Gross national income

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Gross National Income (GNI) is an income approach method of national income accounting that aggregates the total domestic spending and foreign output claimed by residents of a country while subtracting any income earned by foreigners within the domestic economy. Essentially it's Gross National Product (GNP) under a new name with some slight alterations.[1][2] The formula for GNI is as follows

GDP+income inflows-income outflows=GNI

Where income inflows refer to any foreign source of income being earned by domestic residents. These often include capital gains or rents on land. Income outflows refers to income overseas residents are earning from the domestic economy. Any foreign owned factories, bonds, or land will send income abroad.[3]

Comparisons with GDP[edit]

Unlike Gross Domestic Product (GDP) GNI includes income earned from foreign sources.[4] Therefore, nations like the United States or Japan with large amounts of foreign investment will have much higher GNIs than GDPs. Conversely, nations that host large amounts of foreign direct investment like China or India may have smaller GNIs than GDPs. Despite the nuance it provides, economists tend to still focus more on GDP.

See Also[edit]

References[edit]

  1. Chappelow, Jim. "What Is Gross National Income (GNI)?". Investopedia. Retrieved 2020-01-26.
  2. "National income - Gross national income - OECD Data". OECD. Retrieved 2020-01-26.
  3. Bondarenko, Peter. "Gross National Income". Encyclopedia Britannica. Retrieved 2020-01-26.
  4. Gross national income (GNI)