Net National Product (NNP)

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NNP  Net National Product (NNP)  Net National Product (NNP) of an economy is the GNP after deducting the loss due to ‘depreciation’. The formula to derive it may be written like this: NNP = GNP – Depreciation or, NNP = GDP + Income from Abroad – Depreciation. The different uses of the concept of NNP are as given below: (i) This is the ‘National Income’ (NI) of an economy. Though, the GDP, NDP, and GNP, all are ‘national income’ they are not written with capitalized ‘N’ and ‘I’. (ii) This is the purest form of the income of a nation. (iii) When we divide NNP by the total population of a nation we get the ‘per capita income’ (PCI) of that nation, i.e., ‘income per head per year’. A very basic point should be noted here that this is the point where the rates of depreciation followed by different nations make a difference. Higher the rates of depreciation lower the PCI of the nation (whatever be the reason for it logical or artificial as in the case of depreciation being used as a...
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Mixed Economy

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 Mixed Economy


In practice, mixed economic system was already there (by late 1930s) once the market economies adopted certain policy changes (borrowing from the non-market economy) to recover out of the Depression. But first country to announce adopting this system was France (in 1944- 45, with the announcement to adopt national planning). The system got further strengthened once the non-market economies started modifying themselves by mid-1980s. It was with few reports of the World Bank that helped world agree on the best model of the economic system—

■ World Bank accepted the need of ‘state intervention’ in the economy (i.e., the market economy) which used to be an ardent advocate of the free market economy. But the time and nature of the intervention cannot be universal .

■ World Bank further concluded that neither of the economic systems (market and nonmarket) are free from flaws and even a novice of economics can agree that the best economic system can be the mixture of the both. But the state and market mix in any country has to be decided by its socio-economic needs of the time as there cannot be a fixed model of mixed economy .

The chief characteristics of the mixed economy may be summarised in the following way—

■ State and private sector both to have economic roles.

■ Private sector to play those roles where invisible hand (the motive of profit) can work properly. Production and supply of the ‘private goods’ (which people use by purchasing them from their own income) is the best example in this case. But state is not prohibited from playing this role.

■ Those roles which private sector will not be motivated to play (due to absence of any profit element) should be better taken care of by the state. Supply of the ‘public goods’ is the best example in this case. But private sector is free to play this role also.

■ The economic roles played by either state or private sector may not remain fixed for all times to come and may get modified as per the needs of the time.

■ Regulation (things like rules, competition, taxation, etc.) of the economic system to be taken care of by the state.

It means, mixed economic system is not a kind of finality which the market or non-market economic systems used to be rather continuous change looks its main feature—capable to modify as per the socio-economic needs of the hour. This way, the long-drawn debate about the possible role of state in economy also got decided.

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