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Gross National Product
GNP Top 10 (2004) (currency exchange rate)
Country GNP ($ mill)
1 United States
4 United Kingdom
Gross National Product (GNP) is the total value of final goods and services produced in a year by domestically owned factors of production.
Final goods are goods that are ultimately consumed rather than used in the production of another good. For example, a car sold to a consumer is a final good; the components such as tires sold to the car manufacturer are not; they are intermediate goods used to make the final good. The same tires, if sold to a consumer, would be a final good. Only final goods are included when measuring national income. If intermediate goods were included too, this would lead to double counting; for example, the value of the tires would be counted once when they are sold to the car manufacturer, and again when the car is sold to the consumer.
Only newly produced goods are counted. Transactions in existing goods, such as second-hand cars, are not included, as these do not involve the production of new goods.
Income is counted as part of GNP according to who owns the factors of production rather than where the production takes place. For example, in the case of a German-owned car factory operating in the US, the profits from the factory would be counted as part of German GNP rather than US GNP because the capital used in production (the factory, machinery, etc.) is German owned. The wages of the American workers would be part of US GNP, while the wages of any German workers on the site would be part of German GNP.
Gross Domestic Product
GDP Top 10 (2004) (currency exchange rate)
Country GDP ($ mill)
1 United States 10,435,284
2 China 5,409,852
3 Japan 4,326,444
4 Germany 2,400,655
5 United Kingdom 1,794,858
6 France 1,747,973
7 Italy 1,465,895
8 Canada 958,390
9 Spain 836,100
10 Mexico 626,888
Gross Domestic Product (GDP) is the total value of final goods and services produced within a country's borders in a year.
GDP counts income according to where it is earned rather than who owns the factors of production. In the above example, all of the income from the car factory would be counted as US GDP rather than German GDP.
To convert from GNP to GDP you must subtract factor income receipts from foreigners that correspond to goods and services produced abroad using factor inputs supplied by domestic sources. To convert from GDP to GNP you must add factor input payments to foreigners that correspond to goods and services produced in the domestic country using the factor inputs supplied by foreigners.
GDP is a better measure of the state of production in the short term. GNP is better when analysing sources and uses of income.
In economics, an export is any good or commodity, shipped or otherwise transported out of a country, province, town to another part of the world, typically for use in trade or sale. Export products or services are provided to foreign consumers by domestic producers.
Export is the legitimate transportation of domestic or nationalized goods and services from a country intended for use or consumption rendered abroad. Exports can be any good that is shipped out of a government's border for commercial purposes. Exports are usually carried out under specific conditions.
International trade is defined as trade between two or more partners from different countries (an exporter and an importer). Early international trade consisted mostly of barter transactions.
International trade is also a branch of economics. Traditionally, international trade is justified in economics by comparative advantage theory. New developments include in patterns of international trade: the integration of countries into trade blocs (e.g., European Union, NAFTA, EFTA, CEFTA) and globalisation.
Regulation of international trade
Traditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in Mercantilism most nations had high tariffs and many restrictions on international trade. In the nineteenth century, especially in Britain, a belief in free trade became paramount and this view has dominated thinking among western nations for most of the time since then. In the years since the Second World War multilateral treaties like the GATT and World Trade Organization have attempted to create a globally regulated trade structure.
Communist and socialist nations often believe in autarchy, a complete lack of international trade. Fascist governments also placed great emphasis on self-sufficiency. No nation can meet all of its people's needs, however, and every state engages in some trade.
Free trade is usually most strongly supported by the most economically powerful nation in the world. The Netherlands and the United Kingdom were both strong advocates of free trade when they were on top, today it is the United States which is its greatest proponent.
â€¢ This is not completely true. UK, in its height observed mercantilist policy. Today, the highest tariff rates are found among the most industrialized nations. Both the United States and Japan rank among the highest in the list for tariffs in the following areas: textiles and apparel, and agricultural goods. Since developing nations most often have comparative advantage in those areas with protectionist policies, it is not surprising to see developing nations continuously redressing their grievances via World Trade Organization. Also not surprising to observe is that the citizens of United States were less eager than of Mexico to sign the NAFTA (North American Free Trade Agreement), largely due to Mexico's low wages, which leads to comparative advantage in labor intensive goods.
Traditionally agricultural interests are usually in favour of free trade while manufacturing sectors often support protectionism. This has changed somewhat in recent years, however.
During recessions there is often strong domestic pressure to increase tariffs to protect domestic industries. This occurred around the world during the Great Depression leading to a collapse in world trade that many believe seriously deepened the depression.
Risks in international trade
The risks that exist in international trade can be divided into two major groups:
â€¢ Risk of insolvency of the buyer
â€¢ Risk of protracted default - the failure of the buyer to pay the amount due within six months after the due date
â€¢ Risk of non-acceptance
â€¢ Risk of cancellation or non-renewal of export or import licences
â€¢ War risks
â€¢ Risk of expropriation or confiscation of the importer's company
â€¢ Risk of the imposition of an import ban after the shipment of the goods
â€¢ Transfer risk - imposition of exchange controls by the importer's country or foreign currency shortages
The infrastructure of services system required by a developed area; the basic services system required for occupancy of a property or use of a real estate site; infrastructure services that make a location usable and that are generally distinguishable by the fact that easements are required in order to deliver them. The delivery of line communications, energy, and water and the removal of wastewater or sewage make up basic utilities. The Network breaks communications and energy services out from utilities as elements of site selection.
Primary sector of industry
The primary sector of industry generally involves the conversion of natural resources into primary products. Most products from this sector are considered raw materials for other industries. Major businesses in this sector include agriculture, agribusiness, fishing, forestry and all mining and quarrying industries.
Downstream manufacturing industries that aggregate, pack, package, purify or process the raw materials close to the primary producers are normally considered part of this sector, especially if the raw material is unsuitable for sale or difficult to transport long distances.
Tertiary sector of industry
The tertiary sector of industry, also called the service sector or the service industry, is one of the three main industrial categories of a developed economy, the others being the secondary industry (manufacturing and primary goods production such as agriculture), and primary industry (extraction such as mining and fishing).
The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer as may happen in wholesaling and retailing, or may involve the provision of a service, such as in tourism or entertainment. The goods may be transformed in the process of providing the service, as happens in the restaurant industry. There may not even be any goods involved, as in the sex industry. However the focus is on people interacting with people and serving the customer rather than transforming physical goods. For the last 20 years there has been a substantial shift from the other two industry sectors to the Tertiary Sector in industrialised countries.
Secondary sector of industry
The secondary sector of industry is the manufacturing sector of industry. This sector of industry generally takes the output of the primary sector and manufactures finished goods or products to a point where they are suitable for use by other businesses, for export, or sale to domestic consumers. This sector is often divided into light industry and heavy industry. Many of these industries consume large quantities of energy and require factories and machinery to convert the raw materials into goods and products. They also produce waste materials and waste heat that may pose environmental problems or cause pollution.
Divisions of this sector include the Aircraft, Automobile manufacturers, Brewing industry Chemical industry Engineering Energy industries including the production of petroleum, gas and Electric power Steel production Tobacco industry Radio, and Telephone industries.