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-- GDP vs GNP
GDP vs GNP
Why is it that GDP is used all the time, to me it would make more sense to use GNP, since that compare the welth of a people, rather than the wealth of the country? or im i wrong?
anyway, hopefully some of you economic ppl in here have a good answer 
I'm no economist, but my wild guess is that GNP is too wimpy of a number to measure productivity. Economists look for the bottom line when it comes to productivity - does the GNP show this better than GDP of a country? Obviously I think GDP shows it much better.
Okay, I'll let Occ. or some other economist clarify this better (Shakka?). I'll just sit over here in the corner and listen.....
I always thought GNP and GDP were exactly the same 
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Why Gross Domestic Product Instead of Gross National Product? The switch in emphasis by the BEA in December 1991 to Gross Domestic Product from Gross National Product as the key measure of aggregate economic activity in the national income and product account(s) (NIPA) was made for several reasons. First, the move was part of a long-run objective of the BEA to make the US accounts more consistent with those of most other countries that use the United Nations System of National Accounts (UNSNA or SNA for short). The SNA emphasizes GDP instead of GNP. As a practical matter, when the BEA prepares initial estimates for GDP, there are little or no reliable data on net income from the rest of the world (factor income), which is used to derive GNP from GDP. With the switch in emphasis to GDP, the BEA no longer provides an initial estimate of GNP at the same time as the initial release of GDP. The first release of GNP is now with the first revision of GDP for a given quarter. Finally, GDP is more of a measure of domestic production than is GNP. Therefore, it more closely tracks other measures of domestic economic activity such as industrial production or employment. Gross national product is more of a measure of income since it reflects income from domestic production (GDP) plus net income from abroad. Domestic measures relate to the physical location of the factors of production; they refer to production attributable to all labor and property located in a country. The national measures differ from the domestic measures by the net inflow -- that is, inflow less outflow -- of labor and property incomes from abroad. Essentially, Gross Domestic Product includes production within national borders regardless of whether the labor and property inputs are domestically or foreign owned. In contrast, gross national product is the output of labor and property of US nationals regardless of the location of the labor and property. Gross National Product includes income earned by the factors of production (assets and labor) owned by a country's residents but excludes income produced within the country's borders by factors of production owned by nonresidents. The estimates for GDP and GNP are derived from the same expenditure measures with the difference being income (net) from foreign sources. Gross National Product is equal to gross domestic product plus receipts of factor income from the rest of the world less payments of factor income to the rest of the world. As is the case for the United States, GNP exceeds GDP when a nation is earning more from its businesses, financial investments, and labor that are overseas than US nonresidents are earning on businesses in the United States that they own, plus returns on US financial investments, plus labor income for nonresidents in the United States. Receipts of this factor income consist largely of receipts by US residents of interest and dividends and reinvested earnings of foreign affiliates of US corporations. The payments are largely those to foreign residents of interest and dividends and reinvested earnings of US affiliates of foreign corporations. For the United States, the dollar difference between GDP and GNP is very small-about one-half of 0.1 percent of real GDP in 1993. The difference between the nominal data was negligible. Hence, growth rates for these aggregates in the United States typically are very similar. |
They're the same...
GDP = private consumption + government + investment + net exports (exports - imports)
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| Originally posted by occrider It makes more sense to use GDP. Even if wealth is produced by outside factors, that wealth is still being produced and consumed in that country. |
Okay, here's something that most people (even economists) havent seen much of:
The Genuine Progress Indicator
What is the GPI?
The Genuine Progress Indicator, or GPI, is an attempt to measure well-being in Australia by considering a wider range of factors than are included in estimates of Gross Domestic Product (GDP).
Building on similar studies abroad, the GPI covering the period 1950-1996 was first published by the Australia Institute in 1997. This is the first update of the GPI in Australia and it now covers the period 1950-2000. The GPI draws on a mass of data from official institutions and economic and social researchers to compile an index of economic progress over time. While our most recent estimates are based on the method used in 1997 there have been some changes, including the addition of measures of the costs of problem gambling and estimates of the value of advertising. Improvements have also been made in measuring several components, notably income distribution and the costs of climate change.
While well-being is a subtle and hard-to-measure concept, the GPI gets much closer than GDP to the impacts of the growth process actually experienced by Australians. It does not include everything that affects our well-being, nor even everything that affects our economic well-being. Only some aspects that lend themselves to monetary measurement are included. But even adding in a few of the factors that clearly affect our daily lives tells a story very different from the official one. The results confirmed what some critics and many ordinary people have been saying for years.
The GPI is constructed by using the best available dollar value estimates for the costs and benefits of its components. The use of such an approach means that there is no need to develop a system of weights. A dollar of air pollution is equal to a dollar of household work in the same way that a dollar spent on clothes is treated equally to a dollar spent on food in the national accounts.
The principal shortcomings of GDP are outlined in Rethinking GDP. The general approach to the GPI is to identify the pitfalls of GDP as a measure of national progress and then to attempt to overcome them. The factors incorporated into the GPI are:
Personal consumption
Income distribution
Public consumption expenditure
Value of household and community work
Costs of unemployment
Costs of underemployment
Costs of overwork
Private defensive expenditure on health and education
Services of public capital
Costs of commuting
Costs of noise pollution
Costs of transport accidents
Costs of industrial accidents
Costs of irrigation water use
Costs of urban water pollution
Costs of air pollution
Costs of land degradation
Costs of loss of native forests
Costs of depletion of non-renewable energy resources
Costs of climate change
Costs of ozone depletion
Costs of crime
Costs of problem gambling
Value of advertising
Net capital growth
Net foreign lending
More information on each of these variables is available in GPI in detail .
Have a look at the difference between Australia's GDP and GPI..
And the UK's GDP compared to their GPI..
Interesting results..
(btw, i just cut n pasted most of this post from the link I gave at the top.. i'm not taking credit for actually writing all this stuff 
)
With GPI, after looking at those charts, you can still sip your martini and listen to the band play while the ship is sinking...
The ship can't be sinking!
Didn't you see the graphs??
They're....large...isn't that..good!??
j/k
Interesting non-the-less...
Interesting indeed, thanks
The prestigious magazine the Economist has been advocating the GPI in their last issue!!!
means, that not only hippies are supporting that notion of taking into account our natural assets.
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| Originally posted by malek The prestigious magazine the Economist has been advocating the GPI in their last issue!!! means, that not only hippies are supporting that notion of taking into account our natural assets. |
| quote: |
| Originally posted by malek The prestigious magazine the Economist has been advocating the GPI in their last issue!!! means, that not only hippies are supporting that notion of taking into account our natural assets. |
Here is supposedly the US's trend:
http://www.sustainmississauga.com/n...tos/figure1.jpg
Similar to the UK one...
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| Originally posted by St_Andrew Sure, as messure of a country's productivity then it is the best messurment. But private consumption is included in both ones, so the people of a country doesnt necisairly get higher wealth if the GDP is higher, but they do if the GNP is increasing, since GDP can increase simply by foregn investment, money that later go back to another country instead to their own country hence getting less money in this country that still is getting a higher GDP. sounds confusing get my point? But if the difference is only 0.1% then i guess there is not much to argue about |
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| Originally posted by occrider I believe that's incorrect. GNP excludes inter-country income transfers which results in only accounting for a product generated from a terrirotry rather than the incomes received in it. |
| quote: |
| Originally posted by occrider I believe that's incorrect. GNP excludes inter-country income transfers which results in only accounting for a product generated from a terrirotry rather than the incomes received in it. |
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| Gross National Income From Wikipedia, the free encyclopedia. (Redirected from GNI) Previously known as Gross National Product, Gross National Income comprises the total value of goods and services produced within a country (i.e. its Gross Domestic Product), together with its income received from other countries (notably interest and dividends), less similar payments made to other countries. For example, if a British-owned company operating in another country sends some of their incomes (profits) back to UK, UK�s GNI is enhanced. Similarly, a British production unit of an American company sending profit to America will reduce UK�s affect British's GNI but will not reduce it since it is not included in the first place. http://en.wikipedia.org/wiki/GNI |
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