Gross national income (GNI) per capita

This indicator provides values for gross national income (GNI) per person expressed in constant international dollars, converted by purchasing power parities (PPPs). PPPs account for the different price levels across countries and thus PPP-based comparisons of economic output are more appropriate for comparing the output of economies and the average material well-being of their inhabitants than exchange-rate based comparisons.

Gross national income is the total income earned by all residents within an economic territory during an accounting period. It is equal to gross domestic product plus earned income receivable from abroad minus earned income payable abroad. The core indicator has been divided by the general population to achieve a per capita estimate. This indicator is expressed in constant prices, meaning the series has been adjusted to account for price changes over time. The reference year for this adjustment is 2021. The PPP conversion factor is a currency conversion factor and a spatial price deflator. PPPs convert different currencies to a common currency and, in the process of conversion, equalize their purchasing power by eliminating the differences in price levels between countries, thereby allowing volume or output comparisons of GDP and its expenditure components.

Aggregation method:

Weighted average

Statistical concept and methodology:

Methodology: The International Comparison Program (ICP) estimates PPPs for the world’s countries. The ICP is conducted as a global partnership of countries, multilateral agencies, and academia. The recent 2021 ICP comparison covered 176 countries, including 49 Eurostat-OECD countries. For countries that have not participated in ICP comparisons, the PPP are imputed based on a regression model. ICP estimated PPPs cover years from 2011 to 2021. WDI extrapolates 2011 PPPs for years earlier years, and 2021 PPPs for later years. For the member countries of Eurostat-OECD PPP Programme, PPP conversion factors are periodically updated based on the organizations’ databases.

National accounts are compiled in accordance with international standards: System of National Accounts, 2008 or 1993 versions. Specific information on how countries compile their national accounts can be found on the IMF website: https://dsbb.imf.org/ Linked series have been smoothed to remove breaks resulting from changes in base years, data sources or compilation methods. The linking is performed using historical nominal growth rates from archived WDI databases.

Statistical concept(s): PPPs are primarily used to convert the national accounts data of economies, such as GDP and its expenditure components, into a common currency. In the process of conversion, they control for differences in the price levels of economies, and thus equalize purchasing power. PPP-based comparisons of economic output differ from market exchange rate-based comparisons as the latter do not distinguish between the relative price levels of different items in economies. Overall price levels are normally higher in higher-income economies than they are in lower-income economies (Balassa-Samuelson effect), mostly because of the large differences in price levels for non-traded products. If no account is taken of the larger price level differences for non-traded products when converting GDP to a common currency, the size of higher-income economies with high price levels will be overstated and the size of lower-income economies with low price levels will be understated. No distinction is made between traded products and non-traded products when market exchange rates are used to convert GDP to a common currency: the rate is the same for all products. PPP-converted GDP does not have this bias because PPPs account for the different price levels of traded products and non-traded products. Thus, PPPs are more appropriate for comparing the output of economies and the average material well-being of their inhabitants and are also less impacted by the potential volatility of market exchange rates. PPPs are calculated by the International Comparison Program (ICP) based on the prices of goods and services within an economy and national accounts expenditures.

The conceptual elements of the SNA (System of National Accounts) measure what takes place in the economy, between which agents, and for what purpose. At the heart of the SNA is the production of goods and services. These may be used for consumption in the period to which the accounts relate or may be accumulated for use in a later period. In simple terms, the amount of value added generated by production represents GDP. The income corresponding to GDP is distributed to the various agents or groups of agents as income and it is the process of distributing and redistributing income that allows one agent to consume the goods and services produced by another agent or to acquire goods and services for later consumption. The way in which the SNA captures this pattern of economic flows is to identify the activities concerned by recognizing the institutional units in the economy and by specifying the structure of accounts capturing the transactions relevant to one stage or another of the process by which goods and services are produced and ultimately consumed.

Development relevance:

PPPs are used to convert national accounts data from different countries, such as GDP and its expenditure components, into a common currency, while also eliminating the effect of price level differences between countries. PPPs are also used to derive price level indexes (PLIs), the ratio of a country’s PPP to its market exchange rate, to directly compare price levels across countries. The PPP-based expenditures to which they give rise are primarily used to make spatial comparisons of volume and per capita consumption or levels of GDP and its expenditure components across countries. PPP-based indicators are used for national, regional, and global policy making and analysis across the socioeconomic spectrum from poverty and inequality, to health and education, to energy and climate, through to economic growth, labor, productivity, trade, competitiveness, and infrastructure. A number of Sustainable Development Goals use PPP-based indicators to measure development progress.

This indicator is related to the national accounts, which are critical for understanding and managing a country's economy. They provide a framework for the analysis of economic performance. National accounts are the basis for estimating the Gross Domestic Product (GDP) and Gross National Income (GNI), which are the most widely used indicator of economic performance. They are essential for government policymakers, providing the data needed to design and assess fiscal and monetary policies; and are also used by businesses and investors to assess the economic climate and make investment decisions. NAS enable comparison between economies, which is crucial for international trade, investment decisions, and economic competitiveness. More specifically, this indicator is related to national accounts aggregates. Gross Domestic Product (GDP), Gross National Income (GNI), and other aggregates provide a snapshot of the size and health of an economy by measuring the total economic activity within a country. They can thus be used by policymakers to design and implement economic policies, as they reflect the overall economic performance and can indicate the need for intervention in certain areas. Aggregates also allow for comparisons between different economies, which can be useful for trade negotiations, investment decisions, and economic benchmarking. By examining aggregates over time, economists and analysts can identify trends, cycles, and potential areas of concern within an economy, and investors can use national accounts aggregates to assess the potential risks and returns of investing in a particular country. Overall, national accounts aggregates are fundamental tools for economic analysis, policy formulation, and decision-making at both the national and international levels.