Economics for Common People – Part 13 GDP, GNP & Per Capita Income

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1️⃣ What Is GDP?

GDP stands for Gross Domestic Product.

It is the total value of all final goods and services produced within a country in one year.

GDP measures domestic production.

If a car is produced inside the country, it is included in GDP.

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2️⃣ What Is GNP?

GNP stands for Gross National Product.

It measures the total income earned by the country’s residents, including income earned abroad.

GNP = GDP + Net income from abroad.

If a citizen earns money in another country, it is included in GNP.

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3️⃣ Difference Between GDP and GNP

• GDP → Focuses on location of production.
• GNP → Focuses on ownership of income.

Example:

If a foreign company produces goods inside India, it adds to India’s GDP. But the profit sent back to its home country is not part of India’s GNP.

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4️⃣ What Is Per Capita Income?

Per Capita Income = Total National Income ÷ Population

It shows the average income per person.

It helps compare living standards between countries.

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5️⃣ Why These Indicators Matter

• Measure economic growth
• Compare countries
• Help in policy decisions
• Attract foreign investment

However,

GDP growth does not always mean equal distribution of income.

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6️⃣ Limitations

• Does not measure inequality
• Ignores environmental damage
• Does not measure happiness or welfare

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GDP measures production. GNP measures national income. Per Capita Income measures average income.

— Shaktimatha Learning