Gross National Product (GNP)

Gross domestic product measures production within a country's borders, regardless of who owns the businesses or workers involved. GNP instead focuses on ownership: it measures production by a country's residents, wherever it takes place.

GNP can be calculated as GDP plus income earned by residents from abroad, such as profits from overseas investments and wages earned by residents working abroad, minus income paid to foreign residents from domestic production.

For example, if a country's GDP is 2,000, its residents earn 50 from abroad and foreign investors earn 80 from the country, its GNP is 1,970.

For most large economies, GDP and GNP are close. The difference can be large for countries with major foreign investment or many workers abroad. Ireland, for instance, hosts many multinational companies, so its GDP is much larger than the income retained by residents. Today, most statistical agencies publish gross national income, which is essentially the same concept, and GDP has become the more widely used headline measure.