Functions of GDP and GDP in the economy. Gross National Product (GNP) Definition of GNP

To define such a concept as GDP, there is absolutely no need to use a lot of complex terms and formulations. Simple, understandable words are quite suitable for this purpose. So, let's try to decide what GDP is and why this indicator is needed.

First of all, it should be noted that the term GDP or gross domestic product of a country is used to determine the rate of economic development of any state.

In simple terms, GDP is the total value of goods, works and services that were produced and provided in the territory of one country during the year.

This indicator was first calculated in the 30s of the 20th century by economist Simon Kuznets. Subsequently, the specialist received the Nobel Prize.

Today, two important indicators are used in the economic sphere: GDP and GNP. The concepts differ from each other, although they are aimed at determining the economic indicators of the state. When calculating the gross domestic product, financial indicators are taken into account that do not depend on the nationality of the enterprises involved in the production of products. The most important thing is that the enterprise is located on the territory of the state.

To calculate the domestic national product (GNP), only the products of those production facilities that are considered national are taken into account.

What is GDP?

As we have already noted, the term has a very simple definition - it is the cost of everything that is produced in the state. The calculation of the indicator is multi-level and its implementation is carried out by special services. It is generally accepted that GDP is expressed in US dollars, however, today the following options are also used:

• national currency of the country;
• monetary unit of any state, in accordance with the exchange rate.

The dollar is used to compare the GDP of different countries to compile ratings and assess the current economic situation.

What types of GDP are there?

To get a more complete understanding of the indicator, it is worth getting acquainted with its types. So, let's look at this issue in more detail and note that GDP can be:

• real;
• nominal.

Real GDP is an indicator that is used to account for growth in production without using its financial side. As a rule, this parameter is expressed in prices of the year that was taken as the main one when making calculations. For example, to calculate the indicator for last year, Rosstat used price data for 2011 as a basis.

The advantage of the indicator is that it allows you to determine the increase in the country’s trade turnover. Real GDP does not depend on changes in exchange rates and other economic parameters. It is this indicator that draws conclusions about the current state of the economy in the country.

For example, real GDP will allow you to quickly understand whether there is a crisis in the country and how difficult the economic situation has already developed. For countries whose economies are stable, real and nominal GDP are the same.

The nominal indicator is GDP calculated in current prices. The cost of certain goods is determined at the time of collection and is subsequently used for making calculations. When a country experiences an increased level of inflation, GDP may increase, however, such a reaction will be formal and the reason for it will be a real decrease in production capacity.

In fact, nominal GDP serves to reflect the rise or fall in the cost of goods and services within a country, without touching the dynamics of economic development as a whole. Nominal GDP serves as a unique tool for economists to draw certain conclusions and make forecasts.

An example is the situation of a change in an indicator. If, with a constant increase in prices, the level of demand begins to fall, then nominal GDP will decrease significantly.

What is “GDP per capita” and “GDP at PPP”?

Economists often use the term “GDP per capita.” This indicator is used to identify important indicators of a state or a specific region. It is very easy to calculate this indicator using a simple formula:

GDP per capita = total GDP / per number of citizens living in the country.

This parameter is also used to compare economic indicators in different countries. In fact, this indicator cannot be considered absolute and accurate, since the data used in the calculation changes periodically and is not always real.

PPP is another term that needs to be deciphered. Purchasing power parity is encrypted under this concept. This indicator is used to compare data in different countries and in different monetary units. In other words, GDP at PPP is the ability of a citizen of one state to purchase the goods of another with his available income.

When conducting international comparisons, the UN compares about 700 basic goods, 250 investment objects, 15 objects under construction.

Methods for calculating GDP

The classic formula for calculating GDP is quite simple:

GDP = Gross Value Added + Taxes on Products and Imports - Subsidies on Products and Imports, however, different formulas may apply when certain calculation techniques are used. There are several methods for calculating this indicator. Let's note the most famous and simple ones:

1. Production method or value added. To calculate GDP, the value added indicator and the market valuation of production in the state are taken as the basis. The method is production
2. Distribution methodology or by income. To calculate GDP using this method, the following types of income are used: all salaries and bonuses paid to the population, income from land rental, interest on the use of borrowed funds. Direct taxes and salaries of civil servants are not taken into account.
3. End use or cost method. To calculate the indicator, it is necessary to use the following types of expenses: consumer, government, investment, net exports.

There is a special calculation formula for this method:

C - personal consumer expenses;

I—gross investment;

G – government procurement of goods and services;

Xn is net export.

Each method has its own characteristics and subtleties. In our country, all three calculation methods are used, however, the greatest preference is given to the distribution method.

GDP in the Russian Federation

Every year, Russian President V. Putin convenes a press conference where he reports on the current indicators of the country's GDP. Last year, such a meeting took place at the end of December, where the President said that in 2016 there was a decline in GDP, however, it was within the normal range and amounted to 0.5-0.6%. If we compare the figures for 2015, when GDP was 3.7%, we can note that the drop was insignificant. Moreover, in November last year, there was a slight increase in the indicator, which could be the beginning of an increase in the pace of the economy in the state.

Dmitry Medvedev also expressed his opinion on this issue. The Prime Minister confirmed that the country has gone through one of the most difficult periods in its history and today we can say that the state has adapted to the fall in oil and gas prices. According to Medvedev, the economic decline was stopped and the GDP indicators were:

• nominal GDP – 1,267 billion US dollars;
• PPP - 3,745 billion US dollars.

As for the level of GDP in 2017, it is worth noting that already in the first months of the new year, GDP growth was noted, and by the end of the year it amounted to 1.1%.

What is the significance of the GDP indicator for the state?

As we have already noted, GDP is an indicator that includes the total value of all products, goods and services that the state produced during the year. This parameter is of great importance for each country, since it allows one to determine the trends and speed of economic development of the state. The following features are characteristic of GDP:

• the indicator is measured in dollars to allow further comparison;
• within the country, data are calculated in national currency;
• the indicator is recalculated annually;
• GDP is formed not only from government, but also from private income;
• the indicator fully reflects the stage of economic development of the country.

In order for GDP to be calculated as accurately as possible, it is not enough to take the basic general figures and make the calculations. To get a more complete picture of the development of the state, to determine GDP, namely, to understand which sectors are the most profitable, it is worth checking such indicators.

For example, in Russia, the most efficient and profitable industries are those related to the sale of oil and gas; accordingly, income received from this source plays a special role in the formation of GDP.

Conclusion

GDP is a very simple concept that can be described in simple words and phrases, without using complex terms and concepts. Our article was written so that even people without economic education can obtain the desired information without delving into complex formulations and calculations.

The work provides simple definitions of basic concepts and describes the main methods for calculating GDP, which allow you to get an idea of ​​the most important economic indicator of any state.

A general indicator of production volume in the national economy is gross product (GP), which is divided into GDP and GNP:

Gross Domestic Product (GDP) – This is the total market value of the total final production of goods and services created in the territory of a given country during the year using factors of production owned both by that country and by other countries.

Gross National Product ( GNP) – it is the market value of the total final production of goods and services created by national enterprises at home or abroad during the year using factors of production owned by that country.

GNP differs from GDP by the sum of the balance of income received by a given country from abroad and income transferred abroad received in the territory of a given country. Features of the GDP or GNP indicator:

1) all goods and services are paid in cash once;

2) these are indicators that take into account the volume of production for a certain period of time, usually a year;

3) these are indicators that take into account goods and services, regardless of whether they have been sold or not;

4) these indicators take into account only final products (products for final consumption), and not for resale and processing.

The basic principles for calculating these indicators are: exclusion "double counting errors""and exclusion from calculation unproductive transactions. The first principle is ensured by industry accounting of only added value.

Added value- this is the market price of the volume of products produced by the company minus the cost of consumed raw materials and materials purchased from suppliers. This is the contribution of a given company to the production of the current year, consisting of the wages of its employees, utility payments and rent payments.

Exclusion from the calculation of non-production transactions, i.e. those transactions that are not accompanied by an increase in the production of goods and services. Non-productive transactions are: Firstly, purely financial transactions of three types: purchase and sale of securities; government transfer payments to certain categories of citizens (social insurance payments, unemployment benefits, pensions, benefits, scholarships); private transfer payments (one-time gifts from relatives, monthly subsidies to students from their parents), Secondly, sale of second-hand items (each item should be counted in the calculation of GDP only once).

where C – personal consumer expenses;

I – gross private domestic investment, including industrial capital investment in primary production;

G – government procurement of goods and services;

Xn – net exports – the difference between exports and imports.

The calculation method based on company income includes:

where A – depreciation – deductions for capital consumption;

T – indirect taxes on business;

(C+S) – (expenses and savings show income) – these are wages, contributions to social insurance funds, pensions and employment;

R – rent payments (rent);

r – interest income of capital owners;

P – profit, including that received by private owners, corporate profits.

A peculiarity of the calculation of GNP by income is the presence in the income composition of two categories of distribution of funds not related to the payment of income - depreciation (A) and indirect business taxes (T).

Depreciation – These are annual deductions for the reimbursement of capital consumed during the year, i.e., fixed assets operating in production for no more than a certain period, which depends on the policy of the enterprise. In general, for the national economy, depreciation charges are a huge amount, but it is not an increase in profit, since it must be set aside to replace in the future the capital consumed during production in individual years.

Indirect business taxes include: value added tax (VAT), sales tax, excise taxes, customs duties, property tax, etc. These taxes are included in the price of goods and services, and thus are passed on to the buyer. The influx of indirect payments into the treasury is, in fact, unearned income of the government, since it does not make any contribution to the current year's production in exchange for the receipt of indirect taxes into the budget.

Calculation of GDP by industry takes into account the role of industries in creating GDP by value added.

Reducing the value of GDP by the amount of depreciation charges, we get net national product (NNP ) – the total annual production of goods and services produced and consumed in the country.

National income (NI)– the value newly created during the year, characterizing the welfare of society, i.e. the amount of wages, rent, profit, interest, is determined by subtracting from the value of income indirect taxes on business, which do not reflect the contribution of economic resources in its creation.

Personal income (PD)- this is the amount of income of the population, determined by deducting from the national income (NI) the contributions of workers, employees and employers to the social insurance system, taxes on corporate profits and undistributed profits, but adding transfer payments . It is earned income, not received income. Citizens do not receive all of their personal income, as it is subject to taxes.

Disposable income (Disposable income)– income available for direct spending by households; determined by subtracting individual taxes from personal income.

The income level of the population is reflected using the following indicators.

Average per capita cash income, which are calculated by dividing the total cash income by the current population.

Nominal money income population is characterized by the total amount of money received (or accrued) over a certain period of time.

Disposable cash income – This is income that can be used for personal consumption and savings. They are equal to nominal income minus taxes, mandatory payments and voluntary contributions from the population.

GNP is one of the group of main indicators developed by the UN Statistical Commission to compare the level of economic development of different countries.

Gross national product is the total value of all products produced in one year by residents of a country on their territory and abroad, calculated at market prices.

Together with other indicators, GNP is included in the System of National Accounts (SNA), which was created by the UN and has been used since the 50s of the last century. The latest version was developed in 1993 and is used in more than 100 countries around the world. Since 2013, instead of the word product, income has been used. Thus: GNP and GNI are synonyms, they are the same thing.

The SNA reflects the annual economic turnover of a country and is based on the same principles as the balance sheet of an enterprise. The national economy is presented in it as a general system, including production, redistribution, accumulation and consumption of products (Fig. 1).

Let us immediately explain the difference between similar indicators - gross national product and gross domestic product, how they differ from each other, and how they are related (Fig. 2).

• GDP is determined on a territorial basis, and characterizes the state of the economy in a particular country. Through this quantitative indicator, the rate of reproduction of material resources, including labor productivity, is assessed.
• GNP is determined on a national basis, and to a greater extent reflects the income of citizens of a particular country, regardless of where they were received (that’s why the name was changed). It is this indicator that is subsequently used to calculate average per capita income and HDI - the human development index.

Methods for calculating GNP

1. By expenses.

The methodology is based on calculating the expenses of all members of society, including the needs of the state and enterprises. Consists of the following components:

• C is the consumption of goods and services by households;
• I - investments in fixed assets and working capital: inventories, reserves;
• G - government procurement at all levels, including services of military and civil servants;
• NX is net exports, equal to the balance of goods sold abroad and imported.

The cost structure changes depending on the economic and political situation. Thus, with an increase in oil prices, the share of NX increases, and with a large volume of exports, the indicator may become negative. State expenses also increase during periods of natural disasters and military operations.

2. By income.

Gross national product is the total income earned by society. It consists of results for different types of activities (Fig. 3).

Entrepreneurial:

• PC - profit of corporations from the operation of fixed capital: machines, buildings, equipment;
• RD - rent received from the transfer of rights to develop subsoil, use of land, patents;
• PE - payment for loans provided to businesses and other participants in economic life (net interest).

Labor - represents the sum of wages of hired workers (DV), and income received in the form of remuneration for work in one’s own enterprise (DS). In addition, the calculation takes into account depreciation (A) of fixed assets and indirect taxes: VAT, duties, excise taxes (KN).

For some purposes, the production method of calculating GNP, or the value added method, is used. DB is calculated as the difference between revenue and costs for each enterprise separately, and it can be tracked by the amount of VAT. It avoids double counting of final and intermediate products. For example, exclude from the cost of a car the cost of tires and paint produced by other companies.

What is GNP used for?

Gross national product cannot be considered a perfectly accurate measure of national well-being. When calculating it, it is impossible to take into account many factors: housework, gratuitous services, shadow business turnover, including criminal business: drugs, weapons. However, this is the main indicator for comparing per capita income in different countries. The dynamics of its changes in Russia over the past 6 years clearly show a sharp drop in living standards in 2014. Experts believe that capital outflow played a certain negative role in this.

According to the World Bank classification, countries are divided into 3 categories:

• with a high level - more than $12,616/person,
• with an average level - from 1,036 to 12,615 dollars/person,
• with a low level - below $1,035/person.

Russia in 2013-2014 ranked 57th out of 187 countries, and was at the bottom of the high-income group. All European countries are higher than us, including the Baltic countries, and the USA (10) and Japan (40). The first places are occupied by Bermuda and Norway - more than $100/person. All countries of the former CIS have lower positions: Kazakhstan - 60th place, Ukraine - 118th, Belarus - 81st. China occupies 80th position.

GNP (GNI), longevity, access to knowledge are three values ​​on the basis of which the HDI, or the so-called human development index, is calculated. It is adjusted for social and gender inequality, multidimensional poverty, and is considered a fairly accurate indicator of living standards. According to this indicator, Russia is in 57th place, and is one of the countries with a high rating.

To determine the state of economic well-being of a country, there are a significant number of different criteria with the help of which the country’s macroeconomic indicators are compiled. There are also those that relate to psychological, social and others. But in this article, only those that indicate the level of economic prosperity are of interest, or rather, two of them: gross domestic product and gross national product. And the main question: what is the difference between GDP and GNP? In most countries of the world, these indicators do not differ much from each other. But there is a difference between them, and within the framework of the article it is necessary to find out how much the values ​​​​differ when calculating, why they are calculated and, finally, what is the meaning of these parameters, and what are these macroeconomic indicators in general.

What's happened

Gross domestic product refers to the total value of all produced material goods and services rendered that were provided and brought into a state of readiness for sale. Moreover, products made within the borders of a certain country are taken into account. This is the main difference between GDP and GNP. Counting is carried out in nominal banknotes. But conditions should be taken into account, because sometimes products can be included in GDP, and sometimes they cannot.

Example of calculating GDP

So, if there is a certain factory that produces semi-finished products and exports them abroad, then the total cost of semi-finished products produced by the enterprise will be added to the gross domestic product. But if the plant uses them in the future itself to manufacture more advanced and necessary products that will be exported, then the cost of the further product (the very final one, ready for external sales) will be added to the value of GDP. It should be said separately what real and nominal GDP/GNP are. The second means what is currently available, while the first means what it should be as a result of dividing GNP by the general price level. Quite confusing for a non-expert. The main difference that needs to be understood when studying GDP and GNP is the territorial aspect of the calculation.

What is gross national product

The gross national product is understood as the total value of material goods and services that were produced and provided by representatives of one people throughout the entire Earth. Compared to calculating gross domestic product, it is more labor-intensive and only gives a relative idea of ​​the standard of living. It’s all because of the use of money: for example, if a person moved to another country and started business there, GNP takes into account the income that he brings to the state, but this income is brought to a completely different person, from whom his homeland does not receive direct taxes and investments in the economy . A bypass effect is possible when money earned abroad is transferred to the homeland, but even this option is not optimal from the point of view of using human potential. How GDP differs from GNP should already be clear at this stage; if not, you need to read the previous two paragraphs.

How is GDP calculated?

Gross domestic product for a certain year is calculated in this way: the market value of all products produced by a country is summed up in a certain monetary value, which is ready for sale and use abroad by the enterprise that produced it. Here we should digress and talk about the so-called positive shadow sector of the economy. Calculating the real gross national product of a country is very problematic.

Positive shadow GDP

Usually you can learn from TV screens, newspaper pages, on the radio, and on the Internet that the shadow sector is always bad. But only illiterate people can say that. Let's give an example: you have a garden of ten acres, and it was planted with potatoes, carrots, radishes, herbs and other crops. Time has passed, the time has come to harvest. Vegetables collected from plots do not openly contribute to the gross domestic product, therefore, technically, this is part of the shadow sector of the economy - the production of products without imposing taxes. But it is grown, as a rule, for one’s own consumption; it does not harm society, but can only reduce the profits of individual entrepreneurs. It is situations like this that make up the positive shadow sector of the economy. Why was this told? The fact is that in different countries of the world there have been and, perhaps, there will be more attempts to determine the boundaries of this sector and add it to the gross domestic product (or gross national product), but so far, due to the impossibility of obtaining accurate data on the volume of work, such a calculation has not been possible is underway. Measurement of GDP and GNP is carried out in local currencies for “their” investors, and in US dollars for reporting data to international ones. Conversion is carried out at the official exchange rate.

How is GNP calculated?

The gross national product is calculated based on the data provided by people who have citizenship of a certain country, or, if there is a division into nations (provided for in passports), then on the basis of the income of representatives of one nation. This calculation technique is necessary to obtain information about the state of the state-forming masses as a reason for judging the state of affairs in the power itself.

Who calculates the gross domestic product?

GDP is calculated by two organizational forms: private and public. The tax and customs services and various statistics committees help the state collect the required information. The information they collect is quite accurate. But there are a number of pitfalls here that spoil government statistics. Among them: submission of false data by managers or owners of enterprises, deliberate falsification of data by the government or its subordinate structures. In world practice, it has been noted that owners of enterprises in capitalist countries have a tendency to reduce data, and increasing indicators is of interest to managers in countries with a significant public sector, such as in China, where scandals arise over and over again about enterprises overestimating their profitability and turnover indicators.

How do private structures count?

Private structures operate using other methods. They carry out calculations based on official data, but at the same time they check the data provided by other states on the amount of turnover, check with the data of banking institutions and other private structures that have access to the required type of information, and based on a comprehensive assessment they already make their own conclusions about the size of the gross domestic product and present their subjective judgments about the correspondence of government data to the real state of affairs. The calculation of GDP and GNP is carried out by them in order to provide additional confirmation of the financial capabilities of the power, as well as as an indicator of how trustworthy the country’s government can be from the point of view of a foreign investor.

Who calculates the gross national product?

GNP is calculated using almost the same methods as GDP, but the scale of action changes. Thus, if the gross domestic product is calculated for a certain territorial unit, then when calculating the gross national product it is necessary to take into account what is relevant to the people for whom the indicator is calculated.

The concepts of GDP and GNP are not very different for most countries, even when calculated by private entities. Although for some there are still differences, and they are huge. One of these states is Tajikistan, which receives 60% of its gross domestic product from the work of economic migrants. Thus, the gross national product of this country is a multiple of GDP.

Why is GDP calculated?

There are quite a few methods for calculating gross domestic product. Initially, the state wants to know the potential of the economy in order to be able to plan the further consistent development of the state formation. Also, a comparison of gross domestic product indicators allows you to view the progression and stability of its development. That is, data is provided by which potential investors will decide whether the country meets favorable indicators for them and whether it is worth investing in a project.

GDP is based on a number of other indicators that show the overall level of living comfort, a person’s ability to realize their talents, the level of social security and many other aspects of life. One such indicator is the Human Development Index. But even if things are going badly in a country, then calculating the gross domestic product has a certain meaning: it uniquely shows the level of openness in the country, and although in moments of decline it restrains investors’ investments and causes panic among them, when growth begins it can provoke those who invests money in assets that have reached the lower level of value, and, using the snowball principle, cause economic growth. GNP and GDP indicators are valuable precisely as indicators of a country’s level of development, indicators of possible potential that can be worked with and which can be developed, converting into profit.

Why is GNP calculated?

The main purpose, which should only be mentioned, is to find potential reserves. The fact is that migrants who have left the country and are conducting economic activities in the territory of another state can transfer money to their homeland. And ideally, having saved up some money, they can return home and start their own business, creating jobs and thereby revitalizing economic life. But the problem is that although they try to take everyone into account, a rather small number returns to their homeland, so it is impossible to consider the entire potential as usable. Typically, various models take into account rates from 20 to 80 percent. Data is used to identify groups of people who are most likely to return.

Gross National Product is the total market value of all final goods and services produced by a country's citizens using national (that is, owned) factors of production during one year.

Let's consider the main concepts of this definition:

Cumulative. GNP is an aggregate indicator characterizing the entire national production volume, total output.

Market. The value of GNP includes only official market transactions that have gone through the buying and selling process and have been officially recorded.

Therefore, GNP does not include, firstly, self-employment (a person builds his own house, knits a sweater, renovates an apartment, a master repairs his own TV or car, a hairdresser does his own hair); secondly, work without compensation (friendly assistance to a neighbor when repairing a fence, to a friend when renovating an apartment); thirdly, the cost of goods and services produced by the “shadow” economy.

Although the sale of illegally produced products is a market transaction, it is not officially registered or recorded by the tax authorities. The production volume of this “sector” of the economy in developed countries amounts to from a third to a half of the total output. The “shadow” economy refers to those types of production and activities that are not officially registered and are not taken into account by national statistical and tax services. The “shadow” economy, therefore, includes not only illegal activities (drug trafficking, underground dens and gambling houses), but also completely legal ones, the profits from which, however, are hidden from taxes. There are no direct methods of calculation to estimate the share of the “shadow” economy, therefore, as a rule, indirect methods are used, such as additional electricity consumption in excess of what is officially required and additional money supply (the amount of money) in circulation in excess of that required to service official transactions. Price.

GNP measures national output in monetary terms - in value form, since otherwise it is impossible to add up apples with sheepskin coats, cars, computers, CD players, Pepsi-Cola, etc. Money serves as a universal equivalent of the value of all goods, a single meter that allows one to evaluate and compare the values ​​of all different types of goods and services. Ultimate. All products produced by the economy are divided into final and intermediate. Final products - These are products that go into final consumption and are not intended for further industrial processing or resale. goes into the further production process or resale. As a rule, intermediate products include raw materials, materials, semi-finished products, etc.

However, depending on the method of use, the same product can be both an intermediate product and a final product. So, for example, meat bought by a housewife for borscht is a final product, since it went into final consumption, and meat bought by a McDonald's restaurant is an intermediate product, since it will be processed and put into a cheeseburger, which will be in this case the final product. All resales (sales of used items) are also not included in GNP. GNP includes only the cost of final products in order to avoid repeated (double) counting. The fact is that, for example, the cost of a car includes the cost of the iron from which steel is made; steel from which rolled products are produced; rolled metal from which the car is made. Therefore, the cost of the final product is calculated . by added value

Let's look at this with an example. Suppose a farmer grew grain and sold it to a miller for $5, who ground the grain into flour. He sold the flour to a baker for $8, who made dough from the flour and baked bread. The baker sold the baked goods to the baker for $17, and he, in turn, sold the bread to the buyer for $25. Grain for the miller, flour for the baker, and baked goods for the baker are intermediate products, and the bread that the baker sold to the buyer is the final product. = Thus, value added represents the net contribution of each producer (firm) to national output. The amount of added value ($25) is equal to the cost of the final product, that is, the amount paid by the final consumer. Therefore, in order to avoid repeated calculations, only value added equal to the value of final products is included in GNP. Value added is the difference between total sales revenue and the cost of intermediate products (the cost of raw materials that each manufacturer (firm) buys from other firms). In our example: 55 - 30

25 (USD).

In this case, all internal costs of the company (for wages, depreciation, rental of capital, etc.), as well as the company’s profit, are included in added value. Goods and services. Anything that is not a good or service is not included in GNP. Those payments that are not made in exchange for goods and services are not included in the value of GNP. Such payments include and unproductive ( financial) transactions.

Transfer payments are divided into private and public and are like a gift. Private transfers primarily include payments that parents make to children, gifts that relatives make to each other, etc. Government transfers are payments that the government makes to households through the social security system and to firms in the form of subsidies. Transfers do not involve payment for either goods or services.

Financial transactions include the purchase and sale of securities (stocks and bonds) on the stock market. Since there is also no payment for goods or services behind the security, these transactions do not affect the value of GNP. (But it should be borne in mind that the payment of income on securities of firms is necessarily included in the value of GNP, since it is a payment for an economic resource, that is, factor income, part of the national income.)

Produced by the citizens of the country using national factors of production. This statement is important in order to understand the difference between Gross National Product and Gross Domestic Product. GNP represents the total market value of all final goods and services produced with the help of national factors - no matter on the territory of a given country or in other countries. The condition of nationality is important here. GDP- is the total market value of all final goods and services produced on the territory of a given country - no matter with the help of national or foreign factors of production. In this case, the territorial factor is important. In most developed countries, the difference between GNP and GDP does not exceed 1%.

The difference between them is significant for countries that live off (or receive significant income) from tourism (Cyprus, Greece) or provide services, primarily banking, to citizens of other countries (Luxembourg, Switzerland). Within one year. In accordance with this condition, GNP includes only the value of final goods and services, produced in a given year