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Standardized Economic Measurements (GDP, GNP, and GNI)

The large-scale measurements that are discussed in this article all track two things: how economies on all levels are doing and how this affects the areas of said economies. These measurements easily allow for people to observe how a location’s wealth changes over time.

The things that the GDP and the GNP of a nation track are very similar to each other. According to Shobhit Seth, a writer for Investopedia, the profits and costs that these distinctions define are either based within an area’s residents or its nationals, which influences where it contributes to (Seth, investopedia.org). This distinction is important because an international company’s actions can raise the GDPs of the countries where its outposts are. The companies that were founded in its host nation mainly aid its GNP. An example of this difference is shown when the income an outpost for an international company produces for its host country contributes to its GDP. By comparison, the composite income that the employees from the company’s host country bring to that company contributes to that nation’s GNP.

When compared with the other two economic measurements, the GNI of a country is detailed. Peter Bondarenko refers to this measurement in the Encyclopaedia Britannica as the numerated composite revenue that remains within a nation (Bondarenko, britannica.com). The GDP of a nation differs because it includes profits from worldwide entities within its host nation, unlike a country’s GNP. For example, an international outpost from a foreign country will contribute to the GNP of where it was founded, as opposed to the location of the outpost. The profit that this outpost makes contributes to its host country’s GDP.

The GDP of a nation is most useful for tracking which industries bring in the most revenue within a country. Companies and countries are usually intertwined entities, and the national companies bring in the most money for their host country. This is the purpose for GDP and GNI, which aids trade. Each of these measurements serve a purpose to economists and those that work with them. However, they essentially contribute to the same purpose: to tell how the economy is doing within an area, which helps tell how the economy is doing worldwide.