[Marxism] GDP and GNI in Tsunami countries - how they grow and shrink
andromeda246 at hetnet.nl
Tue Dec 28 13:48:19 MST 2004
Previously I've written a small piece on GDP versus GNI for PEN-L,
commenting on the "Atlas method" used by the World Bank. (
In these days of currency speculation, when over a trillion dollars is
exchanged in the world's money markets every day, it's interesting to have a
more detailed look at the World Bank figures - for the purpose of the
exercise, I will take some of the Tsunami countries.
To refresh the memory, GDP (gross domestic product) is defined as is the sum
of the gross value added by all resident producers in the economy, plus any
product taxes, and minus any subsidies excluded from the value of the
products. It is calculated without making deductions for depreciation of
fabricated assets or for depletion and degradation of natural resources. PPP
GDP is gross domestic product converted to international dollars using
purchasing power parity rates. An international dollar has the same
purchasing power over GDP as a U.S. dollar has in the United States. (World
Bank, Organisation for Economic Co-operation and Development, United
Nations) By contrast, GNI (gross national income-formerly gross national
product or GNP) equals GDP plus net receipts of primary income (compensation
of employees and property income) from abroad. (World Bank).
Now have a look at the World Bank estimates for 2003 (valued in US$):
India: GDP = $598,966 million; GDP at ppp=$3,096,239 million;GNI=$567,604
Thailand:GDP = $143,163 million; GDP at ppp=$470,086 million;GNI=$136,063
Indonesia:GDP = 208,311 million; GDP at ppp=$721,583 million;GNI=$172,733
Bangladesh:GDP = 51,897 million; GDP at ppp=$246,526 million;GNI=$54,587
Malaysia:GDP = 103,161 million; GDP at ppp=$240,210 million;GNI=$93,683
Maldives:GDP = 696 million; GDP at ppp=$? million;GNI=$674
Two remarkable trends are immediately visible. Firstly, if GDP is valued at
purchasing power parity, the difference from a straightforward exchange rate
conversion is enormous. (Insufficient data for the Maldives, sorry)
India's GDP at ppp suddenly becomes five times larger.
Thailand's GDP at ppp becomes three times larger.
Indonesia's GDP at ppp becomes nearly three and a half times larger.
Bangladesh's GDP at ppp becomes nearly five times larger
Malaysia's GDP at ppp becomes more than two times larger
But secondly, even more remarkable is how for every country mentioned except
Bangladesh, GDP is LARGER than GNI. You might well ask, how can this
possibly be? After all, GNI includes additionally the income received by the
country from overseas! Then you'd have to say GNI always has to be larger
than GDP, by definition.
Not so, because as the World Bank explains, the "income from overseas" is
NET income. That income can, in other words, be a net positive value (income
receipts by the country exceed outward income payments) or negative value
(outward income payments of the country exceed income receipts).
Without any complicated scientific story about unequal exchange (as Gernot
Kohler or Samir Amin might provide), these "simple" statistics suggest that
most of these countries produce more value than they appropriate in income -
a significant fraction of their product value is income which "drains" from
the country, and disappears overseas. In the case of Indonesia, for example,
the "drain" equals about 17% of GDP.
In summary, not only were these countries in 2003 at a disadvantage in the
currency stakes, in aggregate they also appropriate less value than they
create with their own labor; some of that value is appropriated by other
I'm resting my case.
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