- Gross national income
- Gross national income is the total income earned by a country's residents in a year, wherever in the world they earn it.
- Gross domestic product
- Gross domestic product is the value of all final goods and services produced within a country in a given year.
Three adjustments turn GDP into a fair comparison
Can you name the three adjustments that take a country's GDP to a figure fit for comparing living standards?
The first turns GDP into GNI; the other two make countries comparable.
Net primary income from abroad is the wages, interest, dividends and profits residents earn from abroad, minus those paid out to foreign residents.
Can you think of an example?
UK firms' factories abroad send home £50 billion of profit, and foreign owners of UK firms take out £35 billion: a net inflow of £15 billion.
A per capita figure is a national total divided by the population: the average for each person.
Can you think of an example?
GNI of £600 billion shared among 20 million people is £30,000 per capita.
A purchasing power parity exchange rate is the rate that equalises the prices of the same goods in two countries.
Can you think of an example?
A basket costs £100 in the UK and 4,000 rupees in India, so the PPP rate is 40 rupees to the pound, whatever the market rate.