What is GNI based on?
gross national income (GNI), the sum of a country's gross domestic product (GDP) plus net income (positive or negative) from abroad. It represents the value produced by a country's economy in a given year, regardless of whether the source of the value created is domestic production or receipts from overseas.
Gross National Income (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 (GDP) plus the income it receives from overseas sources.
Gross national income (GNI) is defined as gross domestic product, plus net receipts from abroad of compensation of employees, property income and net taxes less subsidies on production.
The Gross National Income, GNI, formerly referred to as gross national product (GNP) measures the total domestic and foreign value added claimed by residents at a given period in time, usually a year, expressed in international dollars using purchasing power parity rates.
Gross national income (GNI) is defined as gross domestic product, plus net receipts from abroad of compensation of employees, property income and net taxes less subsidies on production.
For other parts of the analysis, countries have been classified by their level of devel- opment as measured by per capita gross national income (GNI). Accordingly, countries have been grouped as high-income, upper middle income, lower middle income and low-income (table E).
The major strength of GNI as an economic metric is the fact that it recognizes all income that goes into a national economy, regardless of whether it is earned within the country or overseas.
The gross national income (GNI) of a given country divided by its population. The legal economy that is taxed and monitored by a government and is included in a government Gross national product as opposed to an informal economy.
Gross National Income (GNI) calculates the monetary worth of what is produced within a country plus income received from investments outside the country minus income payments to other countries around the world.
Definition: Gross National Income (GNI) per capita is the dollar value of a country's final income in a year divided by its population using Atlas methodology.
Why is GNI measured per capita?
GNI measures are preferred to Gross Domestic Product (GDP) as they represent national income, as opposed to the value of domestic production. GNI therefore includes income as earned by a country's residents, whether it originates from production within its borders, or from assets held abroad.
GDP can be determined via three primary methods. All three methods should yield the same figure when correctly calculated. These three approaches are often termed the expenditure approach, the output (or production) approach, and the income approach.
GDP looks at the production level of an economy or the total annual value of what is produced in the nation; it measures an economy's size and growth rate. GNI is the total dollar value of everything produced by a country and the income its residents receive—whether it is earned at home or abroad.
Whereas GDP refers to the income generated by production activities on the economic territory of the country, GNI measures the income generated by the residents of a country, whether earned in the domestic territory or abroad.
- Singapore — 102,450.
- Qatar — 100,450.
- Bermuda (UK territory) — 91,950.
- Luxembourg — 83,230.
- Norway — 82,840.
- Ireland — 79,370.
- Switzerland — 75,810.
- Macau (China SAR) — 72,940.
Example #2
The measurement of GNI is usually done along with the per capita data for a country. For instance, the GNI per capita for the USA in 2021 was $64210.
Income is defined as all employee compensation plus investment profits. GNI also includes any product taxes not already counted, minus subsidies. It only counts income earned from residents who work abroad and does not count income earned by foreigners located in the country.
Factor income includes Direct Investment Income (such as dividends), Portfolio Investment Income (such as distributed dividends from shares and interest received from debt securities), Other Investment Income (such as interests received from deposits and loans) and Compensation of Employees.
GNI can be measured using the output, income, or expenditure approaches. In particular, the expenditure approach measures GNI by considering the expenses incurred by households, firms, and governments in the economy.
Key Takeaways
Gross domestic product (GDP) and gross national income (GNI) are two measures of economic activity, but what they measure differs. GDP looks at the production level of an economy or the total annual value of what is produced in the nation; it measures an economy's size and growth rate.
How does GNI show levels of development?
Classifying levels of development
The World Bank classifies the level of development of a country by using gross national income (GNI) per capita. It classifies countries into: low-income countries (LICs) - GNI per capita of $1,045 or less, e.g. Chad and Ethiopia.
Gross national income (GNI) is defined as gross domestic product, plus net receipts from abroad of compensation of employees, property income and net taxes less subsidies on production.
The smaller, but more-developed country will nearly always have a much higher GNI per capita, as the goods produced by a more advanced economy command higher prices than the goods produced by the less-developed economy.
A problem with gross national income estimates that, to compare them, the GNIs in local currency must be converted to a common currency by using an official exchange rate, and that may not accurately reflect domestic purchasing powers of currencies.
Gross National Income Per Capita
Therefore, the GNI per capita is the best for knowing the standards of living of a country. For example, higher GNI per capita means high rates of literacy, lower rate of infant mortality, and access to hygienic and pure water for the population.
The United Nations' Human Development Index (HDI) seeks to quantify a country's level of prosperity based on both economic and non-economic factors. Non-economic factors include life expectancy, and educational attainment. Economic factors are measured by gross national income (GNI) per-capita.
The GNI per capita is the dollar value of a country's final income in a year, divided by its population. It should be reflecting the average before tax income of a country's citizens.
While gross domestic product (GDP) is among the most popular of economic indicators, gross national income (GNI) is quite possibly a better metric for the overall economic condition of a country whose economy includes substantial foreign investments.
GNI measures are preferred to Gross Domestic Product (GDP) as they represent national income, as opposed to the value of domestic production. GNI therefore includes income as earned by a country's residents, whether it originates from production within its borders, or from assets held abroad.
The GNI per capita income is the total valuation of a nation's closing output related to products and services in a financial year which is then divided by the nation's population.
What is the GNI per capita of a high income country?
| Rank | Country | GNI per capita (US$) |
|---|---|---|
| 1 | Liechtenstein | 116,600 |
| 2 | Norway | 95,510 |
| 3 | Luxembourg | 91,200 |
| 4 | Singapore | 91,100 |
Low-income economies — GNI per capita of up to $1,085 in 2021 (in USD) Lower-middle-income economies — GNI per capita of $1,086 to $4,255. Upper-middle-income economies — GNI per capita of $4,256 to $13,205. High-income economies — GNI per capita of $13,206 or more.
GNI comprises GDP plus net receipts of primary income (compensation of employees and property income) from nonresident sources. GNI provides an aggregate measure of income.
Other Ways to Measure Quality of Life
GDP per capita only measures the income paid to those residing in the country's borders. GNI per capita can raise a country's standard of living. That's because many citizens live in other countries to get better jobs.
What is the difference between national income and personal income? The national income refers to the aggregate money value of all goods and services produced in a country during a year. Personal income means the sum of all incomes an individual or household obtains from all the earning sources during a given period.
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.
Per capita income is used to determine the average per-person income for an area and to evaluate the standard of living and quality of life of the population. Per capita income for a nation is calculated by dividing the country's national income by its population.
- The Output Method (all value added by each producer),
- The Income Method (all income generated) and.
- The Expenditure Method (all spending).
GNI per capita – this measure only shows economic development and says nothing about whether people in a country have a good quality of life . It is also an average and so it hides information about people who are very rich or very poor.
GNI measures are preferred to Gross Domestic Product (GDP) as they represent national income, as opposed to the value of domestic production. GNI therefore includes income as earned by a country's residents, whether it originates from production within its borders, or from assets held abroad.
Is GNI per capita the same as income?
These are per capita Gross National Income (GNI) and Net National Income (NNI). Whereas GDP refers to the income generated by production activities on the economic territory of the country, GNI measures the income generated by the residents of a country, whether earned in the domestic territory or abroad.
Nominal Gross Domestic Product (GDP) and Real GDP both quantify the total value of all goods produced in a country in a year. However, real GDP is adjusted for inflation, while nominal GDP isn't. Thus, real GDP is almost always slightly lower than its equivalent nominal figure.
Both GDP and GNI are for permanent units without direct relation with nationality. For example, GNI reflects the total income of permanent residents in China, not the total income of Chinese citizens. GDP measures the economic aggregate of a country or region from the point of production.
GDP measures the money that a country makes in its own land, while GNI measures the money it makes in other countries and at home.
From 2001, these countries include the Euro area, Japan, the United Kingdom, and the United States. U.S. gni per capita for 2022 was $76,370, a 7.72% increase from 2021. U.S. gni per capita for 2021 was $70,900, a 9.67% increase from 2020. U.S. gni per capita for 2020 was $64,650, a 2.24% decline from 2019.
North America gni per capita for 2022 was $73,934, a 7.75% increase from 2021. North America gni per capita for 2021 was $68,615, a 9.76% increase from 2020. North America gni per capita for 2020 was $62,515, a 2.53% decline from 2019. North America gni per capita for 2019 was $64,135, a 4.13% increase from 2018.
- Somalia — 430.
- Mozambique — 480.
- Central African Republic — 480.
- Madagascar — 490.
- Sierra Leone — 500.
- DR Congo — 550.
- Niger — 590.
- Malawi — 620.
Definition: The Gross National Income, GNI, formerly referred to as gross national product (GNP) measures the total domestic and foreign value added claimed by residents at a given period in time, usually a year, expressed in international dollars using purchasing power parity rates.
A country's GNI will differ significantly from its GDP if the country has large income receipts or outlays from abroad. Those income items may include profits, employee compensation, property income, or taxes.
GNI per capita PPP is gross national income in purchasing power parity (PPP) divided by mid-year population.
Why is it important to measure GNI?
The major strength of GNI as an economic metric is the fact that it recognizes all income that goes into a national economy, regardless of whether it is earned within the country or overseas.
It includes the purchasing of durable goods (like cars and appliances), non-durable goods (like food and clothing), and services (like healthcare, education, and entertainment). For instance, if citizens in Country A spend $500 billion on these goods and services, that amount forms part of the country's GNP.
Gross National Income figures are also closely correlated with social development – generally speaking the higher the GNI per capita, the better the education and health indicators are in a country. Total GDP figures give us an indication of who the most powerful nations are on earth in terms of military power.
Another important measure of a country's economic and social development is the Gross National Income (GNI). GNI is the monetary value of GDP as well as the monetary value of EXPORTS minus IMPORTS in that same year which helps to account for the wealth of a nation that is lost through INTERNATIONAL trade.
- Tax Cuts and Tax Rebates.
- Stimulating the Economy With Deregulation.
- Using Infrastructure to Spur Economic Growth.
- The Bottom Line.
Lower middle-income countries have a GNI per capita between $1,026 and $3,995. Upper middle-income countries have GNI per capita between $3,996 and $12,375. Finally, high-income countries have a GNI per capita of $12,376 or more. Figure 1 illustrates how countries are categorised according to this classification.
U.S. gni per capita for 2022 was $76,370, a 7.72% increase from 2021. U.S. gni per capita for 2021 was $70,900, a 9.67% increase from 2020. U.S. gni per capita for 2020 was $64,650, a 2.24% decline from 2019. U.S. gni per capita for 2019 was $66,130, a 4.21% increase from 2018.
GNI is the best tool to determine equitable and fair income distribution amongst a country's population. Therefore, it helps to measure the standard of living of the population. In addition, economists or policymakers use GNI to calculate the net value of products produced in a nation's economy during a financial year.
It accounts only for income in terms of economic development and offers no insight into quality of life. GNI figures for countries with different currencies must be converted to a common currency and thus may not accurately reflect a specific country's purchasing power.
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