Question

Explain difference between GDP and GNP. Support your answer with simple examples from Oman economy.                                                                                              

Answer 1

Gross domestic product (GDP) and Gross national product (GNP):

GDP is the value of the finished domestic goods and services during a specified period of time of a nation.Gross domestic product is the most basic indicator used to calculate the overall health and size of a country's economy. GDP is found by adding together private consumption or consumer spending, government spending, capital spending by businesses, and net exports—exports minus imports.

Gross national product is another metric used to compute a country's economic output. GNP is the term that refers to the finished goods and services owned by a country's residents over a time period. GNP can be found by adding consumption, government spending, capital spending by businesses, and net exports (exports minus imports) and net income by domestic residents and businesses from overseas investments.

These two terms are often used in economy to measure the country's economy on a whole but both the terms represent the total market value of the production of goods and services during a specified period of time. But the only difference between these two terms are how much they define the scope of the economy that alone matters.

GDP- measures the value of goods and services produced within a country's borders, by citizens and non-citizens alike.

GNP- measures the value of goods and services produced by only a country's citizens but both domestically and abroad.

Example with reference to Oman economy:

Economy of Oman is rural and agrarian. GDP of Oman economy has increased continuously in the past fifty years. GDP rank is 67 and GDP per capita rank is 47 in 2019.

Oman gnp for 2019 was $76.28B, a 11.55% increase from 2018.