Bruttonationaleinkommen

What Is Bruttonationaleinkommen?

Bruttonationaleinkommen (BNE), also known as Gross National Income (GNI), represents the total income earned by a country's residents and businesses, regardless of where the income is generated. It is a key economic indicator within the field of Volkswirtschaftliche Gesamtrechnung (National Accounts). Unlike other measures that focus on production within geographical borders, Bruttonationaleinkommen adheres to the "resident concept," meaning it includes income earned by residents from abroad, such as wages from cross-border commuters or profits repatriated by domestic companies operating overseas, while excluding income earned by foreign entities within the country's borders⁴⁸. This comprehensive view of national income provides insight into the economic well-being and income-generating capacity of a nation's residents⁴⁷.

History and Origin

The concept of national income accounting, which includes measures like Bruttonationaleinkommen, has roots tracing back to the 17th century with early attempts to estimate national wealth for purposes like taxation and assessing war potential⁴⁶. However, the modern framework gained prominence in the aftermath of World War II, driven by the need for systematic economic data for macroeconomic policy and analysis⁴⁴, ⁴⁵. The first international standard for national accounts, the System of National Accounts (SNA), was published in 1953 under the auspices of the United Nations Statistical Commission, with significant contributions from economists like Richard Stone⁴², ⁴³. Subsequent revisions, including those in 1968, 1993, and 2008, have expanded and refined the system to better reflect changes in the global economic environment and user needs⁴⁰, ⁴¹. The term "Gross National Income" (GNI) officially replaced "Gross National Product" (GNP) in the 1993 revision of the SNA to emphasize its nature as an income concept rather than solely a production concept.

Key Takeaways

• Bruttonationaleinkommen (BNE) measures the total income earned by a country's residents, including income from abroad.
• It is a fundamental indicator in national economic accounting, reflecting the economic strength and income-generating capacity of a nation's residents.
• BNE differs from Bruttoinlandsprodukt (BIP) by accounting for net factor income from abroad, making it a "resident concept" measure.
• The World Bank uses BNE per capita as a primary metric for classifying countries into different income groups.
• While a valuable economic indicator, BNE has limitations, as it does not capture income distribution or non-market activities.

Formula and Calculation

The Bruttonationaleinkommen (BNE) is typically derived from the Bruttoinlandsprodukt (BIP) by adjusting for net primary income from the rest of the world³⁸, ³⁹. This adjustment accounts for income earned by a country's residents from abroad and income earned by foreign residents within the country that is sent abroad.

The formula can be expressed as:

Where:

• BNE (Bruttonationaleinkommen) is the Gross National Income.
• BIP (Bruttoinlandsprodukt) is the Gross Domestic Product, representing the total market value of all final goods and services produced within a country's borders in a specific period. It can also be calculated as the sum of Konsumausgaben, Investitionen, Staatsausgaben, and net Exporte (exports minus Importe).
  ³⁷* Saldo der Primäreinkommen aus der übrigen Welt (Net primary income from the rest of the world) includes Arbeitnehmerentgelte (compensation of employees) and Vermögenseinkommen (property income) received by residents from abroad, minus similar income paid to non-residents from domestic sources. Thi³⁵, ³⁶s figure also incorporates net taxes on production and imports less Subventionen receivable from abroad.

##³⁴ Interpreting the Bruttonationaleinkommen

Bruttonationaleinkommen is a crucial measure for understanding a nation's overall economic well-being, particularly concerning the income flow to its residents. A higher Bruttonationaleinkommen generally indicates that residents of a country have a greater capacity to consume, save, and invest, potentially leading to an improved Lebensstandard. For³³ instance, countries with a significant number of citizens working abroad and sending remittances back home, or those with substantial foreign investments, may have a BNE notably higher than their BIP. Thi³²s difference highlights the importance of international income flows for the national economy. Furthermore, institutions like the World Bank widely use GNI per capita (BNE divided by the population) as a primary indicator to classify countries into income groups, such as low, lower-middle, upper-middle, and high-income economies, thereby informing development policies and aid allocations. The²⁹, ³⁰, ³¹ analysis of trends in Bruttonationaleinkommen over time can reveal a country's long-term economic trajectory and its residents' increasing or decreasing purchasing power.

Hypothetical Example

Consider the fictional country of "Econland" for a given year. Econland's domestic production, as measured by its Bruttoinlandsprodukt (BIP), amounts to 500 billion monetary units. However, many Econland citizens work abroad and send money back home. Let's say these Arbeitnehmerentgelte and other Primäreinkommen received from foreign sources total 30 billion monetary units. At the same time, foreign companies operating within Econland repatriate 10 billion monetary units in profits and wages to their home countries.

To calculate Econland's Bruttonationaleinkommen (BNE):

• BIP = 500 billion monetary units
• Income received from abroad by Econland residents = 30 billion monetary units
• Income paid to foreign residents from Econland's economy = 10 billion monetary units

Net primary income from the rest of the world = 30 billion - 10 billion = 20 billion monetary units.

Therefore, Econland's Bruttonationaleinkommen = 500 billion (BIP) + 20 billion (Net primary income from abroad) = 520 billion monetary units.

This demonstrates how Bruttonationaleinkommen provides a more complete picture of the income available to Econland's residents than BIP alone, by factoring in international income flows.

Practical Applications

Bruttonationaleinkommen (BNE) serves multiple critical functions in global economics and policy-making. It is a cornerstone for international organizations to assess and compare the economic standing of different nations. For instance, the World Bank utilizes GNI per capita, derived from Bruttonationaleinkommen, as its main criterion for classifying countries into income categories, which in turn influences eligibility for development assistance and concessional loans. This²⁷, ²⁸ classification helps tailor economic strategies and aid programs to specific country needs.

Fur²⁶thermore, BNE is vital for analysts and policymakers in gauging a country's overall economic health and the living standards of its population. It h²⁵elps in formulating appropriate Wirtschaftspolitik aimed at augmenting and growing a country's economy. For ²⁴example, nations heavily reliant on remittances from citizens working overseas will find BNE to be a more accurate reflection of their national income compared to BIP. Data²³ on Bruttonationaleinkommen is also used in international comparisons of Steuerquoten and public finance, contributing to informed discussions on global economic disparities. The Statistisches Bundesamt (Destatis) in Germany, for example, publishes Bruttonationaleinkommen figures, often converted into US dollars using the Atlas method, to allow for better international comparability by mitigating the impact of Wechselkurse fluctuations.

²²Limitations and Criticisms

While Bruttonationaleinkommen (BNE) offers a valuable perspective on a nation's economic strength, it has several limitations and faces criticism, similar to other aggregate economic indicators like Gross Domestic Product (GDP). One primary criticism is that BNE, as an average measure, does not reflect the distribution of income within a country. A hi²⁰, ²¹gh BNE per capita could mask significant Einkommensungleichheit, where a large portion of the population might still live in poverty.

Add¹⁹itionally, Bruttonationaleinkommen, like GDP, focuses predominantly on market transactions and does not adequately account for non-market activities, such as unpaid household work, volunteer services, or the value of leisure time. It a¹⁸lso does not inherently factor in environmental degradation or the depletion of natural resources, which can be significant hidden costs of economic growth. Crit¹⁷ics argue that a sustained increase in BNE might come at the expense of environmental quality or the erosion of natural capital.

Fur¹⁶thermore, while BNE is used for international comparisons and policy decisions by institutions like the World Bank, its conversion into a common currency (e.g., US dollars) can be influenced by Inflation and Wechselkurse volatility, even with adjustment methods like the Atlas method. Some¹⁵ economists also argue that focusing solely on aggregate measures like BNE or GDP might incentivize policies that prioritize sheer economic growth over broader social well-being or sustainable development.

¹³, ¹⁴Bruttonationaleinkommen vs. Bruttoinlandsprodukt

Bruttonationaleinkommen (BNE) and Bruttoinlandsprodukt (BIP) are two fundamental measures in national accounting, but they differ in their scope based on geographical boundaries versus residency. The core distinction lies in how they treat income generated by cross-border economic activity.

• Bruttoinlandsprodukt (BIP): This measures the total monetary value of all final goods and services produced within the geographical borders of a country during a specific period. It adheres to the "territorial concept" and includes output generated by both domestic and foreign-owned factors of production located inside the country.
• Bruttonationaleinkommen (BNE): This measures the total income earned by the residents of a country, regardless of where that income was generated. It follows the "resident concept" and includes income earned by domestic residents from abroad (e.g., wages from citizens working overseas, profits repatriated by domestic companies from their foreign operations) and subtracts income earned by foreign residents within the domestic economy that is sent out of the country.

In ¹¹, ¹²essence, BIP focuses on production location, while BNE focuses on income ownership by residents. For countries with significant income flows from abroad (e.g., remittances or foreign investments by domestic companies), Bruttonationaleinkommen will typically be higher than BIP. Conversely, if a country has many foreign-owned companies repatriating profits, its BNE might be lower than its BIP. Many¹⁰ countries, including the United States in 1991, switched their primary economic indicator from Gross National Product (the equivalent of BNE) to Gross Domestic Product, although both remain crucial for comprehensive economic analysis.

FAQs

What is the primary difference between Bruttonationaleinkommen (BNE) and Bruttoinlandsprodukt (BIP)?

The main difference lies in their scope: Bruttonationaleinkommen (BNE) measures income earned by a country's residents wherever they are in the world, while Bruttoinlandsprodukt (BIP) measures income generated from production within a country's geographical borders, regardless of who earns it.

###⁸, ⁹ Why is Bruttonationaleinkommen important?
Bruttonationaleinkommen is important because it provides a more accurate picture of the total income available to a country's residents, including income from foreign sources. It is often used by international organizations, such as the World Bank, for classifying countries by Lebensstandard and for allocating aid or loans.

###⁶, ⁷ How does the World Bank use Bruttonationaleinkommen?
The World Bank uses Bruttonationaleinkommen per capita (BNE divided by the mid-year population) as the primary indicator to classify the world's economies into four income groups: low, lower-middle, upper-middle, and high-income countries. These classifications are updated annually and are crucial for analytical and statistical purposes related to development and poverty reduction.

###⁴, ⁵ Does Bruttonationaleinkommen account for income inequality?
No, Bruttonationaleinkommen is an aggregate measure of total income and does not inherently reflect how income is distributed among the population. A high BNE per capita can still coexist with significant Einkommensungleichheit within a country.

###³ What are "Primäreinkommen" in the context of Bruttonationaleinkommen?
Primäreinkommen are incomes generated directly from economic activity, such as compensation of employees (Arbeitnehmerentgelte) and property income (Vermögenseinkommen), which include interest, dividends, and rent. When ca¹, ²lculating Bruttonationaleinkommen, the net flow of these primary incomes from abroad is added to the Gross Domestic Product.