Difference Between GDP and NDP (With Table)

The economic stability of a nation is a macroeconomic variable that completely depends on the national income. The income can be calculated as the outcome of total economic activities in a given year. The two major concepts that involve in this study and analysis is the Gross Domestic Product (GDP) and Net Domestic Product (NDP). They both are closely linked together in determining the nation’s economic state.

The authorities of a government shall release the list of capital assets with their depreciating value every year. This should be taken into serious consideration while manufacturing the goods. As the massive depletion of the country’s assets shall lead to national economic disaster.

NDP is never used in comparative analysis with that of any other country. This is mainly because the different countries shall have different depreciation values, and that may not stand as a stable calibrating point.

Main Differences Between GDP and NDP

  1. The main difference between GDP and NDP is that the GDP can be used in economic comparison with other countries, while NDP can never be used in such comparative studies.
  2. The value of GDP determines the health of the economy, while the value of NDP gives the amount of production to be increased to keep a healthy GDP.
  3. GDP marks the production strength of a nation, while NDP marks the diligence in using the capital assets.
  4. GDP can help predict the economic state in the coming years, while NDP helps in predicting the number of goods to be used for future production to happen.
  5. GDP determines the national income, while NDP determines the optimal resource depletion.

Conclusion

The difference between GDP and NDP must be very narrow. If there is a difference and that is growing consistently over the years, it shall indicate that the capital goods are getting depleted. The optimal use of resources in having optimal production is what the nations must aim for. At the same time, the general public shall not be in dearth of products too. The price of the commodity must be affordable as well.

References

  1. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.0034-6586.2004.00129.x
  2. http://www.csls.ca/ipm/7/spant-e.pdf

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