What is Gross National Product (GNP)?

In the article mentioned gross domestic product (GDP) Earlier, we knew that one of the drawbacks of these economic growth indicators was the fact that they were quite biased.

This is because GDP does not count the productivity of Indonesian citizens working abroad, such as TKI, and instead calculates the productivity of foreign citizens who become expatriates in Indonesia. Therefore, it is necessary to understand one more indicator to understand Indonesia’s economic growth. The indicator is gross national product (GNP).

Definition of Gross National Product (GNP)

Gross National Product (GNP) is an indicator of economic growth that only calculates the level of productivity of a country’s citizens, regardless of where that country’s citizens live. Another term for GNP is Gross National Income (GNI) and Gross National Product (GNP).

in the case of Indonesia This indicator only considers output made by Indonesian residents (WNI), regardless of whether they live in or outside the country. This includes output generated by TKI and TKW, as well as foreign ministry employees living at Indonesian representatives.

report from world bank dataCurrently, Indonesia’s GNP value in 2021 is $1.14 trillion using the ATLAS method and $3.16 trillion by the purchasing power parity (PPP) method, for which the amount of GNP per capita (average income per person) will reach. $4,140-$11,426 per person per year depending on method used (ATLAS or PPP)

Like GDP, the value of GNP per capita of Indonesians was negative during the Co-19 pandemic. According to the World Bank During the pandemic, the value of GNI per capita dropped to -2.7%, but in 2021 this value will improve and reach 2.5%.

Not only in Indonesia, the concept of GNI or GNP is also widely used in other countries, even according to the data. macrotrends.netThe United States, China and Japan are the three countries with the highest GNI.

Formula GNP

The formula for calculating GNP is generally the same as GDP: the value of household consumption plus investment. government spending and net exports It’s just that in GNP it is only calculated if the value is determined by Indonesian citizens.

The formula for gross national product (GNP) is GNP = GDP + (PFLN – PFLN).

information:

PFLN = Goods and Services for Indonesians Living Outside Indonesia

PFDN = Goods and Services for Foreigners Living in Indonesia

The GNP indicator is needed because many economists estimate that GDP is not representative. output value Goods and services produced by the inhabitants of the country are purely because they ignore the role of foreign production in the country and the production of the inhabitants of the country but abroad.

Example of calculating GNP

In 2021, countries will have the following financial histories:

Difference Between GNP and GDP

even though there are similar concepts But there is a big difference between GNP and GDP. In GDP you calculate the value of the production of goods and services. “Made in Indonesia only” regardless of the manufacturer of goods and services Foreign companies or individuals or companies and individuals in the country

To calculate Gross National Product (GNP) or GNP, you will Calculate the production value of Indonesian goods and services. Or is it just a company in the country other than a company in the country that performs import-export operations? or Indonesian citizens living abroad

For example, your relatives work as migrant workers. When calculating GDP, the income of your relatives in TKI is not counted, while when calculating GNP, the income of your relatives remitted to Indonesia is still counted.

The value of a country’s GDP and GNP are often different. For example, in 2021, the value of Indonesia’s GDP using the purchasing power parity (PPP) method is $3.57 trillion. While its GNP value is $3.16 trillion.

The difference between GDP and GNP shows how much of a country’s economic output is performed by Foreign Citizens (WNA) in that country. The greater the role of the international economy in the national economy.

Why is GNP important in the economy?

In a world experiencing globalization as it exists today, There are many opportunities that you can take advantage of by receiving money from abroad. Starting from being Indonesian migrant workers (Indonesian Migrant Workers – TKI) setting up factories or companies abroad. to receiving dividends and profits from investments Investing in stocks of foreign companiesEspecially now that many foreign companies are building factories, branches or in some cases stopping in Indonesia.

in any way The income you earn affects the country’s economy, for example paying taxes on the money you send. Therefore, in calculating GDP, your income from working abroad is not taken into account.

in fact Implementation of economic policies to meet the goals Policymakers and economists want unbiased (strong) data, so although most countries currently use GDP as a benchmark, GNI data is still taken into account.

Lack of GNPs

Although less biased than GDP, the GNP indicator alone is insufficient to measure economic development in a country. This is because:

1. Like GDP, so is GNP. It does not take into account the output of goods and services that are not properly recorded.whether because of its unconventional nature or because these goods and services are being sold on the black market
2. GNI also only measures income.. As the name implies, Gross National Income (GNI), or another name for GNP, this indicator considers only the national economy based on income. It does not include the overall public welfare of the country and inequality.
3. Because the formula is similar to GDP. GNP also takes into account only the value of money issued by the state. To fund the project regardless of whether the project is economically efficient or not.

due to these shortcomings You need to analyze the country’s macro-economic condition with various economic indicators, such as inflation, at the same time. Interest rates, Gini index, poverty and unemployment rates, and much more.