LONDON -- Gross national income, which measures the value produced by the citizens of a country wherever they live and work, has gained ground among economists as a more reliable measure of wealth than the traditional yardstick of gross domestic product.
The differences between the two are usually small, but analysis for the Nikkei Asian Review has shown that the discrepancy for some Asian countries can be very large.
For example, in the Philippines, which receives billions of dollars in remittances from Filipinos working abroad, GNI per capita exceeded GDP per capita by 21.3% in 2016. This difference is substantial and growing, the analysis shows.
World Bank economist Grant Cameron explains the difference thus: "If some folks live in France but work in Luxembourg, their wages while at work are in the GDP of Luxembourg, but not the GNI of Luxembourg. This adjustment does not only apply to wages, but all other sources of incomes related to the production process and assets used in production."
Kiribati, a Pacific island nation with 110,000 inhabitants, demonstrates another important consideration: population size. Kiribati's average GNI per capita exceeded GDP per capita by 34% before 2000 and the gap has increased to 52% since then.
Along with other Asia-Pacific countries with fewer than five million citizens, Kiribati has a larger than average gap between the two measures. In countries with bigger populations, GDP per capita was generally much closer to GNP.
The cases of Kiribati, East Timor, French Polynesia, the Marshall Islands, Nauru and Tuvalu all show the need to exercise care when choosing the data with which to assess the size of the economy.
Datawatch is a series jointly produced by the Nikkei Asian Review and FT Confidential Research.