GNP Crescendo
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The gross national income (GNI), previously known as gross national product (GNP), is the total amount of
factor income Factor income (also called primary income and earned income) is the flow of income that is derived from the factors of production, i.e., the general inputs required to produce goods and services. Factor income on the use of land is called rent, in ...
s earned by the residents of a country. It is equal to
gross domestic product Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performanc ...
(GDP), plus factor incomes received from non-resident by residents, minus factor income paid by residents to non-resident. In contrast to GDP, GNI is not a concept of value added, but a concept of income. GNI is the basis of calculation of the largest part of contributions to the
Budget of the European Union The budget of the European Union ( The Union’s annual budget) is used to finance EU funding programmes (such as the European Regional Development Fund, the Cohesion Fund, Horizon Europe, or Erasmus+) and other expenditure at the European ...
. 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 The Central Bank of Ireland () is the national central bank for Ireland within the Eurosystem. It was the Irish central bank from 1943 to 1998, issuing the Irish pound. It is also the country's main financial regulatory authority, and since 2 ...
replaced Irish GDP with a new metric, Irish Modified GNI (or "GNI*"). In 2017, Irish GDP was 162% of Irish Modified GNI. GNI contrast with net national income : NNI = GNI -
Depreciation In accountancy, depreciation refers to two aspects of the same concept: first, an actual reduction in the fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation i ...
The
Atlas method The World Bank has used the Atlas method since 1993 to estimate the economic size of countries based on their gross national income (GNI) in U.S. dollars. To convert a country's GNI from its local currency to U.S. dollars, the Atlas method uses a c ...
can be applied to correct for fluctuating
exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
s.


History and name change

The modern concept of GNP, along with GDP, was first developed by
Simon Kuznets Simon Smith Kuznets ( ; rus, Семён Абра́мович Кузне́ц, p=sʲɪˈmʲɵn ɐˈbraməvʲɪtɕ kʊzʲˈnʲets; April 30, 1901 – July 8, 1985) was a Russian-born American economist and statistician who received the 1971 Nobe ...
for a 1934
U.S. Congress The United States Congress is the legislative branch of the federal government of the United States. It is a bicameral legislature, including a lower body, the U.S. House of Representatives, and an upper body, the U.S. Senate. They both ...
report. Countries like the US and the UK originally preferred GNP as a measure of economic activity while other like Norway preferred GDP. Overtime communication harmonize around GDP included in the US which switched in 1991. GNP was defined in the 1953 SNA as : "the market value of product before deduction of provisions of consumption of fixed capital, attributable to factors of production supplied by normal residents of the given country" Despite framing GNP as a concept of production, the attribution of the value was defined by the income earned by the owner of the factor of production. In the 1993 revision to the SNA, the GNP definition was reframed from the point of view of the residents receiving income rather than the point of view of the factor of production. To reflect this, GNP was renamed GNI; the "national" part was kept as it is embedded in economic usage, even though the same concept of residence is used to define both GDP and GNI. GNP continues to be used in the
National income and product accounts The national income and product accounts (NIPA) are part of the national accounts of the United States. They are produced by the Bureau of Economic Analysis of the Department of Commerce. They are one of the main sources of data on general econ ...
to refer to GNI calculated for expenditure data.


Type of income included in GNI

GNI includes the salaries and wages of cross-border commuters and seasonal workers working overseas but does not include
remittance A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes ...
sent by workers to their families overseas. This explains why
France France, officially the French Republic, is a country located primarily in Western Europe. Overseas France, Its overseas regions and territories include French Guiana in South America, Saint Pierre and Miquelon in the Atlantic Ocean#North Atlan ...
GNI is higher than its GDP as a lot of French residents work in
Luxembourg Luxembourg, officially the Grand Duchy of Luxembourg, is a landlocked country in Western Europe. It is bordered by Belgium to the west and north, Germany to the east, and France on the south. Its capital and most populous city, Luxembour ...
,
Monaco Monaco, officially the Principality of Monaco, is a Sovereign state, sovereign city-state and European microstates, microstate on the French Riviera a few kilometres west of the Regions of Italy, Italian region of Liguria, in Western Europe, ...
, or
Switzerland Switzerland, officially the Swiss Confederation, is a landlocked country located in west-central Europe. It is bordered by Italy to the south, France to the west, Germany to the north, and Austria and Liechtenstein to the east. Switzerland ...
. In comparison,
India India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
GNI is lower than its GDP despite being the larger receiver of remittances. GNI also includes the propriety income: rent, interest, and "profit". The "profit" included both distributed income of corporations (dividends) and reinvested earnings on
foreign direct investment A foreign direct investment (FDI) is an ownership stake in a company, made by a foreign investor, company, or government from another country. More specifically, it describes a controlling ownership an asset in one country by an entity based i ...
, those are profit retained by the corporation. Like in the
IMF balance of payments manual The Balance of Payments Manual published by the International Monetary Fund provides accounting standards for balance of payments reporting and analysis for many countries. The United States Bureau of Economic Analysis adheres to this standard. T ...
they are treated as if they were distributed to foreign direct investors in proportion to their ownership of the equity of the enterprise and then reinvested by them using additions in equity. The GNI of EU countries also included subsidies received from the EU and excluded
tariff A tariff or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...
s as the EU receives those. GNI contrasts with Gross national disposable income which includes all current transfer income like international cooperation and remittance.


Comparison of GNI and GDP

\mathrm = \mathrm + \text - \text


GNI (Atlas method) nominal

Nominal,
Atlas method The World Bank has used the Atlas method since 1993 to estimate the economic size of countries based on their gross national income (GNI) in U.S. dollars. To convert a country's GNI from its local currency to U.S. dollars, the Atlas method uses a c ...
– millions of current
US$ The United States dollar (Currency symbol, symbol: Dollar sign, $; ISO 4217, currency code: USD) is the official currency of the United States and International use of the U.S. dollar, several other countries. The Coinage Act of 1792 introdu ...
(top 15)


GNI (Atlas method) PPP

PPP – millions of
international dollar The international dollar (int'l dollar or intl dollar, symbols Int'l$., Intl$., Int$), also known as Geary–Khamis dollar (symbols G–K$ or GK$), is a hypothetical unit of currency that has the same purchasing power parity that the U.S. doll ...
s (top 15)


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 Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performanc ...
(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 In economics, economic growth is an increase in the quantity and quality of the economic goods and Service (economics), services that a society Production (economics), produces. It can be measured as the increase in the inflation-adjusted Outp ...
". 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 The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
estimated its GDP at $14.119
trillion ''Trillion'' is a number with two distinct definitions: *1,000,000,000,000, i.e. one million 1,000,000, million, or (ten to the twelfth Exponentiation, power), as defined on the long and short scales, short scale. This is now the meaning in bot ...
, and its GNP at $14.265 trillion. The term ''gross national income'' (GNI) has gradually replaced the ''Gross national product'' (GNP) in international statistics. While being conceptually identical, the precise calculation method has evolved at the same time as the name change.


Use of GNP

The
United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
used GNP as its primary measure of total economic activity until 1991, when it began to use GDP. In making the switch, the
Bureau of Economic Analysis The Bureau of Economic Analysis (BEA) of the United States Department of Commerce is a U.S. government agency that provides official macroeconomic and industry statistics, most notably reports about the gross domestic product (GDP) of the United ...
(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". 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 Unpaid labor or unpaid work is defined as labor or work that does not receive any direct remuneration. This is a form of non-market work which can fall into one of two categories: (1) unpaid work that is placed within the production boundary of ...
and counts much economic activity that is unproductive or actually destructive.


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 World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...
, the GNI of the US in 2016 was 1.5% higher than GDP. 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 of
Armenia Armenia, officially the Republic of Armenia, is a landlocked country in the Armenian Highlands of West Asia. It is a part of the Caucasus region and is bordered by Turkey to the west, Georgia (country), Georgia to the north and Azerbaijan to ...
was 4.45% higher than GDP. Based on the
OECD The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...
reports, in 2015 alone, Armenia has received a total of US$409 million development assistance. Over the past 25 years,
USAID The United States Agency for International Development (USAID) is an agency of the United States government that has been responsible for administering civilian United States foreign aid, foreign aid and development assistance. Established in 19 ...
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, 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. Armenia's GNI, measured in US dollars, amounted to US$13.5 billion in 2021, according to the National Statistical Office. This is an 8.23% increase over the prior year. GNI in USD terms in Armenia has historically ranged from a record high of US$13.8 billion in 2019 to a record low of US$1.06 billion in 1992. Regarding interest rates on GNI expressed in USD, Armenia is ranked 119th out of the 155 monitored nations.


Lists of GNI per capita

*
List of countries by GNI (nominal) per capita This is a list of countries by gross national income per capita in 2023 at nominal values, according to the Atlas method, an indicator of income developed by the World Bank. The GNI per capita is the dollar value of a country's final income in ...
* List of countries by GNI (real) per capita *
List of countries by GNI (PPP) per capita This article includes a list of countries of the world and their gross national income (GNI) (formerly GNP) per capita at purchasing power parity (PPP) in 2023, as reported by the World Bank. Lists By country or dependency By w ...
*
List of countries by GNI per capita growth This is a list of countries by gross national income (GNI) per capita growth. This list is not to be confused with GDP per capita growth, GNI per capita or GDP growth. List of countries and dependencies The rate of GNI per capita growth in annu ...


See also

*
Disposable household and per capita income Household income is a measure of income received by the household sector. It includes every form of cash income, e.g., salaries and wages, retirement income, investment income and cash transfers from the government. It may include near-cash gover ...
* Net national income *
Measures of national income and output A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), Gross national income (GNI), net national income (NNI), and adjusted nati ...
*
Gross national income in the European Union Gross may refer to: Finance *Gross Cash Registers, a defunct UK company with a high profile in the 1970s *Gross (economics), is the total income before deducting expenses Science and measurement *Gross (unit), a counting unit equal to 144 i ...
*
Gross world product The gross world product (GWP), also known as gross world income (GWI), is the combined gross national income (previously, the "gross national product") of all the countries in the world. Because imports and exports balance exactly when consider ...
*
National average salary The national average salary (or national average wage) is the mean salary for the working population of a nation. It is calculated by summing all the annual salaries of all persons in work (surveyed) and dividing the total by the number of worke ...
*
Gross domestic product Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performanc ...
(GDP) * Irish modified GNI (or GNI*) *
List of U.S. states by adjusted per capita personal income List of states by adjusted per capita personal income estimates the per capita personal income of residents of U.S. states adjusted by differences in the cost of living, called "regional price parities" by the U.S. Bureau of Economic Analysis. T ...


References

{{Authority control Gross domestic product Macroeconomic indicators