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Gross National Product

Gross National Product (GNP) measures the aggregate final output of businesses and citizens over a one-year period much like GDP. This means that the economic activity of a United States citizen who is working abroad is counted  in the United State's GNP and not in GDP. But when a Japanese worker is working within the geographical boundary of the United States, he or she will be counted in Japan's GNP and the United State's GDP not GNP.

The difference between GDP and GNP is called the net foreign factor income. This is the foreign income that is earned domestically subtracted from income received from foreign domestic sources. In other words, it is a country's Gross Domestic Product subtracted from its Gross National Product.  In many countries there are significant differences between their GDP and GNP.  This is not as much of an issue for the United States as it is for developing countries because much of their revenue comes from Foreign Direct Investment.  This means that foreign companies are locating within another country's borders and doing business.  The revenue from the foreign company will count in the home country's GDP but not in their GNP.  If a country has a lot of foreign investment then it will have a higher GNP than GDP.

Net National Product (NNP) is the Gross National Product minus capital depreciation

NNP = GNP - Depreciation

Depreciation is usually about ten percent of GNP and subtracting it from GNP displays the net result of all economic activity.

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