GNP, along with gross domestic product, is the basic, most holistic and generalizing macroeconomic indicator, since production volumes make it possible to assess the economic power of a given country. The higher the GNP, the more products the national economy produces.
Methods for calculating GNP
GNP = GDP + Balance of primary income received from abroad or transferred abroad (such first income usually includes wages, income from property in the form of dividends)
Nominal and real GDP
Due to constant dynamics in production volumes, each country's GDP tends to change over time. If the volume of per capita GDP increases, then this indicates an increase in the standard of living of citizens of a given society. On the contrary, negative dynamics of GNP indicates an economic crisis. Therefore, by comparing the GDP of two different years, you can find out in which of them the standard of living of citizens was higher.
However, the following problem arises with such comparisons. The fact is that GDP is measured in monetary units (rubles, dollars, euros, etc.), which in different years may have different purchasing power due to price changes. For example, if GDP was 1000 monetary units in 2000 and 2005, and the price level rose during this period of time, then in reality the standard of living has decreased, since the same amount can buy less goods at the end of the period than at the beginning. Therefore, in order to be able to make comparisons of GDP in different years, it is necessary to take into account price dynamics. For this purpose, the concepts of nominal and real GDP are introduced.
Nominal GDP- production volume in the current year, expressed in prices of the current period.
Where Q- volume of goods or services produced, P- the cost of a given product or service on the market.
Real GDP- production volume in a given year, but expressed in prices of the base period (for example, the previous year with which the GDP value is compared; allows for more accurate comparison of data, making adjustments for price increases):
, Where P base
- the cost of a given product or service on the market during the base period. To illustrate, consider the following example. Let the economy produce only two goods in 2000: product 1 and product 2. Moreover, in 2000, 80 units were produced. product 1, the price of which was 5 monetary units, and 50 pcs. 2 goods at a price of 12 monetary units per piece. Therefore, nominal GDP in 2000 was: 80 x 5 + 50 x 12 = 1000 monetary units. Let, further, in 2005, 60 units were produced. 1 product at a price of 6 monetary units and 40 pcs. 2 goods at a price of 16 monetary units. Nominal GDP in 2005 is equal to: 60 x 6 + 40 x 16 = 1000 monetary units. Thus, nominal GDP has not changed over these years. However, due to rising prices, real GDP in 2005, i.e. the volume of output in 2005 in 2000 prices decreased: 60 x 5 + 40 x 12 = 780 monetary units.
The ratio of nominal GDP to real GDP is called GDP deflator. For our example, the GDP deflator in 2005 is equal to 1000 / 780 = 1.282. The GDP deflator shows how much the general price level in the economy has increased (in this example, by 28.2%).
see also
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Synonyms:See what “GNP” is in other dictionaries:
GNP- on-site tax audit of GNP upper scientific platform education and science GNP platoon observation post military. Dictionary: Dictionary of abbreviations and abbreviations of the army and special services. Comp. A. A. Shchelokov. M.: LLC Publishing House AST, CJSC Publishing House... ... Dictionary of abbreviations and abbreviations
- (GNP) See: gross national product. Economy. Dictionary. M.: INFRA M, Ves Mir Publishing House. J. Black. General editor: Doctor of Economics Osadchaya I.M.. 2000. GNP see GROSS NATIONAL PRODUCT ... Economic dictionary
GNP, see Gross National Product... Modern encyclopedia
Noun, number of synonyms: 1 product (75) ASIS Dictionary of Synonyms. V.N. Trishin. 2013… Synonym dictionary
English national product, gross; German Bruttonational product. Statistic, an indicator expressing the total cost of final goods and services in market prices. Antinazi. Encyclopedia of Sociology, 2009 ... Encyclopedia of Sociology
GNP- [veenp e], uncl., husband. (abbr.: gross national product) ... Russian spelling dictionary
- (GNP) Gross National Product. GDP (GDP) plus net income from foreign-origin factors of production. Policy. Dictionary. M.: INFRA M, Ves Mir Publishing House. D. Underhill, S. Barrett, P. Burnell, P. Burnham, etc.... ... Political science. Dictionary.
GNP- The total value of final goods and services produced in a given country, at market prices, in contrast to the gross domestic product, also includes the amount of net income from abroad. Syn.: gross national product; total social... Dictionary of Geography
GNP- GNP, see Gross National Product. ... Illustrated Encyclopedic Dictionary
Gross National Product, commonly abbreviated as GNP, is the total value of the entire final production of goods and services at current prices (nominal GNP) or base year prices (real... ... Wikipedia
Books
- Russia and the world. The Russian economy in the global context, V. M. Kudrov. The monograph provides an analysis of Russia's place in the world economy, from ancient times to the present day. During the period of Kievan Rus, our country was one of the first in the world, after the Tatar-Mongol...
Question 2. (SNA)
The System of National Accounts (SNA) is a set of interrelated indicators characterizing the production, distribution, redistribution and use of national product and income. The methodology of the system of national accounts was borrowed from accounting practice and built on the principles of double entry and balance sheets. The founder of the method of national accounting is considered to be the representative of the school of physiocrats F. Quesnay. The choice of the theoretical concept of production is of primary importance for constructing a system of national accounts. There are two of them - the Marxist and the expanded concept of production. In addition to them, there was an intermediate one used in France, but it ceased to be used in 1968.
The main macroeconomic indicator of the SNA is GDP. It expresses the result of the functioning of the economy over a certain period of development, characterizes the finished products and services provided. In the national statistics of some countries (USA, Japan), the main macroeconomic indicator can be considered the gross national product (GNP). The calculation of GNP is based on the national principle, which takes into account the cost of products produced by residents, regardless of their location.
Question 3. (measuring the price level).
Measuring the price level
GDP (GNP) calculated at current market prices is called nominal , it can increase due to an increase in the physical volume of all products and due to an increase in the price level.
GDP (GNP) calculated in constant prices is called real, it is not affected by the price level, so it acts as the main indicator of the physical volume of goods and services.
Price index – an indicator of dynamics, increase or decrease, characterizing the relative change in prices for a certain period of a wide group of goods.
The relationship between real and nominal GDP (GNP) can be expressed by the formula:
Deflator– a coefficient expressing the differences between real and nominal GNP is used to determine the inflation rate.
An increase in the general price level is called inflation. This means that ALL prices increase by the same amount (eg 10%, 50% or 100%).
But the general price level may decrease. A decrease in the general price level is called deflation.
Question 4. (Calculation of GNP based on income and expenses.)
The main indicator in compiling national accounts is gross national product (GNP). It is defined as the market value of all final goods and services produced in an economy in a year. GNP measures the value of products produced by factors of production owned by citizens of a given country, including in the territory of other countries.
In order to correctly calculate GNP, it is necessary that all products and services produced in a given year be counted only once. To avoid multiple counting of parts of products, only market value is taken into account when calculating GNP final products and intermediate products are excluded, and, therefore, repeated counting.
Under the final product refers to goods and services that are purchased for final use and not for further processing or resale.
When measuring the results of economic activity, the problem arises: how can the market value of the entire volume of production be calculated.
This can be done in two ways:
first, find out how much the consumer, as the end user of this product, spends on its purchase. This approach reflects the calculation of GNP by expenditure (End Use Method).
When calculating GNP by expenses, the expenses of all economic agents using GNP are summed up: households, firms, the state and foreigners (expenses on our exports). In fact, we are talking about the aggregate demand for produced GNP. Total expenses can be broken down into several components.
GNP= C+ Ig + G+ Xn,
WITH - personal consumption expenses, which includes household expenditures on durable goods and current consumption, but does not include expenditures on the purchase of housing.
Ig- gross investment, including industrial capital investments or investments in fixed production assets; investment in housing construction; investment in inventories. Gross investment can be expressed as the sum depreciation And net investment(In)
G- public procurement of goods and services. This group of expenditures includes all government expenditures on direct purchases of resources, especially labor, and the final products of enterprises.
Xn- net exports goods and services abroad, calculated as the difference between exports and imports.
When calculating GNP by expenses, all types of factor income (wages, rent, interest, corporate profits, income of unincorporated enterprises) are summed up, as well as two components that are not income: depreciation deductions and pure indirect taxes for business (taxes minus subsidies).
The following types of factor income are distinguished as part of GNP:
- compensation for labor of employees (wages, bonuses, etc.);
- rental income,
- net interest (as the difference between interest received and interest paid);
- corporate profits
- income of the non-corporate sector (small shops, farms, etc.)
Thus, GNP calculated by income is as follows:
GNP= A+T+Z.P.+ R+ %+P+ U, Where
A - depreciation,
T - indirect taxes,
Z.P. - wage,
K - rent payments,
% - net interest,
P - corporate profit,
Y is the income of the non-corporate sector.
Question 5. (National income).
As a measure of gross annual output, GDP has one important shortcoming: it overstates output by the cost of annual depreciation and indirect taxes. If we want to get the amount that production actually added to the welfare of society, then we must reduce the value of GDP by the amount of depreciation charges accrued for the year, and we will get another important macroeconomic indicator - pure product(NNP).
^ NNP = GNP - Depreciation
The PNP shows the amount of income of suppliers of economic resources for the land, labor, capital, and entrepreneurial abilities provided to them, with the help of which the PNP was created.
To determine the total amount of wages, rental payments and profits, it is necessary to subtract the amount of indirect taxes from the NNP. This indicator is called “national income”.
^ ND = NNP – Indirect taxes
National income(ND) is the value newly created during the year, characterizing what production in a given year added to the welfare of society.
In practice, a distinction is made between produced and used ND.
Produced ND- this is the entire volume of newly created value of goods and services.
Used ND- this is the produced ND minus losses from natural disasters, damage during storage, etc. and external balance.
National income is divided into two funds: the consumption fund and the accumulation fund.
^ Consumption fund- this is part of the ND, ensuring the satisfaction of the material and cultural needs of people and the needs of society as a whole (for health care, education, culture, etc.)
^ Savings Fund- this is part of the RD, which ensures the further development of production.
Personal income(LD) - the amount of money actually received by the population, used for paying taxes, saving and consumption. On the scale of the entire society, the amount of total personal income is determined by the size of personal income after deductions of the population's contributions to the national insurance system, taxes on corporate profits and retained earnings.
| Parameter name | Meaning |
| Article topic: | Methods for calculating GNP |
| Rubric (thematic category) | Production |
There are three ways to measure GNP (GDP):
a) by value added (production method);
b) by cost (end-use method);
c) by income (distribution method).
When calculating GNP (GDP) using the production method it is required to take into account all goods and services produced during the year only once, that is, so that the calculation takes into account final products and does not take into account intermediate products that can be bought and resold many times.
Final products- ϶ᴛᴏ goods and services that are purchased for final consumption and are not used for intermediate consumption (ᴛ.ᴇ. in the production of other goods and services).
Intermediate products – These are goods and services that are further processed or resold several times before reaching the final consumer.
If you sum up the goods and services produced in the country in all sectors of the economy, then multiple repeated calculations are inevitable, significantly distorting the real volume of the gross product produced.
Taking into account the cost of the final product, as well as the sales and resale values of its various components in a multi-stage production process, leads to the so-called double counting. To avoid multiple re-counting in the IRR, it is critical to include only the value created (added) at each intermediate stage of processing. Added value – this is the value created in the production process at a given enterprise (firm) and covers the real contribution of the enterprise to the creation of the value of a specific product͵ ᴛ.ᴇ. wages, profits and depreciation.
For this reason, the cost of consumed raw materials and supplies that were purchased from suppliers and in the creation of which the enterprise did not participate is not included in the added value of the product produced by this enterprise.
In other words, added value is the difference between the cost of products produced by a company and the amount paid to other companies for purchased raw materials, materials, etc. (that is, for intermediate products).
By adding up the added value created by all five firms in our example, we can accurately calculate the cost of the suit.
However, the value of GNP when calculated using the production method is the sum of added value of all manufacturing firms in the country. For the economy as a whole, the sum of all added value must be equal to the cost of final goods and services.
When calculating GNP based on expenses the expenses of all economic entities (households, firms, states) and foreigners (export expenses) for the acquisition (consumption) of the final product are summed up. In fact, we are talking about the aggregate demand of economic agents for produced GNP. Total costs can be broken down into four components:
GNP = C + J g + G + X n ,
Where WITH– personal consumer expenses, including household expenses on durable consumer goods (cars, refrigerators, furniture, etc.), on current consumption goods (bread, milk, cigarettes, shirts, etc.), as well as consumer expenses for services (lawyers, doctors, mechanics, hairdressers, etc.); J g– gross private domestic investment, which includes three components: 1) all final purchases of machinery, equipment and machine tools by entrepreneurs; 2) all construction (industrial and residential); 3) change in inventories (inventories of semi-finished products and raw materials not yet consumed in the production process of goods), while an increase in inventories is taken into account with a “+” sign, a decrease – with a “-” sign; G– government purchases of goods and services – all government expenditures (including federal and local authorities) on the final products of enterprises and on all direct purchases of resources, especially labor (government apparatus). This excludes all government transfer payments, since they do not reflect a real increase in current production. These are payments from government bodies that are not related to the movement of goods and services. Transfers are the transfer of government revenues received from taxpayers to certain families and individuals in the form of pensions, benefits, scholarships, etc.); Xn– net export of goods and services abroad, calculated as the difference between exports and imports. When calculating GNP, it is extremely important to take into account all expenses associated with the purchase of final goods and services produced in a given country, incl. and expenses of foreigners, ᴛ.ᴇ. the value of a given country's exports. At the same time, it is extremely important to exclude from the purchases of economic agents of a given country those goods and services that were produced abroad. import cost. The indicator must have both a “+” and a “-” sign.
Among the components of GNP, consumer spending is usually the largest (WITH), and the most volatile are investment expenses ( J g).
When calculating GNP based on income everything is summed up types of factor income, as well as two non-income components: depreciation charges and net indirect business taxes (taxes minus subsidies).
The following types of factor income are usually distinguished as part of GNP (the criterion is the method of generating income):
– remuneration for the work of employees (salary, bonuses, etc.);
– rent payments, which represent income received by property owners;
– interest, which represents payments of monetary income to suppliers of monetary capital;
– income from property or income from the unincorporated business sector (income from individually owned enterprises, partnerships and cooperatives);
– corporate profits, which can be used in three ways: 1) in the form of taxes on corporate profits – the state receives income; 2) in the form of dividends - corporate profits are paid to shareholders; 3) in the form of retained corporate profits (what remains from paying taxes and dividends), which are invested either immediately or in the future for the creation of new factories and the purchase of equipment.
Depreciation In the form of an accounting entry, there are annual allocations that show the amount of capital consumed in the course of production during certain years. Depreciation charges are called capital consumption charges, ᴛ.ᴇ. for the purchase of investment goods consumed in the process of producing GNP for a given year. Depreciation is not an addition to someone's income, it says that part of a given year's GDP must be set aside to replace in the future the machinery and equipment consumed in the production of final goods and services.
Indirect business taxes include general sales tax, excise taxes, property taxes, license fees and customs duties. This influx of indirect business taxes is unearned revenue since the government does not contribute anything in exchange for tax revenue.
As when calculating GNP based on expenses, in this method it is extremely important to also take into account factor income from abroad.
In this case, the calculation of GNP will take the form:
GNP = GDP + net factor income from abroad
Net factor income from abroad is equal to the difference between the income received by citizens of a given country abroad and the income of foreigners received in the territory of a given country.
Of the above methods for calculating GNP (GDP), the production method (based on value added) and the final use method of GNP (based on expenses) are most often used.
Methods for calculating GNP - concept and types. Classification and features of the category "Methods for calculating GNP" 2017, 2018.
Gross Domestic Product (GDP) is the sum of the values of all goods and services produced in the state. Reported in US dollars. Determined at the end of the financial year. By calculating GDP annually, you can track the development of the economy. A change in the indicator may indicate how successful the economic policy was in the state. Knowing how to calculate GDP will help you understand the course of many macroeconomic processes. Methods for calculating GDP involve the use of one of three methods
End-use method or calculation of gross domestic product by expenditure
When calculating the GDP indicator in this way, you need to add up the costs of all participants in the economic process, namely:
- Consumer expenditures of citizens (All expenses incurred by households, as well as the state for the maintenance of budgetary organizations, expenses of non-profit firms for the purchase of products for personal and shared use, if organizations serve households; in this case, expenses are long-term, for example, buying a car, and short-term – purchase of products; expenses for the purchase of services, including on credit, are separately allocated);
- The totality of investments in the economy (Investments are funds invested by an organization or an individual, for example, in the purchase of equipment, as well as the purchase of real estate or software for the operation of a company. The exchange of assets is not considered an investment, and the acquisition of funds is savings. Also, the purchase itself securities are not considered an investment if the company does not subsequently use this proceeds to modernize production, etc.)
- Government expenditures (Funds spent by the state on the purchase of final goods. This includes payments of salaries to public sector employees and the purchase of weapons, as well as government investments.)
- Net exports (is the difference between the total value of imported and exported products)
We obtain the formula for GDP per capita, which determines GDP using the final use method:
GDP = C + I + G + Xn
In the formula for expenses: C – consumer spending, I – investment, G – government. costs and X is an indicator of net exports (from the total cost of exports we subtract the amount of imports).
Production method or finding the sum of all added values
To calculate the GDP indicator using this method, you need to add up all the added value of goods manufactured in the country. Added value is that which does not include market prices for products purchased to produce the final product or service, therefore, it is the cost that arose during production. Otherwise, when calculating GDP, some goods/services will be counted twice, and the result will be significantly distorted upward.
The advantage of this method is that it allows one to evaluate the role of a certain production or organization in the structure of state GDP. To find VA (value added), you need to subtract from the profit received during sales the amount spent on products needed in production.
We get the following formula for calculating GDP:
GDP = DS + NPI – C
where: VA is value added, NPI is a tax on production and imports, and C is subsidies for imports and production.
Method of accounting for GDP by income or distribution method
To find the level using this method, you should add up all possible factor incomes and add depreciation charges and indirect taxes. The last two components are called non-income.
The GDP formula by income will include:
- salaries of the organization’s employees (this also includes additional and social payments, for example, bonuses and pensions)
- gross mixed income and gross profit (funds remaining with the manufacturer, who paid the employees and contributed taxes to the treasury)
- Import and production taxes (mandatory payments to the state stipulated by law. This includes duties, land tax, VAT, license tax, etc.)
- rent
- depreciation
- interest on bank deposits
GDP does not include transfer payments (in return for which nothing was made). These include unemployment benefits and other social benefits. payments from the state, such as pensions, as well as the purchase of second-hand goods, financial transactions between private individuals.
We get the following formula for calculating GDP:
GDP = Salary + R + Pr + VD + KS + A – NFD (from abroad)
in which: ZP is the funds spent on payments to employees, P is the cost of rent, PR is revenue from interest on, KS is indirect taxes, A is depreciation and NFD is foreign net factor income.
Nominal and real GDP
GDP is calculated in money, so it is necessary to take into account price dynamics during the reporting period. Therefore, there are two types of GDP.
Nominal is determined in prices existing at the moment. It can increase in two cases: with an increase in production volumes and with an increase in prices. Real GDP is calculated taking into account the prices of the base period - the one that is taken as a basis. For example, in the United States - 1996.
Real GDP is an indicator of output, since increases or decreases in prices do not change its indicator. To find real GDP, you need to adjust the nominal GDP by the price index. To do this, the nominal GDP indicator must be divided by a price index equal to the ratio of prices in the year under review to prices in the base year.
To bring nominal GDP to the real figure, you need to know the consumer price index or. The CPI is influenced by the cost of the 300 most commonly purchased goods, and the GDP deflator generally illustrates the change in prices for all goods.
GDP adjustment by PPP
In order to ensure maximum objectivity in comparing the GDP of different countries, GDP is calculated using purchasing power parity (PPP). This is explained by the fact that, although the calculation of GDP in all world countries is carried out in US dollars, this does not take into account the purchasing power of money in different countries and the difference
The central indicator of the SNA is gross national (or internal) product (GNP or GDP). It is the total market value of final goods and services produced over a specified period of time (usually a year).
To determine GNP, it is important to distinguish between the concepts of “final” and “intermediate product”.
TO final product These include those goods and services that are purchased for final consumption and are not intended for further processing or resale. TO intermediate product refers to everything that is purchased as raw materials, materials, semi-finished products for production or during the sales process does not reach the final consumer.
Most products go through several stages of processing and sales. At each stage, the costs of intermediate goods are reflected in the market price of the finished product. Therefore, accounting for all goods and services sold on the market would lead to repeated counting. Determining GNP based on the final product allows one to avoid such distortion of the results, since it eliminates repeated calculations.
Gross National Product is a cost indicator that reflects the market assessment of national production volumes and measures them in market prices. However, some goods are provided to final consumers without going through market exchange and do not have a market price. These are, for example, public administration services, judicial services, national defense, partly education and healthcare services. As part of GNP, services of this kind are taken into account according to the value of costs, i.e., government costs associated with providing them to the population. This technique, of course, is imperfect, but it is used due to the lack of appropriate market estimates.
Some of the goods and services produced in the country cannot be taken into account in GNP at all, since they are consumed without going through the market, and there is no information about the value of costs. These are, for example, the services of housewives, household products used for personal consumption. Final products produced in the shadow economy are not taken into account in GNP, since the income received from these products is sheltered from taxation and therefore is not reflected in the system of national accounts.
Thus, the gross national product is not an absolutely accurate indicator of the volume of production produced in a country. But it is quite suitable for comparing output volumes by year, assessing economic dynamics, cross-country comparisons, and also for assessing the level of economic well-being. For these purposes, the indicator is calculated GNP per capita. In this capacity, GNP also does not provide complete information, since, in addition to the above-mentioned shortcomings, it does not take into account the structure of production in different countries, the amount of free time, the degree of inequality in income distribution, country differences in price levels, and the impact on the level of well-being of such negative factors as environmental pollution , crime rate, negative consequences of urbanization. Therefore, to assess the level of well-being of a nation, the indicator is used net economic welfare (CHEB). To determine the NEB indicator, the value of GNP is adjusted: the valuation of non-market activities and leisure is added and the monetary valuation of negative factors is subtracted
Despite these shortcomings, GNP is the best general indicator of economic performance that economists currently have at their disposal.
There are three ways to calculate GNP: by expenditure, by income and by value added. Different methods should ideally lead to the same results. Discrepancies are possible only if there are omissions and errors in the national accounting system.
Calculated by three methods:
1) by income- the income of individuals, joint-stock companies and private enterprises, as well as state income from business activities are summed up:
· remuneration of employees, including wages and other payments related to the hiring of labor (bonuses, overtime pay, etc.);
· income from property, i.e. income of owners of unincorporated, including individual enterprises;
· rent payments received by owners of land and real estate;
· corporate profits, which are further broken down into income taxes, dividends and retained earnings;
· interest on capital paid by firms to suppliers of debt capital.
2) by expenses- expenses on personal consumption, on government purchases (state needs), on capital investments and the balance of foreign trade are summed up and it is assumed that the produced products are sold and their cost is paid by end customers:
· household expenditures on consumer goods and services, i.e. personal consumption expenses;
· investment expenditures of the business sector, including industrial capital investments, housing construction costs, as well as investments in inventories;
· government expenses for the purchase of goods and services, which include all costs of government bodies for the acquisition of final products, as well as for financing the production of services provided to the population free of charge;
· expenses of foreign buyers for the purchase of goods and services of national production.
3) by added value(production method) - the totality of conditionally net products from all spheres of the economy is summed up. In practice, added value is defined as the difference between the market value of finished products (sales revenue) and current material costs.
Nominal GNP- the sum of final goods and services at current market prices.
Real GNP- the cost of goods and services, recalculated in constant prices (prices of the base period).
GNP deflator is the ratio of the nominal volume of GDP to the real one.
One of the main macroeconomic indicators that evaluate the results of economic activity is gross domestic product (GDP).
