all the companies producing within the country are owned by the citizens of the country and none of them on any interests outside the country, in theory, GDP and GNP will be in equilibrium.

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