The Meaning of Gross Domestic Product (GDP), Gross National Product (GNP), and Gross National Income (GNI)
Encyclopedia of Business Terms and Methods, ISBN 978-1-929500-10-9. Revised 2013-05-02.
Economists refer to several measures of total economic production for individual countries, including Gross Domestic Product (GDP) and Gross National Product (GNP). Another measure seen increasingly is Gross National Income (GNI), essentially an augmented version of GDP.
- Gross domestic product (GDP) is the total market value of all goods and services produced in the country, in a given year or quarter. GDP is equal to all government, consumer, and investment spending, plus the value of exports, minus the value of imports. GDP includes earnings made by foreigners while inside the country. GDP does not include earnings by its residents while outside of the country.
- Gross National Income (GNI) is GDP plus income paid into the country by other countries for such things as interest and dividends (less similar payments paid out to other countries).
- Gross National Product (GNP) is the total market value of all goods and services produced by domestic residents.
GNP includes domestic residents earnings from goods and services produced and sold abroad, and investments abroad. GNP does not include earnings by foreign residents while inside the country.
GDP and GNI thus refer to economic income within the borders of the country, while GNP refers to economic output by the country's residents.
Since the the early 1990s, economists and government officials have generally regarded GDP (rather than GNP) as the primary indicator of a country's economic output. Data from the three sources listed below, for example, agree that currently (2010) the annual GDP Growth rate for China is over 9%, while for the United States the rate is about –2.5% (i.e., negative growth).
GDP serves as the primary measure for identifying and measuring phases of the economy's business cycle, such as recession, depression, recovery, and expansion. Economic recession, for instance, is usually defined as two consecutive quarters of GDP decline. (For more on the cycle and these phases, see the encyclopedia entry business cycle).
• Reporting and comparing GDP, GNI, and GNP
• Determining GDP, GNI, and GNP
• Sources of GDP, GNI and GNP Data
• Example GDP and GNI figures
– GDP by per capita by country
– GDP by country
– GNI Per capita by country
Reporting and comparing GDP, GNI and GNP
GDP, GNI and GNP figures are often compared . . .
- Between quarters and years for a single country or groups of countries, to identify changes and trends in economic growth.
- Between countries, to show the size of a country's economy relative to other countries or groups of countries.
- Between countries on a per capita basis, to show the average wealth or poverty of individuals in a country compared to people in other countries.
Those who evaluate economic output figures across time usually prefer figures adjusted to compensate for inflation, so that GDP and GNP figures from different time periods accurately reflect changes in real purchasing power. Those who compare economic output figures between countries, of course, need to see all figures expressed in the same currency units. Most data sources use one of the following approaches in reporting financial figures:
- Economic data from a single country source, for a single year, may be expressed simply as totals and per capita figures in the local currency.
- Economic data from a single country source covering multiple years may be expressed in local currency units.
- Without adjustments for inflation and purchasing power (that is, on a nominal basis), or:
- With adjustments for inflation and purchasing power (that is, on a PPP basis).
- Comparisons between countries are most often expressed in terms of "US dollars," either
- On a nominal or "exchange basis," that is, converted to US $ using average currency exchanges rates for the most recent year, (or for some other period such as the most recent three years).
- As International Dollars, which are adjusted to reflect average currency exchange rates and purchasing power parity (PPP).
Determining GDP, GNI and GNP
Given the definitions of GDP, GNI and GNP above, there are several commonly used approaches to calculating their values. The so called expenditure approach for GDP for instance, is taken as the sum of aggregate consumption, investment, government expenditure and net exports. In principle, the so called income approach and output approaches should reach the same result by summing wages, rents, interest, profits, non income charges, and in some cases, foreign income earned. In reality, the different approaches usually produce slightly different results because, in all cases, the component figures are estimates and not known exactly, and because the different components are developed and revised at different times.
To business people generally, the most familiar approach is probably the expenditure approach illustrated here.
- GDP = Consumption + Investment + Government spending + Exports - Imports
- GNP = GDP + Net Income Receipts from assets abroad less income of foreign nationals within the country.
- GNI = GDP + payments by foreign nationals into the country for such things as investments (interest and dividends), less similar payments paid out of the country.
Sources of GDP, GNI, and GNP data
Comprehensive GDP, GNI and GNP figures are available from quite a few different sources. Three of the more frequently cited and more readily accessible sources are:
- The International Monetary Fund (IMF) World Economic Outlook, at
IMF data are updated semiannually, in April and October.
- The CIA World Fact Book, available at
This source is updated every two-weeks with the latest available data from many different world sources.
- The World Bank Data pages, available at:
Data updates are incorporated when they are made available by individual sources.
These sources provide financial/economic data on most countries of the world, expressed either in nominal dollar equivalents or in International dollar units adjusted by country for purchasing power parity.
For the most recent data from individual countries, visit the internet sites of country government offices for statistical and economic data.
Example GDP and GNI figures
Example GDP and GNI figures for a few countries are listed below. In most cases these are World Bank data for the year 2009. "Nominal" figures are expressed in equivalent US$ for 2009, based on average exchange rates. PPP based figures are expressed in International dollars, adjusted to represent equivalent purchasing power per dollar. Country rankings are "approximate" because different sources may report slightly different dollar figures, and because sources sometimes differ in countries or economic regions listed.
For more comprehensive country lists and the most recent available data see the sources listed in the preceding section.
Gross domestic product per capita by country
| GDP Per|
| GDP Per|
|2||United Arab Emirates||57,827||45,615|
Gross domestic product by country
|3||China (People's Rep)||4,984,731||9,104181|
Gross national income (GNI) per capita
| || |
|33||China (People's Rep)||6,670||3,590|