Gross national product is the monetary value of all goods and services produced by a country's citizens and national companies over a specific period, whether within the country's geographical borders or abroad. An increase in GNP reflects the expansion of the national economy's global strength and the flow of funds into the country, while a decline indicates a contraction in the performance of national investments and activities.

Simplified definition: It is a financial and economic measure that tells us the scale of the wealth and financial value generated by "the country's people and its companies," regardless of where they live or operate around the world. In other words, it focuses on the economy's ownership and citizenship; it includes the profits of a Saudi company that invested in France or the United States, while excluding the profits of foreign companies operating in Saudi Arabia because their ownership does not belong to the country.

How is it calculated?

Gross national product = gross domestic product + (Saudi income abroad - foreign income domestically)

Note: "Net factor income from abroad" is the difference between (the profits and income earned by citizens and national companies outside the country) and (the profits and income earned by foreigners and foreign companies inside the country and transferred abroad).

Example: Suppose a Saudi company (such as the Qiddiya Company) invested in a large entertainment project in France and generated net profits of 500 million riyals, which were transferred to the Kingdom. These 500 million riyals are added directly to Saudi Arabia's gross national product because the owner is Saudi, while they are not included in Saudi Arabia's "gross domestic product" because the activity took place geographically on French territory.

What does this mean for you?

  • A high or growing level: This indicates the country's and its companies' ability to grow across borders and seize external investment opportunities that bring funds and profits back into the country, strengthening the local economy and cash liquidity.
  • A declining level: This indicates a deterioration in the performance of national investments abroad, or an increase in transfers by foreign companies and individuals out of the local economy to their home countries that exceeds the inflow from the country's overseas investments.
  • The difference between it and gross domestic product (GDP): Gross domestic product focuses on "location" (what is produced within the country's borders, regardless of the investor's nationality), while gross national product focuses on "ownership" (what the country's owners produce anywhere in the world).

Frequently asked question: Why do countries sometimes focus on supporting the global expansion of their national companies instead of limiting investment to the domestic market?

Answer: Because overseas expansion opens up new markets and virtually unlimited sources of income. Once a national company grows and invests abroad, it can channel these financial returns back into its domestic economy in the form of profits and cash flows that stimulate "gross national product" and support the strength of the currency and the country's financial position.