Developments in the GDP-GNI Gap in Hungary and the CEE Region

With the progress of globalisation, due to the cross-border movement of the factors of production, there is a gap between the output of the Hungarian economy and the primary income generated by production, allocable to residents. The GDP-GNI gap shows the difference between the performance of the domestic economy and the primary income allocable to the individual sectors of the economy, and it also provides useful information on the current burdens of the country’s accumulated net foreign liabilities. This paper presents the factors that have influenced the changes in the GDP-GNI gap in recent years and examines how the income of the individual economic sectors has changed, breaking down the available data by industries and countries. We examine the correlation between the GDP-GNI gap and the development of the economy by analysing the international developments and regional trends, and then try to survey the trends that determine the domestic GDP-GNI gap over the short and long term. We find that, due to the anticipated growth in the income of foreign-owned companies, the GDP-GNI gap may increase over the short run, while its long-term trend depends significantly on whether the convergence of the Hungarian economy with the Western countries is implemented from external or internal funds.