Gross National Income (Gni)

Published Oct 25, 2023

Definition of Gross National Income (GNI)

Gross National Income, or GNI, is a measure of the total income generated within a country in a given period of time. It includes both the income earned by residents of the country and the income earned by the country’s residents abroad. GNI encompasses various sources of income, such as wages, salaries, profits, interest, and dividends.

Example

To better understand GNI, let’s consider the example of Country A. In a year, the citizens of Country A collectively earn $10 billion in wages and salaries from working within the country. Additionally, the country receives $2 billion in remittances from its citizens who are working abroad. The profits generated by companies owned by residents of Country A amount to $3 billion, and the interest and dividends earned by residents from investments total $1 billion.

Taking all these income sources into account, Country A’s GNI for the year would be $16 billion ($10 billion wages and salaries + $2 billion remittances + $3 billion profits + $1 billion interest and dividends).

Why Gross National Income Matters

Gross National Income is an essential economic indicator that provides insights into the economic health and well-being of a country. It serves as a measure of the income generated by a country and can be used to compare the economic performance and living standards of different nations. GNI is also utilized in international economic analysis, policy-making, and development planning. By understanding a country’s GNI, policymakers and economists can formulate strategies to promote economic growth, reduce poverty, and improve the overall welfare of the nation’s residents.