National Income Summary

National Income Overview

• Definition: The measurement of national income provides insights into a country’s economic production for a specific year, reflecting growth or decline by comparing figures over time.

Gross National Income (GNI)

• Definition: Total market value of goods and services produced by a country's citizens in a given period.
• Measurement: Typically assessed quarterly or annually.

Gross Domestic Product (GDP)

• Definition: Total market value of all final goods and services produced within a country during a specific time.
• Includes: All factors of production, regardless of ownership.

Difference Between GNI and GDP

• GNI: Includes goods/services produced by a country’s citizens both domestically and abroad (e.g., remittances from Overseas Filipino Workers).
• GDP: Includes goods/services produced within country borders, regardless of who produces them (e.g., foreign companies operating within the country).

Methods for Measuring GNI and GDP (Villegas & Abola, 1992)

1. Expenditure Approach

• Components:
  • C (Consumption): Personal expenditures (food, clothing, etc.).
  • I (Investment): Business expenses (raw materials, wages).
  • G (Government Expenditures): Spending on social projects.
  • Net Exports (X – M): Exports minus imports.
  • Statistical Discrepancy (SD): Adjustments for unclassified transactions.
  • Net Factor Income from Abroad (NFIFA): Difference between incomes earned by residents abroad and foreign incomes earned domestically.
• Formula: GNI = C + I + G + (X – M) + SD + NFIFA

1. Income Approach

• Components:
  • Wages: Compensation for labor.
  • Net Operating Surplus: Profits of businesses.
  • Depreciation: Loss in asset value over time.
  • Indirect Taxes and Subsidies: Taxes collected and subsidies paid by government without direct exchange.

1. Industrial Origin Approach

• Definition: Measures total production value across sectors (agriculture, industry, services).
• GNI Calculation: Can incorporate NFIFA for GNI measurement.