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