A better measure of standards of living: the Gross National Disposable Income

1. A bettermeasure of standards of living: the Gross National DisposableIncome Clara Capelli & Gianni Vaggi University of Pavia

2. PalestinianTerritories, National Accounts (million US$, 2011 data from PCBS) SeeGiacaman 2013, MICAD Thesis

3. 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).

4. Some definitions/1 • GDP = C + I + G + (X-M) • (X-M) is the trade balance; • GNI = GDP + NPI • NPI = remunerations of factorsof production (capital and labour) receivable from the rest of the world – thosepayable to the rest of the world. • GNDI = GNI + NSI = GDP + NPI + NSI • NSI = currenttransfers (aid, remittances) receivable from the rest of the world – thosepayable to the rest of the world. • Current Account Balance (CAB)= X-M + NPI + NSI

5. Some definitions/2 • Net primaryincome: • Interestsand dividends (on portfolio investments); • Earnings of FDIs; • Rents on land and naturalresources; • Compensation of employees (cross-borderworkers). • Net secondaryincome: • Personal transfers (i.e. remittances); • (Current) International cooperation; • Social contributions: (i.e. contributionsfor future pensions); • Social benefits(i.epensions).

6. GNI isoftenconfused with the GNDI and believed to be higherthan the GDP in common practice, particularly in developingcountries. In 2010 UNDP replaced GDP per capita with GNI per capita in the HumanDevelopmentIndex

7. 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)

8. OECD’s data on Mexicomillions US$ (current PPP) http://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE2#

9. Total net resource flows to developing countries by type of flow, 1990-2016f (Billions of Dollars)

10. Top remittancereceivers in absoluteterms (millions of US$) 2013 WB Database

11. Top remittancereceivers in relative terms (millions of US$) 2013 WB Database

12. Whyis the GNDI to be used? • Building the HDI Index (sub-index on living standards; • WB incomethresholds to classifycountries • Calculating the ANNI (Adjusted Net National Income); • AssessingDutchDiseasephenomena; • The importance of NICA (Non-InterestCurrent Account)

13. Remittances, Trade Balance and Current Account (millions US$, % GDP)/1 2013 WB Database

14. Remittances, Trade Balance and Current Account (millions US$, % GDP)/2 2013 WB Database