From the course: Economic Indicators

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GDP vs. GNP

GDP vs. GNP

From the course: Economic Indicators

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GDP vs. GNP

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- We live in a global economy, but whether we're talking about England, Mexico, or Russia, economists measure growth for every country in the world by using the same metric, GDP, otherwise known as Gross Domestic Product. But it's also important to be able to compare what growth looks like across different economies in our global economy. Today, GDP is the measure people use when talking about growth, but not long ago, people used something called GNP, Gross National Product, to talk about growth. Some people still use it today, and it's important to know the difference, and why GDP is the better measure of growth. You see, GNP referred to growth in businesses with a certain national origin, even if they were in foreign countries, but it excluded foreign companies operating within that country. So Toyotas made in the United States would not be a part of U.S. GNP, they'd be a part of Japanese GNP. But Fords made in Europe would be part of U.S. GNP. For GDP, Toyotas made in the USA are…

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