How to Calculate GNP (Gross National Product)
Gross national product equals GDP plus net foreign factor income, so you add what a country's residents earn abroad and subtract what foreigners earn inside its borders.
The GNP formula
Calculator
Enter GDP and the two cross-border factor income flows to get net foreign factor income and GNP.
Output produced inside the borders, whoever owns the resources behind it.
Wages, rent, interest and profit flowing in from production in other countries.
Factor payments flowing out to foreign workers and foreign-owned firms producing here.
Output produced by this country's residents, wherever they produced it, comes to $22,240 billion.
- Net foreign factor income
- $240
- Compared with GDP
- GNP above GDP
- Net foreign factor income as a share of GDP
- 1.09%
The two cross-border flows leave a net $240 billion coming in, and that figure is the whole gap between the two measures.
Residents earning more abroad than foreigners earn at home lifts GNP above GDP, and the reverse pushes it below.
The net flow is worth 1.09% of domestic output, which is why the two measures usually sit close together.
How to calculate GNP, step by step
- 1Start with GDP. The market value of all final goods and services produced inside the country's borders, whoever owns the resources that made them.
- 2Add income residents earn abroad. Wages, rent, interest, and profit that citizens and domestically owned firms collect from production in other countries.
- 3Subtract income foreigners earn at home. Factor payments that flow out to foreign workers and foreign-owned firms producing inside the borders.
- 4Net the two flows. Inflows minus outflows gives net foreign factor income, a single figure that is positive when residents earn more abroad than foreigners earn at home.
- 5Add it to GDP. GNP = GDP + net foreign factor income, so a positive net figure puts GNP above GDP and a negative one puts it below.
Worked example: GNP
An economy has GDP of $22,000 billion. Its residents earn $850 billion from production abroad, while foreigners earn $610 billion from production inside its borders. Net foreign factor income = 850 − 610 = $240 billion. GNP = 22,000 + 240 = $22,240 billion. The net inflow is worth 240 ÷ 22,000 = 1.09% of GDP, so GNP sits just above GDP for this country.
GNP questions
What is the difference between GDP and GNP?
GDP counts output produced inside a country's borders no matter who owns the resources, while GNP counts output produced by a country's residents no matter where they are. A factory owned by residents but operating overseas adds to GNP and not to GDP.
When is GNP larger than GDP?
When residents earn more from production abroad than foreigners earn from production at home, so net foreign factor income is positive. That happens where many citizens work overseas or domestic firms own large operations in other countries.
How is GNP related to gross national income?
Gross national income measures the income residents receive rather than the output they produce, and it is built the same way: start from the domestic figure and adjust for net factor income from abroad. The two match because every dollar of output becomes income for whoever produced it.
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