Net National Product

Net national product or NNP is the market value of all the finished goods and services that are produced by citizens of a nation, living domestically and internationally during a year.

Net national product is also referred to as the value that is obtained by subtracting depreciation from the gross national product (GNP).

Net national product considers all the goods, products and services that are manufactured by the country’s citizens, irrespective of their location, or in other words, net national product considers products that are produced domestically and also from overseas.

NNP is one of the important metrics for determining the actual growth of a nation. It measures how much the country is able to consume in a given period of time.

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When the net national product (NNP) of a country declines or falls, then the businesses consider moving to industries that are deemed to be recession-proof.

In case there is a rise in net national product, then the businesses shift their focus on industries that are consumer led, such as travel and sales in order to generate more sales

The depreciation that is calculated refers to the wear and tear of the capital assets and the depreciation of human capital is observed when there is workforce turnover.

The extent of workforce turnover helps in understanding the resources that will be required to be spent by the companies in order to find new employees.

The net national product can be calculated by the following formula

NNP = GNP – Depreciation

This concludes the concept of NNP which is one of the indicators of economic health of a nation. To read about more such interesting concepts on Economics for Commerce, stay tuned to BYJU’S.

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