Why is GDP the most important when measuring the economic growth and why are other factors such as GNP etc secondary?
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When some measure is created or defined, there are several desirable properties of that measure. (ELI5)
1) Clarity. The definition is relatively unambiguous
2) Reliability. Different groups trying to measure, get reasonably similar or identical results.
3) Accuracy or Precision. There is/are reasonably accurate and generally accepted means to determine the measure.
4) Consistency. The measure gives outcomes that are comparable across time.
5) Comparability. The measure allows for reasonable comparisons to be made across different subjects.
6) Significance. The measure correlates to some outcome or allows for predictions of outcomes that are useful or important.
7) Availability. The measure is used widely and the data is relatively easily obtained.
GDP tends to fit many of the above. It can be overused and it may not be as significant as many believe. Nonetheless, it does a more than reasonable job of giving a measure of economic activity that is generally understood.
Depending on what a person wants to study, GNP or GDP-PPP, etc might be better measures. But these can suffer from lack of availability and inconsistency. For example, GDP-PPP has some built in arbitrariness and using different methods will give differing results.
GNP is broad and the measure can be vague for modern economies (for example, if a company was originally formed in country A but does most of its business in country B and a large part of it is owned by citizens in country C – how is GNP allocated?) While it is more straightforward to say that if company A makes and sells 25% in country B and 50% in country C, then the GDP is allocated accordingly irrespective of ownership.
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