What Is World GNP?

World gross national product (GNP) is determined by combining the GNP of all countries that produce services or goods. GNP is a monetary figure for the value of goods and services that are produced in a year by a country's citizens or companies that are owned by its citizens. This differs from gross domestic product, which measures only the production within a country's borders, regardless of whether the involved enterprises are owned by its citizens or foreigners. When comparing or combining the GNP of countries, such as when calculating world GNP, the currency of the producing countries typically are converted into US Dollars using certain exchange rates.

Understanding world GNP and changes over periods of years allows economists to see where economic growth is occurring and which countries might be declining economically. Analyzing changes in world GNP provides an interesting insight into overall world economy and how changes in technology and business affect individual countries. It also provides information on the economic effect of natural disasters that can disable a country’s production ability.

Economists also can calculate each country's GNP per capita, which measures its income per person. Taking population figures into account allows countries of different sizes to be compared more accurately in terms of efficiency and per-person wealth. For example, a study of world GNP figures on a per-capita basis might reveal that a country that is five times as large as another country has a GNP that is only twice as large. This would tell economists that the smaller country is more efficient at creating wealth.

There are some flaws in world GNP figures. Many countries do not have figures listed for inclusion in world GNP for various reasons, such as a lack of actual goods production, the very small size of certain nations or other factors. In addition, some economic activities, such as agricultural production by peasants or certain exchanges that do not involve money, are unlikely to be included in a country's GNP.