by Joseph Joyce
Measures of Global Income
The difference between the income generated by the domestic production of goods and services and the income received by the residents of a country is the basis of the distinction between Gross Domestic Product (GDP) and Gross National Income (GNI). The latter measure includes net foreign-sourced income, the income domestic residents receive from foreign sources for providing productive resources (such as labor) minus the income paid to foreign residents in exchange for their productive resources. Net foreign income is also called “net primary income,” and is a component of the current account of the balance of payments. However, GNI and net primary income exclude one form of income from the foreign sector that has become increasingly important: personal transfers, also called remittances.
The two measures do include the wages paid by foreign firms to domestic workers who travel across borders to their place of employment. But the determination of who is a “domestic worker” depends on residency, not citizenship, and residency can be an ambiguous concept. The IMF’s Balance of Payments and International Investment Position Manual formulated a criterion for establishing it:
“A household is resident in the economic territory in which household members maintain or intend to maintain a dwelling or succession of dwellings treated and used by members of the household as their principal dwelling. Being present for one year of more in a territory or intending to do so is sufficient to qualify as having a principal dwelling there.”