Difference between GDP, PIN, PNN and GNP
The difference between GDP, PIN, PNN and GNP is based on various ways of measuring the total production of a country during a given period of time. Which concept should be used in a certain analysis will depend on the information to be captured and the objectives of the analysis itself.
In other words, the difference between GDP, PIN, PNN and GNP is explained by the use of different formulas to measure the product of a country. The latter is one of the most important indicators of the so-called System of National Accounts.
The product of a country tries to measure the value of the goods and services produced in its territory during a certain period of time (usually one year).
To obtain a monetary value of the product (physical goods and services cannot be added), the quantity of goods and services produced is multiplied by their respective price at a given time.
Different product concepts
There are different ways of measuring the country's product: in gross, net terms, considering the flows of residents or non-residents, etc. These differences explain the existence of various product concepts such as GDP, PIN, PNN and GNP. Next, we will explain them.
- GDP: It is the gross domestic product, and it measures the production of goods and services carried out by the residents of the country (within the borders) minus the consumption of intermediate goods and services (those that were consumed in order to produce).
- PIN: It is the net internal product. It is calculated by subtracting depreciation or consumption of fixed capital from GDP. In other words, with this measure we consider the deterioration or wear and tear suffered by capital goods when they are used in the production process. For example, a bread oven wears out as more and more loaves are produced. In this way, the PIN = GDP - consumption of fixed capital.
- GNP: It is the gross national product. While the GDP measures the production of final goods and services within the borders of a country, the GNP is concerned with measuring the production of nationals. That is, of the citizens of a country, regardless of where they are. In this way, if we want to calculate the GNP of Spain, we must consider the production of companies that are owned by Spaniards, whether or not they are located within the country. Then, we subtract the production of the companies that are located in Spain but are owned by foreigners. We will do the same with income (if we use this method), considering the income of Spaniards inside and outside of Spain and subtracting the income of foreigners living in Spain.
- PNN: It is the net national product. It is calculated by subtracting consumption of fixed capital from GNP. In this way: PNN = GNP - consumption of fixed capital
See the difference between gross and net.
As we can see, the difference between GDP, PIN, PNN and GNP is explained by the existence of different product calculation methodologies. In any case, these concepts are interrelated and one can be derived from one another with the appropriate information.
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