Net National Product (NNP)

NNP
Net National Product (NNP) of an economy is the GNP after deducting the loss due to ‘depreciation’.
The formula to derive it may be written like:
NNP = GNP – Depreciation
or,
NNP = GDP + Income from Abroad – Depreciation.
The different uses of the concept NNP are as given below:
(a) This is the ‘National Income’ (NI) of an economy. Though, the GDP, NDP and GNP, all are
‘national income’ they are not written with capitalised ‘N’ and ‘I’.
(b) This is the purest form of the income of a nation.
(c) When we divide NNP by the total population of nation we get the ‘per capita income’ (PCI)
of that nation i.e. ‘income per head per year’. A very basic point should be noted here that this
is the point where the rates of dipreciation followed by the different nations make a
difference. Higher the rates of depreciation lower the PCI of the nation (whatever be the
reason for it- logical or artificial as in the case of depreciation being used as a tool of policymaking)!
Though, economies are free to fix any rate of depreciation for the different assets the
rates fixed by them make difference when the NI of the nations are compared by the
international financial institutions like the IMF, WB, ADB, etc.