net national product

noun
Updated on: 26 Jul 2017

Definition of net national product

  1. :  the net value of the goods and services produced in a nation during a specific period (as a year) computed by subtracting from the gross national product charges for depreciation of capital assets — compare national income

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Financial Definition of NET NATIONAL PRODUCT

net national product

What It Is

Net national product (NNP) is the market value of a nation's goods and services minus depreciation (often referred to as capital consumption).

How It Works

The formula for NNP is:

NNP = Market Value of Finished Goods + Market Value of Finished Services - Depreciation

Alternatively, NNP can be calculated as:

NNP = Gross National Product - Depreciation

Let's assume Country XYZ's companies, citizens and entities produce $1 trillion worth of goods and $3 trillion worth of services this year. The assets used to produce those goods and services depreciated by $500 billion. Using the formula above, Country XYZ's NNP is:

NNP = $1 trillion + $3 trillion - $0.5 trillion = $3.5 trillion

Why It Matters

NNP is a measure of how much a country can consume in a given period. Note that NNP measures output regardless of where that production takes place (in other words, it includes the value of goods and services that American companies produce, supply or create abroad).

In the 1990s, net domestic product replaced NNP as "the" macroeconomic measure of output, much as "gross domestic product" replaced "gross national product." The Bureau of Economic Analysis (BEA) still releases all four measures, however.


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