Definition
Gross National Income (GNI)
The total income earned by an economy's residents over a specific time period, equal to the market value of all final goods and services produced by the factors of production supplied by the economy's residents, regardless of the location of the factors of production.
In turn, the GNI:
- Measures the total income an economy's residents receive in return for providing the factors of production that produce the national output.
- Does not take into account the location of the factors of production.
How does GNI differ from GDP?
The calculations of the GDP and GNI of the same open economy, during the same period of time provide different values for the national output. This is because:
- GDP is the market value of all final goods and services produced in an economy over a period of time (usually a year), regardless of who owns the factors of production.
- GNI is the total income earned by an economy's residents, equal to the market value of all final goods and services produced by the factors of production supplied by the economy's residents, regardless of the location of the factors of production.
Understanding the differences noted above, the GNI can also be defined as:
