is gnp a measure of a nations economic well being?

Answer 1

Is GNP a measure of a nations economic well being? In a nutshell, "Yes!"

But please consider the following info;

GNP (Gross National Product) and GDP (Gross Domestic Product) measure the total amount of money changing hands.

A Tricky Move Almost Everyone Missed
Before outlining the flaws, it helps to clarify the difference between GNP and GDP.

The difference is well explained by the folks at Redefining Progress:
". . . in 1991 the GNP was turned into the GDP - a quiet change that had very large implications.

Under the old measure, the Gross National Product, the earnings of a multinational firm were attributed to the country where the firm was owned and where the profits would eventually return.

Under the Gross Domestic Product, however, the profits are attributed to the country where the factory or mine is located, even though they won't stay there. This accounting shift has turned many struggling nations into statistical boomtowns, while aiding the push for a global economy. Conveniently, it has hidden a basic fact: the nations of the North are walking off with the South's resources and calling it a gain for the South.
The Difference Between GNP and GDP
Economic statistics are often revised to reflect the availability of new data, to incorporate new estimation techniques, to reflect a change in definitions, or to make different measures more compatible. In December 1991, the Bureau of Economic Analysis (BEA), an agency within the Department of Commerce, began to emphasize gross domestic product (GDP) over gross national product (GNP) as the most comprehensive measure of production in the U.S.

The difference between GNP and GDP lies in the treatment of income from foreign sources. GNP measures the value of goods and services produced by U.S. nationals, while GDP measures the value of goods and services produced within the boundaries of the U.S. For example, all the income received by a U.S. proprietor owning factories in the U.S. and Mexico (ie. Ford Motor Co.) would be counted in GNP. GDP would include income from the U.S. factory, but exclude the income received from the factory in Mexico. At the same time, the profits earned by a Japanese-owned corporation in the U.S. (ie. Nissan) would be included in GDP but excluded from GNP. Over the last 3 years, GNP has been larger than GDP since U.S. nationals received more income from abroad than foreign nationals received from the U.S. You have never heard this on the news have you? The difference has been small however, amounting to about 0.2 percent of GDP in 1991. For many countries the difference is much larger. In Germany, for example, GNP is about 8.6 percent larger than GDP. What does this tell you? Does it say that Germany has exported more jobs from her boundaries than the U.S.? Does it say that the U.S. has exported about as many jobs to other countries as has been imported to the U.S.? A little different picture than the ones painted by the Textile Manufacturers Association and U.S. labor unions, don't you think.

There are two major reasons for the switch from GNP to GDP. First, because GDP measures economic activity in the U.S., it more closely parallels other measures such as employment or industrial production, which do not distinguish among the nationalities of the employer or producer. Second, GDP is emphasized by the United Nations' System of National Accounts, which many other countries use as their framework for reporting and gathering statistics. Comparing U.S. performance with other countries' performance is easier when the standards are the same.

Does this help any?