What is Gross National Income (GNI)

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Gross National Income (GNI) is the total monetary value of all final goods and services produced by the residents of a country during a specific period, usually a year. It is calculated as GDP (production within the country’s borders) plus income earned by residents from abroad (remittances, overseas wages, foreign investments, etc.) minus income earned domestically by non-residents (profits of foreign companies, wages of foreign workers, etc.).

 

Types of GNI

1.       Nominal GNI: GNI measured at current market prices, without adjusting for inflation. It can rise simply due to higher prices, even if actual income has not increased.

2.       Real GNI: GNI adjusted for inflation, measured at constant prices of a base year. It shows the actual change in residents’ income by removing the effect of price changes.

 

Common Misconceptions about GNI

GNI means GDP: GNI and GDP are not the same. GDP measures production within borders; GNI measures residents’ income, adjusted for cross-border flows.

GNI equals personal income of citizens: GNI is the total income of the nation, not what each individual earns. Personal incomes vary widely.

GNI includes only remittances: GNI is not just money sent home by workers abroad. It also includes overseas wages, business profits, and foreign investments.

Higher GNI means higher living standards: A country with a higher GNI is not automatically better off. GNI, like GDP, does not account for inequality, environment, or quality of life.

GNI is the government’s revenue: GNI is not the tax money collected by the government. It is the total income of residents and businesses, while government revenue is only a small portion of it.


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