The Differences Between Gross Domestic Income and Gross National Income Essay

GDP stands for Gross Domestic Product and GNI stands for Gross National Income - The Differences Between Gross Domestic Income and Gross National Income Essay introduction. GDP is the sum of the gross values added by all resident producers in the economy plus any product taxes and minus all subsidies not included in the value of the products. GDP is measured by the country’s overall economic output. GDP is the market value of all services and goods within the borders of a nation.

Besides that, GNI is sum of value added by all resident producers plus any product taxes not included in the valuation of output. In another word, GNI is comprises of the Gross Domestic Product along with the income obtained from other countries. One of the differences between the GDP and the GNI is GDP is based on the location and GNI is based on ownership. Besides that GDP is the value produced within a country’s borders and the GNI is the value produced by all citizens inside and outside of country.

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For example, a Malaysia’s firm established in other country and all the profits from the firm will not be part of Malaysia’s GDP and the profits will be counted in Malaysia’s GNI because the firm stated outside of Malaysia. Finally GDP helps to show the strength of a country’s local income. On the other hand, GNI helps to show the economic strength of the citizens of country. GNI counts any profit from citizens that invest at abroad or outside of their country.

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