gross national product

gross national product (GNP), in economics, a quantitative measure of a nation's total economic activity, generally assessed yearly or quarterly. The GNP equals the gross domestic product plus income earned by domestic residents through foreign investments minus the income earned by foreign investors in the domestic market. Gross domestic product, often confused with GNP, is calculated from the total value of goods and services produced in an economy over a specified period. Since World War II, GNP has been generally regarded as the most important indicator of the status of an economy. In the United States, the economy is considered to be in recession if there are two consecutive quarters of decrease in GNP. Despite the fact that GNP does not allow for inflation, overall value of production, and other factors, it is nevertheless a significant measurement of economic health. In 1995 the International Bank for Reconstruction and Development (World Bank) created a new system for measuring national wealth, based on the value of natural and mineral resources.

Bibliography: See L. C. Thurow and R. L. Heilbroner, Economics Explained (1987); J. Craven, Introduction to Economics (1984).

Gross National Product (GNP) An unduplicated measure of the total flow of output in any economy during a specified time-period. Unduplicated means that the measure excludes intermediate goods and services that are used as inputs in the production of further goods and services—such as the use of flour to make bread for sale. The aim is to measure final products—the consumer goods and services which constitute the ultimate aim of all productive work. It is accepted by economists that GNP excludes large amounts of consumption work and other types of work. See also INFORMAL ECONOMY.

gross national product (GNP) Total market value of all goods and services produced by a country annually, plus net income from abroad. GNP is a universal indicator of economic performance, and provides an assessment of different economic sectors. GNP is the sum of four types of spending: private consumption (goods and services bought by the community), government expenditure, balance of trade, and business investment. See also gross domestic product (GDP)