Gross national product (GNP) is one of the most commonly used measures of a country’s economy. Often evaluated alongside gross domestic product (GDP), GNP represents the value of all goods and services produced by a country’s nationals anywhere in the world. GNP's mathematical formula is nearly identical to that of gross national income (GNI) and the two metrics are functionally interchangeable. GNP is determined using the formula GNP = C + I + G + X + Z, which breaks down as follows:
- C = Consumption: Value of all goods and services purchased by nationals and domestic businesses
- I = Investments: Funds invested by nationals and domestic businesses both internationally and domestically
- G = Government: Federal, state, and local government spending
- X = Exports: The value of goods manufactured in the U.S. by domestic firms and exported for sale in another county—minus imports brought from another country for sale in the United States
- Z = Foreign production: The value of products produced and sold internationally by a domestic company—minus the value of goods produced and sold domestically by foreign companies. (Also applies to other profit sources, such as international investments.)
Top 10 Countries with the Highest Gross National Product (United Nations 2020 GNI, current US$):
- United States — $21.29 trillion
- China — $14.62 trillion
- Japan — $5.16 trillion
- Germany — $3.95 trillion
- United Kingdom — $2.72 trillion
- France — $2.67 trillion
- India — $2.64 trillion
- Italy — $1.91 trillion
- South Korea — 1.65 trillion
- Canada — $1.63 trillion
10 Countries and Territories with the Lowest Gross National Product (United Nations 2020 GNI, current US$):
- Montserrat — 67.9 million
- Tuvalu — 96.7 million
- Nauru — 159.38 million
- Anguilla — 252.9 million
- Palau — 269.0 million
- Cook Islands — 283.4 million
- Marshall Islands — 298.2 million
- Kiribati — 337.6 million
- Micronesia — 452.8 million
- Sao Tome and Principe — 475.1 million
GNP/GNI vs. GDP
Although GNI/GNP and GDP are similar, a key difference exists between the two: GDP represents the value of goods and services produced within a country’s geographical borders regardless of which country profits from that production, whereas GNP/GNI represents the value of all goods and services produced by a country's nationals regardless of where in the world they are produced. In other words, GNP/GNI focuses on a country's overall income and GDP focuses on a country's overall production.
The auto industry offers an ideal illustration of the difference between GDP and GNP/GNI. General Motors is a U.S.-based company that has several factories in other countries. Vehicles produced in these foreign factories and sold in international markets would not be part of the U.S. GDP because they were not manufactured or sold in the United States—however, they would be part of GNP/GNI because they are manufactured by a U.S.-based company and profits from their sale will ultimately funnel into the U.S. economy.
Conversely, Volkswagen is a German automaker with a U.S. assembly plant in Chattanooga, Tennessee. Vehicles assembled at this plant would be part of the U.S. GDP because the product is being assembled and sold in the U.S. by U.S.-based workers. But they would not be part of the U.S. GNP/GNI because the profits of that sale will ultimately go to a German company rather than an American company.
Another way to consider the difference is that GNP/GNI starts out the same as GDP, then makes one addition and one subtraction: it adds income that domestic investors or companies earn in other countries, but subtracts any income earned domestically by foreign investors or companies.
The value of comparing GNP/GNI to GDP
Economists typically examine both GDP and GNP/GNI when evaluating a country’s economy. While GDP is a more widely followed measure of a country’s economic activity, differences between GDP and GNP/GNI can provide insight into a country’s engagement in international trade and financial operations. For example, some countries have a high GDP because numerous products are made there, but a much lower GNP/GNI because those products are being sold by international companies that are shipping the profits overseas instead of reinvesting them locally. In this circumstance, GNP/GNI is a more realistic picture of the economy's true state.
That said, GNP can be misleading when examined on its own. While GNP is a viable indicator of the economic well-being of a country's nationals and corporations, it is less adept at illustrating the health of a country's economy as a whole. GNP can be influenced by foreign exchange rates (due to its inclusion of foreign investments and production), offers incomplete insight into domestic resource usage, and does a poor job of indicating the economy's rate of growth.