GNI and GDP

Gross National Income represents the total income earned by a country's residents, including income from abroad. In simple terms, GNI equals the nation’s Gross Domestic Product plus net income from abroad.

Net income from abroad refers to the income earned by a country's residents from foreign sources—such as investments or employment overseas—minus the income earned by foreigners within the country.

The key difference between GNI and GDP lies in the ownership of income versus the location of production.

GDP measures the value of goods and services produced within a country’s borders, regardless of who owns the production.

GNI, on the other hand, measures the total income earned by a country’s residents, no matter where the income is generated.

For example, if an American company operates a factory in Germany, its output contributes to Germany’s GDP. However, the profits the company earns count toward the United States’ GNI, as the income goes to American residents.

Conversely, if a French company operates a factory in the U.S., its output adds to U.S. GDP, but the profits go to France’s GNI, because the income is received by French residents.