GNP, National Sovereignty And International Security …
The stage is set for what may be the perfect global storm. Three crises have converged to challenge countries of the Global Economy: economics, employment and education. In many countries, a fourth crisis looms overhead … political leadership. The underlying causes are many, complex … a global maze. Ironically, it is the very complexities of the crises that interconnect the world’s population even further. The complexities also threaten the stability, sovereignty and security of countries, worldwide.
For every country, the long-term, sustainable solutions to the global crises depend upon strong leadership of a well-educated population with the training to analyze, synthesize and evaluate the complexities and the fortitude to respond to the challenges confronting the Global Economy.
Just peel back the layers of the international crises and you arrive at a core truth: A strong educational infrastructure is the backbone of long-term, sustainable economic growth and development [GNP], national sovereignty and international security … for every country. Ultimately, the backbone of a strong educational infrastructure for every country is Global Education Transformation that is systemic, scalable and sustainable for all public schools, worldwide, K-12→College→Career …
1.2 Billion Youth join the Global Economy by 2015 … 90% of them are not prepared with the 21st Century Skills needed by the Global Economy Workforce …
Part 1: [GET] … Backbone Of GNP & 21st Century Skills
A strong economy is a goal shared by countries all over the world. A salient measure of the strength of country’s economy is economic growth, because it reflects the increase in the size of the economy. And the broad measure of an economy’s size is the country’s output of goods and services within a given period of time … the country’s GNP-GDP.
GNP [gross national product] and GDP [gross domestic product] are two of the most comprehensive measurements of a nation’s economy. Both GNP and GDP broadly measure the size of country’s economic growth determined by the output of its goods and services produced and purchased within the current year.
A country’s strong GNP-GDP depends on sound economic policies developed by strong leaders of a well-educated population capable of producing the goods and services needed by the nation and Global Economy. And, in today’s Global Economy, the competition for production of the goods and services is fierce … from individual-to-individual and among nations.
Given the complexities of the current crises, the global challenges and competition … it is no longer sufficient just to compete. Indeed, for long-term, sustainable economic growth, a country and its residents must be able not only to compete … but also to excel among the Global Economy competition. For countries, worldwide, that ability to excel requires … Global Education Transformation that is systemic, scalable and sustainable for all public schools, K-12→College→Career …
Brief Look At GNP-GDP & Economic Growth
GNP refers to the current, aggregate value of all final goods and services produced and purchased by a country’s residents during a given time period, wherever the residents may live. The time period is usually one year … the current year. A country’s GNP will therefore include the current value of houses, automobiles, food and drink, and the value of legal, accounting and medical services produced and purchased within the current year by the nation’s residents, whether they reside within the country’s borders or in another country.
GDP is a closely related measurement to GNP. GDP is the domestic output of a country. It is an estimate of the monetary value of final goods and services produced within a country’s own borders, in a given one-year period, using the factors of production located within the country’s borders. Factors of production are the country’s important resources needed to produce other goods and services and include: [financial and human] capital, labor, entrepreneurship, and land. In theory, increasing a country’s GDP will increase the standard of living for its population.
GNP Is Not GDP: GNP and GDP are not synonyms. Ownership and location distinguish GNP from GDP. GNP measures a country’s economic output based on ownership. A country’s GNP includes its domestic production [GDP] and that part of the country’s output earned or produced in another country. If the country’s residents own the resources or otherwise produce the economic output [goods and services], the output is included in the country’s GNP. It does not matter where the country’s residents live when the output is produced and purchased.
GDP measures a country’s economic output of final goods and services based on the location where the goods or services are produced. GDP is the country’s output of its domestic economy. If economic output occurs within the country’s borders, then it is included in the country’s GDP, even if produced by foreign-owned companies or by residents of another country working within the country’s borders.
- Goods and services [output] produced by a country’s workers located in another country are included in the GNP of the workers’ home country, but not the home country’s GDP.
- Goods sold in a country but manufactured by a foreign company or foreign workers are included in the country’s GDP, but not the country’s GNP. The output of the purchased goods represent domestic labor and resources [domestic factors of production], but the goods are produced by foreign national(s).
- A country’s GNP can be either larger or smaller than the country’s GDP. The ratio depends on the number of the country’s citizens working outside its borders and the number of foreign citizens working within its borders.
- For both GNP and GDP, only final goods and services for which there is a market value are included. Final goods and services are those that have been purchased for final use within the year; or goods and services [raw materials] that will not be used in the production of final goods and services or resold within the year.
- Intermediate goods and services that are used in the production of final goods and services are not included in determining the aggregate market value to avoid double counting, which would misrepresent the true market value of GDP. Thus, the sale of used automobiles and existing homes are excluded in calculating GNP-GDP.
- Volunteer services and goods produced for personal services are not included in determining the aggregate market value, for the same reason: Only final goods and services that are priced in an active market are calculated.
… Why Care … ?
This is an important question and will soon be answered … Just bear with me ….
How GNP & GDP Are Determined
GNP = GDP + NI
A nation’s GNP is determined by adding together the aggregate market value of all outputs of goods and service produced and sold within a given year, regardless of where the goods and services are produced.
GNP calculations include only the values of output currently produced, for which there is a current market value. Here, too, the sales of used goods and existing homes, as well as volunteer work and goods and services produced only for personal use … are all excluded from the nation’s GNP.
Mathematic Formula: The mathematical formula for GNP is: GNP = GDP + NI [net income regardless of where earned]. GNP is calculated by adding the sum of the country’s GDP plus the country’s net income, which is the income earned in foreign countries by residents of the home country minus income earned by non-residents [foreign nationals] within the home country.
GDP = C + I + G + (X-M)
There are three approaches to calculating GDP: income approach, product or output approach, and the expenditure approach. Because they are equivalent, the same result will be reached with each of the three approaches:
- Income approach … represents the total income received by all producers within the country determined by adding total salaries and wages, business profits, rental income and interest income.
- Product [output] approach … calculates the market value of goods and services produced within the country. Under this approach, GDP is estimated by:
- → First, by adding the total output of all organizations in the country that produce goods or services;
- → Next, by subtracting the total costs of raw materials; and
- → Then, by adjusting for depreciation and the value of imports and exports.
- Expenditure approach … calculates the final spending on goods and services within the country’s borders. This is the most common approach used for understanding and measuring GDP.
Mathematic Formula: GDP must equal total supply and total demand for output within the country. Therefore, using the expenditure approach, GDP can be expressed mathematically as:
GDP = C + I + G + (X-M), or
GDP = Consumption + Investment + Government spending + (Exports – Imports)
- → Consumption … represents the sum of all expenditures for both durable and nondurable goods [food and clothing] and services. Consumption is generally the largest component of the GDP. The estimated value of imported goods does not affect GDP.
- → Investment … represents [business] expenditures in fixed assets and increases in inventory.
- → Government spending … represents government expenditures minus government transfer payments, which include both welfare and unemployment payments made by the government.
- → Net exports … are the goods and services that the country exports minus goods and services that the country imports. Imports are subtracted because GDP measures the output of the domestic economy only.
Thus, the final GNP-GDP mathematic formula may be written as:
GNP = GDP [C + I + G + (X-M)] + NI
… So, Why Care … Really?
Okay … why should anyone really care about GNP, GDP, or any other calculations? Because the GNP-GDP of countries are really important for the home country and its population, and for the Global Economy.
Knowledge and understanding of GNP-GDP enable:
- Leaders and the people of a country to determine the current health of their economy, in a reasonably precise manner;
- Governments to formulate economic and education policies that promote long-term economic growth and development;
- Businesses to plan for near-, mid- and long-term investments in plants and equipment; and
- Individual entrepreneurs to develop new products and services [innovations] that can further promote the economic growth and development [GNP-GDP] of their country.
It is important to know that importing goods [oil or any other goods] and/or services [human resources] can reduce a country’s GDP and thus its GNP. It is important to be aware that outsourcing the manufacture of goods and provision of services to offshore workers at lesser wages may reduce expenses and strengthen the earnings growth of domestic businesses … but such activities can also reduce the home country’s GDP and GNP. It is important that such reductions to a country’s GNP-GDP be balanced and offset by domestic populations who have the knowledge, training and skills to increase the home country’s productivity at home and abroad.
It is important to acknowledge that unemployed, underemployed and undereducated populations who do not have proficient 21st Century Skills needed to compete and excel among the Global Economy competition can reduce the GNP-GDP of the home country … and impact national sovereignty and transnational security …
Yes, we should care about the GNP of the home country and countries, worldwide, because long-term resolutions of the multi-connected global crises depend upon strong leaders who have the knowledge and skills to shape financial, employment and academic policies for long-term, sustainable economic growth; and well-educated populations with the 21st Century Skills to analyze, synthesize and evaluate the policies and produce the goods and services needed by the Global Economy. In fact, there can be no long-term, sustainable economic growth without a strong educational infrastructure. And, for countries, worldwide, that strong educational infrastructure depends upon …
Global Education Transformation …
best, educators, best OER content, and best applied-learning
training … for all public schools …
to assure that every student, at every grade level,
at every public school, worldwide,
attains and can apply 21st Century Skills
with proficiency, K-12→College→Career …
The Ford Program
… is committed to help close persistent education gaps in public schools, worldwide, K-12→College→Career.