Gross Domestic product is the total value of goods and services produced within the boundaries of a country regardless to nationality GNP: Gross national product is the total amount of goods and services produced by means of production which are domestically owned in one years time. GNP can be used to measure the increase in real national income over a given period of time. Criticisms of GNP 1.
General Problems of statistical comparison A. Definitions and accounting standards B. Methods of data collection and secrecy C.
Theoretical, methodological issues National income statistics number problem II. Uses of Income Comparisons: As a measure of the standard of living i.
As a measure of economic size or power i. As a denominator in ratios of trade dependency, debt burden, military spending, etc. National Income Definitions 1. Gross domestic product - Total value of all final goods and services produced in the country in a year, where "country" is defined a geographically.
Now the standard concept used by the United Nations, in its standardized System of National Accounts, by the EC, and by most individual countries, including the U. Formerly used by U. The difference between GNP and GDP is large in countries that pay or receive large incomes from international investments or remittances, and tends to be large in countries that are "tax havens" income reporting homes for corporations that are producing elsewhere.
Ireland is a special case. For this reason companies such as Google, Yahoo, Microsoft, Forest Labs, and many others channel license revenues and royalties through Irish subsidiaries.
These royalties and revenues are largely excluded from the tax base in Ireland source. Net material product - The total value, measured in final selling prices, of final material production most services excludednet of depreciation.
Was used by most socialist countries. Soviet GNP was only about half the U. Uncounted Income and Production 1. Goods produced but not sold - Production by households for family consumption.
Underground, shadow, or second economy, black market, or informal sector - Production concealed to avoid taxation or regulation. In socialist countries, the underground economy filled gaps in the plan.
Tends to be larger in countries with weak institutions, high taxes and regulations, and limited formal emloyment opportunities.
Because it is intentionally hidden, its size is not known accurately, but its difference from measured GDP can be estimated in several ways, including monetary circulation, electricity consumption, lights seen at night in outer space, survey methods, discrepencies in national income accounts, and multiple-indicator methods, such as the one used to compile the following table.
Conversion of National Incomes to a Single Currency 1. Official or market exchange rates - In socialist countries, prices and exchange rates were set by central planners. In market economies, rates are influenced by government intervention and market fluctuations.
Atlas Method - Three-year adjusted average of market rates to reduce effects of year-to-year exchange fluctuations 3. Purchasing power parity - U. International Comparison Project revalues production in "international dollar" prices. Significantly increases relative sizes of GDPs for most low-income countries.
Three Methods Compared, We support America's small businesses. The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business. National income figures for various countries provides us the rates of growth in different economies.
4 In an economy, inter-sector comparison can be made with the help of national income statistics 5 national income figures are inevitable for an economy, which wants to develop with the help of economic planning.
6 National income accounts. Gross national income (GNI) is defined as gross domestic product, plus net receipts from abroad of wages and salaries and of property income, plus net taxes and subsidies receivable from abroad.
Net national income (NNI) is equal to GNI net of depreciation. Income received on the basis of redistribution, called secondary income, is excluded from the national income.,Such secondary income includes pensions, grants, and the wages of workers employed in education or health or at other institutions and organizations in the nonproduction sphere.
Historic Versions of the System of National Accounts: The broad objective of the System of National Accounts (SNA) is to provide a comprehensive conceptual and accounting framework for compiling and reporting macroeconomic statistics for analysing and evaluating the performance of an economy.
National income accounting is essentially adding up all of the economic activity in a nation within a certain period of time. Such economic measures as Gross Domestic Product (GDP) and Gross.