National Income

The national income of a country is the total income earned by that country from the production of goods and the provision of services in a given year after deducting depreciation. It therefore measures the level of economic activity of a country within a year. Note depreciation of assets is taken into account when measuring national income.

Gross Domestic Product (GDP)

GDP is the total money value of all output produced within a country over a year.  The word ‘domestic’ refers to income earned from local production only.

Gross National Product (GNP)

GNP is the total money value of all output produced over one year, both within a country and from its overseas investments.

Therefore GNP = GDP + overseas earnings by nationals

Net National Product (NNP) or National Income (NI)

NB:  The definition for national income includes adjustments for depreciation.

National Income (NI) = GNP- depreciation

Since GNP figures do not accurately measure the standard of living, the following indices may be used.

Per capita GNP

This is calculated by dividing a country’s GNP by its total population. That is,


Total population

Thus if a country’s GNP is $40,000,000 and its total population is 5,000, its per capita GNP would be $8,000.

40,000,000   = 8,000


Thus each citizen enjoys on an average $8,000 worth of goods and services.

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