How do GDP and GNP differ?
Both GDP and GNP are defined in terms of goods and services produced, but they use different criteria for coverage. GDP covers the goods and services produced by labor and property located in the United States. As long as the labor and property are located in the United States, the suppliers (that is, the workers and, for property, the owners) may be either U.S. residents or residents of the rest of the world. GNP covers the goods and services produced by labor and property supplied by U.S. residents. As long as the labor and property are supplied by U.S. residents, they may be located either in the United States or abroad. To change the measurement from GNP to GDP one must subtract income from foreigners, which represent the goods and services produced abroad using the labor and property supplied by U.S. residents, and add factor income payments to foreigners, which represent the goods and services produced in the United States using the labor and property supplied by foreigners. Fact
