7 6 GDP, GNI and GNDI

A better measure of standards of living: the Gross National Disposable Income Clara Capelli & Gianni Vaggi University of Pavia... • The System of National Accounts 2008 2008 SNA is the l

A better measure of standards of living: the Gross National Disposable Income

Clara Capelli & Gianni Vaggi

University of Pavia

Palestinian Territory West Bank Gaza Strip

Gross Domestic Product (GDP) 6,257.9 4,572.3 1,685.6

Gross National Income (GNI) 6,821.8 4,984.3 1,837.5

Gross Disposable Income (GDI) 7,908.6 5,778.4 2.130.2

Palestinian Territories, National Accounts (million US$, 2011 data from PCBS)

See Giacaman 2013, MICAD Thesis

• The System of National Accounts 2008 (2008 SNA) is the latest version of the international statistical   standard for the national accounts, adopted by the United Nations Statistical Commission (UNSC)

• The sixth edition of the Balance of Payments and International Investment Position Manual (2009 BPM6)

writen in close collaboration with the IMF Commitee of Balance of Payments Statistics (Commitee). 

Some definitions/1

• (X-M) is the trade balance;

• NPI = remunerations of factors of production (capital and labour) receivable from the rest of the world – those payable to the rest of the world

• NSI = current transfers (aid, remitances) receivable from the rest of the world – those payable to the rest of the world

Some definitions/2

• Net primary income:

• Interests and dividends (on portfolio investments);

• Earnings of FDIs;

• Rents on land and natural resources;

• Compensation of employees (cross-border workers).

• Net secondary income:

• Personal transfers (i.e remitances);

• (Current) International cooperation;

• Social contributions: (i.e contributions for future pensions);

• Social benefits(i.e pensions).

GNI is often confused with the GNDI and believed to be higher than the GDP

in common practice, particularly in developing countries.

In 2010 UNDP replaced GDP per capita with GNI per capita in the Human Development Index

Gross national income (GNI) per capita replaces gross domestic product (GDP) per capita This should

be an unambiguous improvement: GNI reflects what citizens can do with income they receive, whereas that is not true of value added in goods and services produced in a country that go to someone outside it, and income earned abroad still benefits some of the nation’s citizens As trade and remittance flows have been expanding rapidly, and as aid has been better targeted to very low-income countries, this distinction has become increasingly important (Todaro and Smith 2011:54)

OECD’s data on Mexico

millions US$ (current PPP)

Net primary incomes from the rest of

the world

Net current transfers from the rest of

the world

htp://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE2#

Total net resource flows to developing countries by type of flow, 1990-2016f (Billions of Dollars)

Top remittance receivers in absolute terms (millions of US$)

2013 WB Database

Top remittance receivers in relative terms (millions of US$)

2013 WB Database

Why is the GNDI to be used?

Remittances, Trade Balance and Current Account (millions US$, % GDP)/1

2013 WB Database

Remittances, Trade Balance and Current Account (millions US$, % GDP)/2

2013 WB Database