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Why Gross National Disposable Income should substitute Gross National Income

Author

Listed:
  • Clara Capelli

    () (Department of Economics and Management, University of Pavia)

  • Gianni Vaggi

    () (Department of Economics and Management, University of Pavia)

Abstract

The Gross National Income (GNI) is often used as an indicator for a country’s living standards. Yet, it does not record unilateral transfers and notably remittances, which in the last decades have gained growing importance as a source of income for developing countries. Gross National Disposable Income (GNDI), includes both income and transfers and provides a much better account of people’s actually available income. However GNDI is sometimes confused with the GNI and is rarely available in major reports. This paper fills this gap by calculating the GNDI for all the countries in the World Bank database and it discusses the use of GNDI for 27 countries amongst the world top remittance receivers. We show that GNDI is much more informative than GNI and is a much more reliable basis for policy making in developing countries.

Suggested Citation

  • Clara Capelli & Gianni Vaggi, 2014. "Why Gross National Disposable Income should substitute Gross National Income," DEM Working Papers Series 091, University of Pavia, Department of Economics and Management.
  • Handle: RePEc:pav:demwpp:demwp0091
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    File URL: http://economia.unipv.it/docs/dipeco/quad/ps/RePEc/pav/demwpp/DEMWP0091.pdf
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    References listed on IDEAS

    as
    1. Louka T. Katseli & Robert E.B. Lucas & Theodora Xenogiani, 2006. "Effects of Migration on Sending Countries: What Do We Know?," OECD Development Centre Working Papers 250, OECD Publishing.
    2. Giulia Bettin & Andrea F. Presbitero & Nikola L. Spatafora, 2017. "Remittances and Vulnerability in Developing Countries," World Bank Economic Review, World Bank Group, vol. 31(1), pages 1-23.
    3. Annalisa Prizzon & Gianni Vaggi, 2009. "On The Sustainability of External Debt: Is Debt Relief Enough?," Quaderni di Dipartimento 094, University of Pavia, Department of Economics and Quantitative Methods.
    4. Jeni Klugman & Francisco Rodríguez & Hyung-Jin Choi, 2011. "The HDI 2010: new controversies, old critiques," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(2), pages 249-288, June.
    5. Xavier Sala-i-Martin, 2006. "The World Distribution of Income: Falling Poverty and … Convergence, Period," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 351-397.
    6. Milorad Kovacevic, 2010. "Review of HDI Critiques and Potential Improvements," Human Development Research Papers (2009 to present) HDRP-2010-33, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    7. Sumner, Andy, 2013. "Global Poverty, Aid, and Middle-Income Countries: Are the Country Classifications Moribund or is Global Poverty in the Process of 'Nationalizing'?," WIDER Working Paper Series 062, World Institute for Development Economic Research (UNU-WIDER).
    8. Ibrahim Sirkeci & Jeffrey H. Cohen & Dilip Ratha, 2012. "Migration and Remittances during the Global Financial Crisis and Beyond," World Bank Publications, The World Bank, number 13092.
    9. Adams, Richard Jr. & Page, John, 2003. "Poverty, Inequality and Growth in Selected Middle East and North Africa Countries, 1980-2000," World Development, Elsevier, vol. 31(12), pages 2027-2048, December.
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    More about this item

    Keywords

    Gross National Income; Gross National Disposable Income; Living standard; Balance of Payments; Current Account; Remittances;

    JEL classification:

    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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