The remainders after removing the depreciation in the value of cost from GNP is called “net national product” or NNP.
For example, if the cost of any machine is Rs 5000, after one year its value remains only Rs 4000, then GNP will be deducted by Rs 1000. In this, if any kind of benefit will be received, it will be called NNP.
In simple words, Net national product (NNP) refers to gross national product (GNP), i.e. the total market value of all final goods and services produced by the factors of production of a country or other polity during a given time period, minus depreciation.
What are the different uses of NNP?
- 1) It is the national income of any economy (National Income).
- 2) This is the best way to calculate the national income of any country.
- 3) When we divide the NNP by the total population of the country, it gives the per capita income of the country. This is the annual per capita income. One basic thing that needs to be noted here is that the rate of basic deduction is different in different countries.
In such a situation, if the rate of price cut in a country is high, there is a decrease in per capita income. This is the reason why the basic deduction is used as a weapon in policy making. However, Policies are proposed to cut the value of any asset. In fact financial institutions like IMF, World Bank and Asian Development Bank compare countries on the basis of their national income.
Calculating Net National Product (NNP)
The formula for NNP is:
NNP = MVFG + MVFS – Depreciation
where:
MVFG = Market value of finished goods
&
MVFS = Market value of finished services.
Alternatively, NNP can be calculated as:
NNP = Gross National Product – Depreciation
The NNP is expressed in the currency of the nation it represents. That means that in the United States the NNP is expressed in dollars (USD), while for European Union (EU) member nations the NNP is expressed in euros (EUR).
The relationship between a nation’s GNP and NNP is similar to the relationship between its gross domestic product (GDP) and net domestic product (NDP). Read More http://bestockangel.com/blogs/ndp-net-domectic-product/
