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Gross National Product (GNP)
We've already taken a look at what Gross Domestic Product (GDP) is and how annual figures help governments and economists measure growth in an economy. Now let's look at Gross National Product (GNP). Like GDP, GNP measures the total value of all goods and services produced in a country in one year. However, GDP measures the figure at domestic level, or inside a country, only. GNP takes into account both the value from within the country and the value residents may claim from foreign sources. So GNP is a figure that represents the total of all wages and salaries, business profits, rental incomes and income from interest. Types of revenue you may receive from overseas include business revenue and interest payments from offshore savings accounts.
GNP figures can help economists gain a useful picture of economic growth in the same way as GDP figures do. They also help economists to calculate what each person's national income is. This can be obtained by dividing the total population present in the country by the GNP figure. The result is what your national income is. People that live in a country with a healthy GNP figure will have a higher national income than people who live in less wealthy countries.
But why do economists keep track of your national income? The reason is simple. When your national income is known, it can be used to make a huge range of decisions at government and at local level. Just like unemployment statistics and consumer price levels, GNP and national income figures help governments form policies and test new theories. Business people who plan new investment schemes also use these figures, as do all the major banks. Economists use the figures to gain a better understanding of how the economy works and how government policies affect a country's population.
As you can see, simple economics affects our day to day lives in hundreds of ways. If you're interested in finding out more about your national income, you can look up your country's annual GNP figure just like an economist does.
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