4.1.2—GDP, GNI and NNI

GDP measures output produced within a country’s borders. GNI adjusts GDP for net primary income from abroad. NNI further accounts for depreciation of capital, giving a measure closer to income after wearing out productive assets.

Use the geographic boundary and depreciation adjustment explicitly. A country can have GDP above GNI if more factor income flows abroad than in; NNI is lower than GNI when depreciation is positive.

GDP £1,000bn plus net factor income from abroad £20bn gives GNI £1,020bn; subtracting £70bn depreciation gives NNI £950bn.

GDP is not automatically the income of residents, and NNI is not GDP minus every kind of government spending.