[Marxism] GDP and GNI in Tsunami countries - how they grow and shrink

Jurriaan Bendien 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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