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What is the difference between GDP and GNP?

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Quick Answer

The primary difference between gross domestic product, or GDP, and the gross national product, or GNP, is that the GNP also takes into account income from foreign sources while the GDP does not. Both the GDP and GNP are measurements that are used to determine the economic output of nations during a period of time, and are usually measured on an annual basis.

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Full Answer

The GDP is calculated by measuring all income that is earned within a country, or all the expenditures. The GNP also calculates all the income, but also takes into account income that comes in from foreign sources. Income that is paid to foreign citizens and entities are deducted from the income before it is added to the GDP. Even though the GNP uses the GDP as a starting point, it can actually be lower or higher than the GDP. Whether or not a country has a negative or positive amount of input and output from foreign resources can influence which direction it goes in.

Both the GDP and GNP are used by politicians, large companies and economists to predict and measure economic changes. To calculate the amount of GDP and GNP per capita, the final calculations of each is divided by the population of the country.

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