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