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International Marketing: GDP - GNP - Gni

GDP, GNP, and GNI are measures of economic output that differ in their treatment of international income. GDP measures output within a country's borders, while GNP and GNI also include income from national ownership of assets abroad, with GNP accounting for income sent overseas and GNI being similar to GNP. GNP can be lower than GDP if multinationals repatriate significant profits from local production. GNI, as defined by the World Bank, is the sum of domestic output plus net primary income from foreign sources.

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86 views6 pages

International Marketing: GDP - GNP - Gni

GDP, GNP, and GNI are measures of economic output that differ in their treatment of international income. GDP measures output within a country's borders, while GNP and GNI also include income from national ownership of assets abroad, with GNP accounting for income sent overseas and GNI being similar to GNP. GNP can be lower than GDP if multinationals repatriate significant profits from local production. GNI, as defined by the World Bank, is the sum of domestic output plus net primary income from foreign sources.

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vimal
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International Marketing

GDP | GNP | GNI

Prepared by : Vimal Luhana


GNP and GDP both reflect the national output and income of an economy.
The main difference is that GNP (Gross National Product) takes into account net
income receipts from abroad.

•GDP (Gross Domestic Product) is a measure of (national income = national output = national
expenditure) produced in a particular country.
•GNP (Gross National Product) = GDP + net property income from abroad. This net income
from abroad includes dividends, interest and profit.
•GNI (Gross National Income) = (similar to GNP) includes the value of all goods and services
produced by nationals – whether in the country or not.
Example of how GNP is different to GDP
• If a Japanese multinational produces cars in the UK, this production will be counted towards
UK GDP. However, if the Japanese firm sends £50m in profits back to shareholders in Japan,
then this outflow of profit is subtracted from GNP.UK nationals don’t benefit from this profit
which is sent back to Japan.
• If a UK firm makes a profit from insurance companies located abroad, then if this profit is
returned to UK nationals, then this net income from overseas assets will be added to UK GNP.
• Note, if a Japanese firm invests in the UK, it will still lead to higher GNP, as some national
workers will see higher wages. However, the increase in GNP will not be as high as GDP.
• If a county has similar inflows and outflows of income from assets, then GNP and GDP will be
very similar.
• However, if a country has many multinationals who repatriate income from local production,
then GNP will be lower than GDP.
GNI
GNI (Gross National Income) is based on a similar principle to GNP. The World Bank defines GNI as
“GNI is the sum of value added by all resident producers plus any product taxes (minus subsidies)
not included in the valuation of output plus net receipts of primary income (compensation of
employees and property income) from abroad.” (World Bank)
Thank you

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