Net domestic Product, Net National Product, Net Value added and National Disposable Income

What is the difference between Gross Domestic Product (GDP) and Net Domestic Product (NDP)?

To arrive at the NDP, depreciation needs to be taken account.

NDP = GDP – Depreciation of all capital equipment

Net National Product (NNP)

Similarly, accounting for depreciation from GNP gives NNP,

NNP = GNP – Depreciation of all capital equipment

NNP at Market prices = NNP – Indirect taxes

NNP at factor cost = National Income = (NNP – Indirect taxes + Subsidies)

Net Value Added (NVA)

Accounting for depreciation from GVA gives NVA,

NVA = GVA – Depreciation of all capital equipment

National Disposable Income

National Disposable Income = Net National Product at market prices + Other current transfers from the rest of the world

The idea behind National Disposable Income is that it gives an idea of what is the maximum amount of goods and services the domestic economy has at its disposal.

Current transfers from the rest of the world include items such as gifts, aids, etc.