GDP's Limitations and Alternatives: Exploring GNP and PNN

University:
Stanford University
Course:
ECON 1 | Principles of Economics
Academic year:

2024
Views:

500

Pages:

1
Author:

larbi43100

GDP If GDP is considered an important aggregate, it poses some problems regarding the relevance of the results obtained: ⮚ Certain activities cannot be taken into account in the calculation of GDP, such as: domestic work, gardening, undeclared work, DIY, etc. ⮚ GDP growth is not always synonymous with well-being (pollution, congestion, noise, etc.) ⮚ The accounting method may be illogical. Indeed, overconsumption of tobacco or road accidents are included in the calculation of GDP growth (care, support, etc.). The Gross National Product (GNP):it is an economic concept which is interested in the creation of wealth of the economic agents of a country whatever the place of creation of this wealth. In the calculation, to obtain the GNP the transfers and exchanges of net funds with foreign countries are added to the GDP. GNP = GDP + Net movement of income (labor and capital) with foreign countries GNP = GDP + RNRE The National Net product (PNN):it is the GNP reduced by depreciation (A) PNN = GNP – A Depreciation is the depreciation suffered by capital over a period as a result of its wear or obsolescence. The PNN is an indicator of net wealth created and transferred to the country. The National Net product at factor cost (PNNcf):if we deduct indirect taxes net of subsidies from the PNN, we obtain the net national product at factor costs.