What Is Gross National Income (GNI)?
GNI is the total amount of money earned by a nation's people and
businesses. It is used to measure and track a nation's wealth from year
to year. The number includes the nation's gross domestic product plus
the income it receives from overseas sources.
GNI is an alternative to gross domestic product (GDP) as a means of
measuring and tracking a nation's wealth and is considered a more
accurate indicator for some nations.
Understanding GNI
GNI calculates the total income earned by a nation's people and
businesses, including investment income, regardless of where it was
earned. It also covers money received from abroad such as foreign
investment and economic development aid.
The more widely known GDP is an estimate of the total value of all goods and services produced within a nation
for a set period, usually a year. Finally, there's gross national
product (GNP), which is a broad measure of all economic activity.
GDP Vs. GNI Vs. GNP
Of the three measures, GNP is the least used, possibly because it might
be deceptive. For instance, if a nation's wealthiest citizens routinely
move their money offshore, counting that money would inflate the
nation's apparent wealth.
In fact, GNI may now be the most accurate reflection of national wealth given today's mobile population and global commerce.
- GDP is the total market value of all finished goods and services produced within a country in a set time period.
- GNI is the total income received by the country from its residents and businesses regardless of whether they are located in the country or abroad.
- GNP includes the income of all of a country's residents and businesses whether it flows back to the country or is spent abroad. It also adds subsidies and taxes from foreign sources.
GNP and GDP both reflect the national output and income of an economy. The main difference is that GNP (Gross National Product) takes into account net income receipts from abroad.
- GDP (Gross Domestic Product) is a measure of (national income = national output = national expenditure) produced in a particular country.
- GNP (Gross National Product) = GDP + net property income from abroad. This net income from abroad includes dividends, interest and profit.
- GNI (Gross National Income) = (similar to GNP) includes the value of all goods and services produced by nationals – whether in the country or not.
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