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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WHAT IS AN ECONOMY? Sectors & Types of Economies

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 WHAT IS AN ECONOMY?

Economy is economics in action. It is a still-frame picture of the economic activities. A country, a company and a family all have their economies. It is popularly used in case of countries- Indian economy, the US economy, the Japanese economy, etc. While the principles and theories of economics remain the same, economies (of countries) show diversities given the socioeconomic diversities countries have.


Sectors & Types of Economies

Sectors & Types of Economies

Economic activities in a country/economy are broadly divided into three main sectors and by their dominance economies get their names also:

Primary Sector: The economic activities which take place while exploiting the natural resources fall under it, such as mining, agricultural activities, oil exploration, etc. When agriculture sector (one of the sub-sectors of the primary sector) contribute minimum half of the national income and livelihood in a country it is called an agrarian economy.

Secondary Sector: It contains all of the economic activities under which the raw materials extracted out of the primary sector are processed (also called industrial sector). One of its sub-sectors, manufacturing, has proved to be the largest employer across the western developed Economies. When secondary sector brings in minimum half of the national income and employment in a country it is called an industrial economy.

Tertiary Sector: All of the economic activities where services are produced falls in this sector, such as education, healthcare, banking, communication, etc. When this sector contributes minimum half of the national income and livelihood in a country it is called a service economy.

 Later on, experts created two more sectors of economy— Quaternary and Quinary . Though, they are subsectors of the Tertiary Sector.

Quaternary Sector: Known also as ‘knowledge’ sector, the activities related to education, research and development, etc. come under it. The sector plays the most important role in defining the quality of the human resources an economy has.

Quinary Sector: All activities where top decisions are made fall under it. The highest level of decision makers in governments and the private corporate sector fall under it. The number of people involved in this sector is very low rather they are considered the ‘brain’ behind socio-economic performance of an economy.

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