MIBE
The economics of emerging economies
The role of Finance in economic
development and the emerging economies
Gianni Vaggi, April 2014
Finance 1-4
5-REMITTANCES-B
From the paper:
A better measure of standards of
living:
the Gross National Disposable
Income
Clara Capelli & Gianni Vaggi
Department of Economics and management,
University of Pavia
Palestinian Territories, National Accounts (million US$, 2011 data from PCBS)
Palestinian
Territory
West Bank
Gaza Strip
Gross Domestic
Product (GDP)
6,257.9
4,572.3
1,685.6
GDP per capita
1,593.5
1,955.3
1,061.0
Gross National
Income (GNI)
6,821.8
4,984.3
1,837.5
GNI per capita
1,737.1
2,131.5
1,156.6
Gross Disposable
Income (GDI)
7,908.6
5,778.4
2.130.2
GDI per capita
2,013.9
2,471.1
1,340.9
Final Consumption
Expenditure
7,868.1
6,075.3
1,792.8
Gross Capital
Formation
1,179.2
1,017.5
161.7
Net Exports
-2,789.5
-2,604.7
-184.8
40.5
-296.9
337.4
Savings
See Giacaman 2013, MICAD Thesis
Sources
• The System of National Accounts 2008 (2008 SNA) is the
latest version of the international statistical standard for the
national accounts, adopted by the United Nations Statistical
Commission (UNSC).
• The sixth edition of the Balance of Payments and
International Investment Position Manual (2009 BPM6)
written in close collaboration with the IMF Committee of
Balance of Payments Statistics (Committee).
Some definitions/1
• GDP = C + I + G + (X-M)
• (X-M) is the trade balance;
• GNI = GDP + NPI
• NPI = remunerations of factors of production (capital and
labour) receivable from the rest of the world – those payable
to the rest of the world.
• GNDI = GNI + NSI = GDP + NPI + NSI
• NSI = current transfers (aid, remittances) receivable from the
rest of the world – those payable to the rest of the world.
• Current Account Balance (CAB)= X-M + NPI + NSI
Some definitions/2
• Net primary income:
•
•
•
•
Interests and dividends (on portfolio investments);
Earnings of FDIs;
Rents on land and natural resources;
Compensation of employees (cross-border workers).
• Net secondary income:
•
•
•
•
Personal transfers (i.e. remittances);
(Current) International cooperation;
Social contributions: (i.e. contributions for future pensions);
Social benefits(i.e pensions).
GNI is often confused with the GNDI and
believed to be higher than the GDP in
common practice, particularly in developing
countries.
In 2010 UNDP replaced GDP per capita with
GNI per capita in the Human Development
Index
Gross national income (GNI) per capita replaces gross
domestic product (GDP) per capita. This should be an
unambiguous improvement: GNI reflects what citizens can
do with income they receive, whereas that is not true of
value added in goods and services produced in a country
that go to someone outside it, and income earned abroad
still benefits some of the nation’s citizens. As trade and
remittance flows have been expanding rapidly, and as aid
has been better targeted to very low-income countries,
this distinction has become increasingly important (Todaro
and Smith 2011:54)
OECD’s data on Mexico
millions US$ (current PPP)
2009
2010
2011
1,605,272.4
1,713,411.0
1,905,415.0
-24,886.8
-19,644.2
-27,798.8
Primary incomes
receivable
11,878.9
13,199.6
15,708.3
Primary incomes
payable
36,765.7
32,843.7
43,507.0
1,580,385.7
1,693,766.8
1,877,616.1
39,295.1
35,716.2
37,764.0
Current transfers
receivable
39,409.0
35,859.6
38,054.3
Current transfers
payable
113.9
143.3
290.2
1,619,680.8
1,729,483.1
1,915,380.1
GDP
Net primary incomes
from the rest of the
world
GNI
Net current transfers
from the rest of the
world
GNDI
http://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE2#
Total net resource flows to developing countries by type of flow,
1990-2016f (Billions of Dollars)
Top remittance receivers in absolute
terms (millions of US$)
2013 WB Database
Top remittance receivers in relative
terms (millions of US$)
2013 WB Database
Why is the GNDI to be used?
• Building the HDI Index (sub-index on living
standards;
• WB income thresholds to classify countries
• Calculating the ANNI (Adjusted Net National
Income);
• Assessing Dutch Disease phenomena;
• The importance of NICA (Non-Interest Current
Account)
Remittances, Trade Balance and Current
Account (millions US$, % GDP)/1
2013 WB Database
Remittances, Trade Balance and Current
Account (millions US$, % GDP)/2
2013 WB Database