GDP versus GNP

What is the difference between these two terms? Where do we look at them?

GDP and GNP are two terms used in business and economics.

GDP is The dollar value of all final goods and services in a 12-month period within the country.

GNP measures the wealth of all citizens in 12 months whether its in the U.S. or outside our borders, based on citizens.

If you are taking economics, you’ll most likely get practice problems like such:

If I am a Spanish citizen doing business in Portugal, who's GDP am I contributing to? GNP?

The best way to solve these problems is by focusing on citizenship versus location. GDP, think of where. GNP, think of citizenship. Try this problem on your own before checking your answer with me here.


It is… GDP = Portugal, GNP = Spain !! If you’re confused, here’s a quick explanation. GDP = location, since the business is in Portugal, I am contributing to the GDP of Portugal. GNP = citizenship, I am a Spanish citizen, so I am contributing to the GNP to Spain. Bonus If you’re a citizen in two locations, your GNP is going to be contributed 50/50. Today was a relatively short blog post as I have a Scrimmage I am performing in, however, I am grateful you continue to read nonetheless.