The difference between the gross domestic product (GDP) and gross national product (GNP) IS?
Answer Details
The difference between Gross Domestic Product (GDP) and Gross National Product (GNP) is the net income from abroad.
GDP is the total value of goods and services produced within a country's borders in a specific period, usually a year. It includes the production of both domestic and foreign-owned businesses located within the country.
GNP, on the other hand, is the total value of goods and services produced by a country's citizens, regardless of their location, in a specific period, usually a year. GNP includes the production of both domestic and foreign-owned businesses in which the country's citizens have a stake, regardless of where those businesses are located.
The difference between GDP and GNP is the net income from abroad, which is the income earned by a country's citizens and businesses from investments made abroad, minus the income earned by foreign citizens and businesses from investments made within the country.
For example, if a U.S. citizen owns a business in Canada, the income generated by that business is included in Canada's GDP, but it is also included in the U.S.'s GNP, since the owner is a U.S. citizen. However, if a Canadian citizen owns a business in the U.S., the income generated by that business is included in the U.S.'s GDP, but it is not included in Canada's GNP, since the owner is not a Canadian citizen.
Therefore, the difference between GDP and GNP is the net income from abroad, which reflects the income earned by a country's citizens and businesses from investments made abroad, minus the income earned by foreign citizens and businesses from investments made within the country.