Gross national income

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Not to be confused with Gross domestic product, Modified gross national income, or GNI*.
World Bank's income groups as of 2016.[1]

The gross national income (GNI), previously known as gross national product (GNP), is the total domestic and foreign output claimed by residents of a country, consisting of gross domestic product (GDP), plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents (Todaro & Smith, 2011: 44).[2] Comparing GNI to GDP shows the degree to which a nation's GDP represents domestic or international activity. GNI has gradually replaced GNP in international statistics.[3][4] While being conceptually identical, it is calculated differently.[5] GNI is the basis of calculation of the largest part of contributions to the budget of the European Union.[6] In February 2017, Ireland's GDP became so distorted from the base erosion and profit shifting ("BEPS") tax planning tools of U.S. multinationals, that the Central Bank of Ireland replaced Irish GDP with a new metric, Irish Modified GNI*. In 2017, Irish GDP was 162% of Irish Modified GNI*.[7]

Comparison of GNI and GDP

Comparison of GNI (Atlas method), GNI and GDP
2018 World Bank (millions of current US$)
No. Country GNI (Atlas method)[8] GNI[9] GDP[10]
value (a) a - GDP value (b) b - GDP
1 United States 20,636,317 91,974 20,837,347 293,004 20,544,343
2 China 13,181,372 -426,779 13,556,853 -51,298 13,608,151
3 Japan 5,226,599 255,276 5,155,423 184,100 4,971,323
4 Germany 3,905,321 -42,299 4,058,030 110,410 3,947,620
5 United Kingdom 2,777,405 -77,891 2,816,805 -38,491 2,855,296
6 France 2,752,034 -25,501 2,840,071 62,536 2,777,535
7 India 2,727,893 9,161 2,691,040 -27,692 2,718,732
8 Italy 2,038,376 -45,488 2,106,525 22,661 2,083,864
9 Brazil 1,902,286 16,804 1,832,170 -53,312 1,885,482
10 Canada 1,665,565 -47,776 1,694,054 -19,287 1,713,341

GNI (Atlas method) nominal

Nominal, Atlas method – millions of current US$ (top 15)[3]

Rank 2014 2013 2012 2011 2010 2009 2008 2007 2006
1 United States 17,611,491 United States 17,001,290 United States 16,501,016 United States 15,727,291 United States 15,143,137 United States 14,740,580 United States 15,002,428 United States 14,651,211 United States 14,345,565
2 China 10,096,966 China 9,110,333 China 7,934,721 China 6,726,270 China 5,752,320 China 4,856,999 Japan 4,835,553 Japan 4,812,119 Japan 4,931,413
3 Japan 5,339,076 Japan 5,899,905 Japan 6,101,579 Japan 5,775,633 Japan 5,376,601 Japan 4,797,984 China 4,070,860 Germany 3,348,291 Germany 3,160,529
4 Germany 3,853,623 Germany 3,809,927 Germany 3,754,154 Germany 3,801,607 Germany 3,662,524 Germany 3,588,452 Germany 3,601,765 China 3,283,519 China 2,685,206
5 France 2,844,284 France 2,869,883 France 2,824,713 France 2,889,304 France 2,847,703 France 2,831,553 United Kingdom 2,904,224 United Kingdom 2,835,805 United Kingdom 2,645,489
6 United Kingdom 2,801,499 United Kingdom 2,695,974 United Kingdom 2,612,525 United Kingdom 2,542,593 United Kingdom 2,540,957 United Kingdom 2,666,939 France 2,800,864 France 2,576,642 France 2,414,820
7 Brazil 2,429,720 Brazil 2,486,874 Brazil 2,432,061 Italy 2,237,958 Italy 2,234,508 Italy 2,227,358 Italy 2,222,143 Italy 2,093,640 Italy 1,989,288
8 Italy 2,147,247 Italy 2,130,760 Italy 2,143,583 Brazil 2,207,921 Brazil 1,916,260 Brazil 1,572,431 Spain 1,490,975 Canada 1,356,017 Spain 1,241,641
9 India 2,027,964 Russia 1,981,791 India 1,892,548 India 1,755,712 India 1,555,615 Spain 1,519,339 Canada 1,484,345 Spain 1,353,031 Canada 1,224,994
10 Russia 1,930,634 India 1,952,847 Russia 1,823,299 Canada 1,617,083 Canada 1,511,465 Canada 1,447,937 Brazil 1,427,429 Brazil 1,152,772 South Korea 966,585
11 Canada 1,785,099 Canada 1,848,274 Canada 1,773,264 Russia 1,547,010 Spain 1,496,363 India 1,392,779 Russia 1,368,593 India 1,117,463 India 941,326
12 Australia 1,444,201 Australia 1,514,269 Spain 1,396,221 Spain 1,455,758 Russia 1,425,123 Russia 1,318,495 India 1,229,139 South Korea 1,091,726 Mexico 921,879
13 Spain 1,366,027 Spain 1,376,929 Australia 1,359,417 South Korea 1,125,787 South Korea 1,053,302 South Korea 1,037,381 South Korea 1,118,647 Russia 1,079,991 Brazil 898,063
14 South Korea 1,365,797 South Korea 1,298,958 South Korea 1,232,164 Australia 1,119,902 Mexico 1,026,316 Mexico 988,663 Mexico 1,074,555 Mexico 1,000,700 Russia 830,146
15 Mexico 1,237,533 Mexico 1,202,800 Mexico 1,167,292 Mexico 1,068,140 Australia 1,025,186 Australia 954,754 Australia 900,062 Netherlands 809,106 Netherlands 753,205

GNI (Atlas method) PPP

PPP – millions of international dollars (top 15)[4]

Rank 2016 2014 2013 2012 2011 2010 2009 2008 2007 2006
1 China 21,366,057 China 17,966,893 United States 17,091,162 United States 16,596,084 United States 15,802,898 United States 15,121,133 United States 14,494,460 United States 14,791,194 United States 14,585,723 United States 14,140,770
2 United States 18,749,688 United States 17,823,200 China 16,418,959 China 15,112,256 China 13,680,536 China 12,305,378 China 11,017,654 China 10,090,052 China 8,991,462 China 7,637,790
3 India 8,594,226 India 7,292,778 India 6,699,996 India 6,179,567 India 5,794,517 India 5,314,158 India 4,783,856 Japan 4,433,212 Japan 4,408,333 Japan 4,180,595
4 Japan 5,443,842 Japan 4,846,688 Japan 4,844,841 Japan 4,700,740 Japan 4,522,723 Japan 4,437,371 Japan 4,192,471 India 4,376,743 India 4,138,987 India 3,658,435
5 Germany 4,394,786 Germany 4,243,163 Germany 4,097,775 Germany 3,890,009 Germany 3,634,151 Germany 3,505,460 Germany 3,407,922 Germany 3,286,644 Germany 3,170,077 Germany 3,006,891
6 Brazil 4,175,469 Brazil 3,809,390 Brazil 3,651,266 Brazil 3,474,015 Brazil 3,293,559 Brazil 3,157,522 Brazil 2,953,733 Brazil 2,836,486 Brazil 2,724,769 Brazil 2,603,694
7 Russia 3,305,725 Russia 3,237,388 Russia 3,108,506 Russia 3,254,184 Russia 3,124,400 Russia 2,837,672 Russia 2,678,150 Russia 2,597,648 United Kingdom 2,325,258 United Kingdom 2,270,766
8 Indonesia 2,929,424 France 2,655,517 France 2,625,346 France 2,494,655 France 2,495,100 France 2,381,563 France 2,291,855 United Kingdom 2,343,012 France 2,288,657 France 2,094,160
9 France 2,835,242 Indonesia 2,592,315 United Kingdom 2,483,802 United Kingdom 2,394,758 United Kingdom 2,343,934 United Kingdom 2,281,280 United Kingdom 2,272,667 France 2,310,555 France 2,224,097 Russia 2,071,669
10 United Kingdom 2,763,382 United Kingdom 2,550,078 Indonesia 2,436,810 Indonesia 2,275,802 Italy 2,124,755 Italy 2,054,019 Italy 2,016,501 Italy 2,050,607 Italy 1,971,909 Italy 1,865,144
11 Italy 2,316,529 Italy 2,155,153 Italy 2,148,502 Italy 2,134,839 Indonesia 2,106,961 Indonesia 1,949,021 Indonesia 1,798,541 Indonesia 1,705,066 Indonesia 1,568,263 Indonesia 1,434,248
12 Mexico 2,262,919 Mexico 2,111,206 Mexico 1,939,753 Mexico 1,941,682 Mexico 1,859,264 Mexico 1,710,132 Mexico 1,597,656 Mexico 1,611,372 Mexico 1,516,236 Mexico 1,432,295
13 Turkey 1,907,486 South Korea 1,696,955 South Korea 1,652,081 South Korea 1,627,812 South Korea 1,568,631 South Korea 1,506,812 Spain 1,492,658 Spain 1,508,412 Spain 1,447,718 Spain 1,346,277
14 South Korea 1,833,914 Canada 1,576,495 Saudi Arabia 1,549,822 Spain 1,497,167 Spain 1,494,181 Spain 1,486,687 South Korea 1,393,108 South Korea 1,405,612 South Korea 1,350,407 South Korea 1,246,382
15 Saudi Arabia 1,799,740 Spain 1,556,600 Canada 1,535,440 Saudi Arabia 1,488,100 Canada 1,401,447 Canada 1,336,646 Canada 1,279,702 Canada 1,313,134 Canada 1,271,027 Canada 1,212,200

Gross national product

Gross national product (GNP) is the market value of all the goods and services produced in one year by labor and property supplied by the citizens of a country. Unlike gross domestic product (GDP), which defines production based on the geographical location of production, GNP indicates allocated production based on location of ownership. In fact it calculates income by the location of ownership and residence, and so its name is also the less ambiguous gross national income.

GNP is an economic statistic that is equal to GDP plus any income earned by residents from overseas investments minus income earned within the domestic economy by overseas residents.

GNP does not distinguish between qualitative improvements in the state of the technical arts (e.g., increasing computer processing speeds), and quantitative increases in goods (e.g., number of computers produced), and considers both to be forms of "economic growth".[11]

When a country's capital or labour resources are employed outside its borders, or when a foreign firm is operating in its territory, GDP and GNP can produce different measures of total output. In 2009 for instance, the United States estimated its GDP at $14.119 trillion, and its GNP at $14.265 trillion.[12]

The term gross national income (GNI) has gradually replaced the Gross national product (GNP) in international statistics.[3][4] While being conceptually identical, the precise calculation method has evolved at the same time as the name change.[5]

Use of GNP

The United States used GNP as its primary measure of total economic activity until 1991, when it began to use GDP.[13] In making the switch, the Bureau of Economic Analysis (BEA) noted both that GDP provided an easier comparison of other measures of economic activity in the United States and that "virtually all other countries have already adopted GDP as their primary measure of production".[14] Many economists have questioned how meaningful GNP or GDP is as a measure of a nation's economic well-being, as it does not count most unpaid work and counts much economic activity that is unproductive or actually destructive.[15]

GNI vs GDP

While GDP measures the market value of all final goods and services produced in a given country, GNI measures income generated by the country's citizens, regardless of the geographic location of the income. In many states, those two figures are close, as the difference between income received by the country versus payments made to the rest of the world is not significant. According to the World Bank, the GNI of the US in 2016 was 1.5% higher than GDP.[16]

In developing countries, on the other hand, the difference might be significant due to a large amount of foreign aid and capital inflow. In 2016, the GNI [17] of Armenia was 4.45% higher than GDP.[18] Based on the OECD reports, in 2015 alone, Armenia has received a total of US$409 million development assistance. Over the past 25 years, USAID has provided more than one billion USD to improve the living of the people in Armenia. GNI equals GDP plus wages, salaries, and property income of the country's residents earned abroad that also constitutes the higher GNI figure. According to the UN report on migration from Armenia in 2015-17, every year around 15-20 thousand people leave Armenia permanently,[19] and roughly 47% of those are working migrants that leave the country to earn income and sustain the families left in Armenia. In 2016 Armenian residents received in a total of around $150 million remittances.[20]

See also

References

  1. ^ "World Bank's Income Groups". Our World in Data. Retrieved 5 March 2020.
  2. ^ Todaro, M. P., & Smith, S. C. (2011). Economic Development 11. Addison-Wesley, Pearson, ISBN, 10, 0-13.
  3. ^ a b c World Bank. "GNI, Atlas method". data.worldbank.org. Retrieved 2016-06-23.
  4. ^ a b c World Bank. "GNI, PPP (international $)". data.worldbank.org. Retrieved 2016-06-23.
  5. ^ a b "Glossary:Gross national income (GNI)". Eurostat Statistic Explained. Eurostat. Retrieved 2016-06-23.
  6. ^ "Monitoring GNI for own resource purposes". Eurostat Statistic Explained. Eurostat. Retrieved 2016-06-23.
  7. ^ Heike Joebges (January 2017). "CRISIS RECOVERY IN A COUNTRY WITH A HIGH PRESENCE OF FOREIGN-OWNED COMPANIES: The Case of Ireland" (PDF). IMK Macroeconomic Policy Institute, Hans-Böckler-Stiftung.
  8. ^ "GNI, Atlas method (current US$)". World Bank.
  9. ^ "GNI (current US$)". World Bank.
  10. ^ "GDP (current US$)". World Bank.
  11. ^ Daly, Herman E. (1996), Beyond Growth. Beacon Press
  12. ^ "Flow of Funds Accounts of the United States" (PDF). Board of Governors of the Federal Reserve System. 17 September 2010. p. 9. Archived from the original (PDF) on 8 December 2010. Retrieved 23 August 2018.
  13. ^ "BEA: Glossary "G"". Bureau of Economic Analysis. 5 September 2007.
  14. ^ "Gross Domestic Product as a Measure of U.S. Production" (PDF). August 1991.
  15. ^ "Beyond GDP". The Economist. ISSN 0013-0613. Retrieved 2016-07-27.
  16. ^ "BEA: The World Bank - US figures". the World Bank. 2017.
  17. ^ "BEA: Armenia GNP". Macrotrends. 2019.
  18. ^ "BEA: Armenia GDP". Macrotrends. 2019.
  19. ^ "BEA: Migration Rate and Associated Issues in Armenia in 2016-2017". UN Armenia. 2017.
  20. ^ "BEA: Inflow of Remittances by Balance of Payments". Central Bank of Armenia. 2019.
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