GNP
World Bank Atlas method
Purchasing power parity
GDP
Population

GNP

Gross national product (GNP) measures the total domestic and foreign income claimed by the residents of the economy. It comprises gross domestic product (GDP) plus net factor income from abroad, which is the income residents receive from abroad for factor services (labor and capital) less similar payments made to non-residents who contributed to the domestic production. GNP in U.S. dollars is calculated according to the World Bank Atlas method of conversion from national currency to U.S. dollar terms. GNP per capita is the GNP in current U.S. dollars as divided by the mid-year population.

World Bank Atlas method

In calculating GNP in U.S. dollars and GNP per capita for certain operational purposes, the World Bank uses a synthetic exchange rate commonly called the Atlas conversion factor. The purpose of the Atlas conversion factor is to reduce the impact of exchange rate fluctuations in the cross-country comparison of national incomes.

The Atlas conversion factor for any year is the average of a country’s exchange rate (or alternative conversion factor) for that year and its exchange rates for the two preceding years, after adjusting for differences between the rate of inflation in the country and the G-5 countries (France, Germany, Japan, the United Kingdom, and the United States). A country’s inflation rate is measured by its GNP deflator. The inflation rate for G-5 countries is measured by changes in the SDR deflator. (Special drawing rights, or SDRs, are the International Monetary Fund’s unit of account.) The SDR deflator is calculated as a weighted average of the G-5 countries’ GDP deflators in SDR terms. The weights are determined by the amount of each currency included in one SDR unit. Weights vary over time because the IMF changes the composition of both the SDR and the SDR exchange rate for each currency changes. The SDR deflator is first calculated in SDR terms and then converted to U.S. dollars using the SDR to dollar Atlas conversion factor.

This three-year averaging smooths annual fluctuations in prices and exchange rates for each country. The Atlas conversion factor is then applied to a country’s GNP. The resulting GNP in U.S. dollars is divided by the midyear population for the latest of the three years to derive GNP per capita. When official exchange rates are deemed to be unreliable or unrepresentative of the effective exchange rate during a period, an alternative estimate of the exchange rate is used in the Atlas formula.

and for calculating GNP per capita in U.S. dollars for year t :

Yt$ = (Yt/Nt)/et*,

where et* is the Atlas conversion factor (national currency to the U.S. dollar) for year t, et is the average annual exchange rate (national currency to the U.S. dollar) for year t, pt is the GNP deflator for year t, ptS$ is the SDR deflator in U.S. dollar terms for year t, Yt$ is the Atlas GNP in U.S. dollars in year t, Yt is current GNP (local currency) for year t, and Nt is midyear population for year t.

Purchasing power parity

The International Comparison Programme (ICP) collects data on prices paid for a large set of comparable items in more than 100 countries. Purchasing power parities (PPPs) computed from these data allow comparisons of prices and real GNP expenditures across countries.

A country’s international price level is the ratio of its PPP rate to its official exchange rate for U.S. dollars. PPPs can be thought of as the exchange rate of dollars for goods in the local economy, while the U.S. dollar exchange rate measures the relative cost of domestic currency in dollars. Thus the international price level is an index measuring the cost of goods in one country relative to a numeraire country, in this case the United States. An international price level above 100 means that the general price level in the country is higher than that in the United States. For example, Japan’s international price level of 161 implies that the price of goods and services in Japan is 61 percent higher than the price of comparable goods and services in the United States. By contrast, Kenya’s price level of 21 means that a bundle of goods and services purchased for $100 in the United States costs only $21 in Kenya.

GDP

Gross domestic product (GDP) measures the total output of goods and services for final use occurring within the domestic territory of a given country, regardless of the allocation to domestic and foreign claims. Gross domestic product at purchaser values (market prices) is the sum of gross value added by all resident and nonresident producers in the economy plus any taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. National currency GDP is converted into U.S. dollars at the relevant year's conversion rate. For most countries, conversion rate is the official exchange rate as reported in the International Monetary Fund's International Financial Statistics (line rf/wf -- period average), expressed in units of national currency per U.S. dollar. However, where the official exchange rate is judged to diverge by an exceptionally large margin from the rate effectively applied to domestic transactions of foreign exchange and internationally traded products, a Bank-staff estimated exchange rate is used.

Population

Population is a World Bank estimate for mid-year population, based, in most cases, on a de facto definition, which counts all residents regardless of legal status or citizenship. Note, however, that refugees not permanently settled in the country of asylum are generally considered to be part of the population of their country of origin.

Population estimates are usually based on national censuses, but the frequency and quality of these censuses vary by country. Most countries conduct a complete enumeration no more than once a decade. Precensus and postcensus estimates are interpolations or extrapolations based on demographic models. Errors and undercounting occur even in high-income countries; in developing countries such errors may be substantial because of limits on transportation, communication, and resources required to conduct a full census. Moreover, the international comparability of population indicators is limited by differences in the concepts, definitions, data collection procedures, and estimation methods used by national statistical agencies and other organizations that collect population data.

Current population estimates for developing countries that lack recent census-based population data, and precensus and postcensus estimates for countries with census data, are provided by national statistical offices or by the United Nations Population Division. The estimation methods require fertility, mortality, and net migration data, which are often collected from sample surveys, some of which may be small or have limited coverage. These estimates are the product of demographic modeling and so are also susceptible to biases and errors due to shortcomings of the model, as well as the data.

The quality and reliability of official demographic data are also affected by public trust in the government, the government’s commitment to full and accurate enumeration, the confidentiality of and protection against misuse accorded to census data, and the independence of census agencies from undue political influence.

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