Net National Product - NNP

What is the 'Net National Product - NNP'

The net national product (NNP) is the monetary value of finished goods and services produced by a country's citizens, whether overseas or resident, in the time period being measured (i.e., the gross national product, or GNP) minus the amount of GNP required to purchase new goods to maintain existing stock (i.e., depreciation). Alternatively, the NNP can be calculated as total payroll compensation plus net indirect tax on current production plus operating surpluses.

BREAKING DOWN 'Net National Product - NNP'

NNP is the amount of goods that can be consumed within a nation each year without reducing the amount that can be consumed in following years.

NNP provides an expression of the net value of the goods and services a nation has produced during a specific time, often examined on an annual basis as a way to measure a nation’s success in continuing minimum production standards. The NNP is expressed in the currency of the nation it represents. In the United States, the NNP would be expressed as a dollar amount, whereas it would be expressed in euro for EU member nations, such as Belgium.

The NNP can be extrapolated from the GNP by subtracting the depreciation of any assets, also known as the capital consumption allowance, from its total. The depreciation of asset's figure is determined by assessing the loss of value of assets attributed to normal use and aging. 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).

Understanding the Capital Consumption Allowance

The capital consumption allowance provides a mechanism to measure the need to replace certain assets and resources to maintain a specified level of national productivity. It is generally divided into two categories: physical capital and human capital.

Physical capital can include real estate, machinery or any other tangible resource used in the production of goods and services aside from the human element. Human capital covers the skills, knowledge and abilities of a workforce to produce goods and services, as well as the necessary training or education that may be required to maintain production standards.

Physical capital experiences depreciation based on physical wear and tear, while human capital experiences depreciation based on workforce turnover.

Net National Product and Environmental Economics

The NNP has particular usefulness in terms of environmental economics. It provides a model relating to the depletion of natural resources, and it may be used to determine whether certain activities are sustainable within a particular environment.

RELATED TERMS
  1. Gross National Product - GNP

    Gross national product (GNP) is an economic statistic that includes ...
  2. Gross National Product (GNP) Deflator

    An economic metric that accounts for the effects of inflation ...
  3. Net Foreign Factor Income (NFFI)

    The difference between a nation’s gross national product (GNP) ...
  4. Net Domestic Product - NDP

    An annual measure of the economic output of a nation that is ...
  5. Real Economic Growth Rate

    A measure of economic growth from one period to another expressed ...
  6. Okun's Law

    The relationship between an economy's unemployment rate and its ...
Related Articles
  1. Markets

    What's the GNP?

    Gross national product (GNP) is one of many metrics economists use to measure a country’s economic output. For any one year, GNP equals the market value of all the goods and services produced ...
  2. Markets

    How To Use Gross National Product As An Indicator

    Learn what the GNP truly represents, and how its misuse can manipulate the facts.
  3. Markets

    The Functional Difference Between GDP and GNP

    Both gross domestic product and gross national product try to measure the market value of all goods and services an economy produces.
  4. Markets

    Deadly Flaws In Major Market Indicators

    These indicators give investors and experts some data to work with, but they're far from perfect measures.
  5. Markets

    How To Calculate The GDP Of A Country

    A nation’s gross domestic product measures the monetary value of all of the goods and services it produces.
  6. Trading

    Top Economic Factors That Depreciate The $US

    A variety of factors contribute to currency depreciation, including monetary policy, inflation, demand for currency, economic growth and export prices.
  7. Markets

    How Does National Income Accounting Work?

    National income accounting is an economic term describing the system used by a country to gather data and determine aggregate economic activity.
  8. Markets

    What's Human Capital?

    Human capital is a company asset, but it’s not listed on the balance sheet. Human capital is all of the creative skills and knowledge embodied in the employees of a company -- skills that bring ...
  9. Retirement

    What The National Debt Means To You

    The U.S. deficit seems to grow every year. But how does it actually affect you?
  10. Markets

    Understanding Imports

    An import is a good or service that’s brought into one country from another.
RELATED FAQS
  1. What is the formula for calculating gross national product (GDP)?

    Find out how to calculate a country's gross national product (GNP), which is a method of accounting for the total income ... Read Answer >>
  2. What insights are economists trying to capture with GNP?

    Learn how, despite its disfavor as a primary economic indicator, GNP provides special insight into the value of production ... Read Answer >>
  3. What is the functional difference between GDP and GNP?

    Find out the difference between GDP and GNP, and how each brings a different perspective to the meaning of economic success. Read Answer >>
  4. Is GNP a valuable metric in a globalized economy?

    Learn about the value of GNP in a globalized economy and find out what information GNP can provide to policymakers and business ... Read Answer >>
  5. When do economists use GNP?

    Learn about the ways economists use GNP. Find out how the Bureau of Economic Analysis monitors U.S. economic performance ... Read Answer >>
  6. What does GNP say about the balance of trade?

    Learn about the interaction of GNP and the balance of trade. Find out how GNP is structured and the role that the balance ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center