What does Gross National Product (GNP) measure?

Gross National Product (GNP) measures the economic output produced by a country's residents, regardless of their location. This means that GNP includes the value of all goods and services produced by the labor and capital of the country’s residents, whether they are located domestically or abroad. For example, if a company based in the country operates factories overseas, the output from those factories still contributes to that country’s GNP, as the company and its employees are considered national residents.

By focusing on production by residents, GNP provides insight into the economic strength and productivity of the country’s citizens, reflecting their contributions to the economy, irrespective of where that production takes place. This is distinct from Gross Domestic Product (GDP), which only measures economic output within the geographical boundaries of the country, regardless of who produces it. Therefore, the emphasis on residents' output in GNP offers a broader view of national economic activity that incorporates international production efforts as well.