Economic Indicators

• In GNP/GNI, the overall production of the country is studied & examined
• Gross National Product(GNP)/Gross National Income(GNI)


  Total market value of all the final goods & services; most important for measuring development of the country; can also be from abroad; accumulation of all goods & services produced in the country
• Included is the production of Filipinos within & outside of the country; EX: the income earned by OFW’s is included in the GNP, which is determined yearly
• Various Units of Measure

  • kilo
  • yard
  • meter
  • dozen
  • gallon
  • liter
• What’s the difference between GNP/GNI & GDP?
• What is Gross National Product/Gross National Income?
• GNP is equal to GNI except that GNP doesn’t deduct the Indirect Business Taxes
• Measuring the economic performance of our country is necessary
• OFW - Overseas Filipino Workers
• Economic Indicators


  Instruments used to evaluate development of our economy
• GDP - computing only income within the country
• Final Goods - the only goods that are computed; ready for consumption
• Intermediate Goods - not included in the computation; makes the final goods; no market value
• EX: flour (an intermediate good), has its value not included in the computation of GNP to avoid double counting, because it has to be processed to become bread (the final good)
• Summary: 'Gross National Product (GNP) or Gross National Income (GNI) measures the total market value of all final goods and services produced by a country, including income earned abroad, such as from Overseas Filipino Workers (OFWs). GNP and GNI are essentially the same, except GNP doesn't deduct indirect business taxes. Economic indicators like GNP/GNI are crucial for evaluating a country's development, using specific units of measure like kilos, yards, or dozens to assess overall production, which includes goods produced both domestically and overseas. Intermediate goods, which are not ready for consumption, are excluded from GNP computations to avoid double counting.'
• What are the 3 different approaches to GNP measurement?
• Final Expenditure Approach

  Economic factors (household, government, business firms, & foreign market) have their own expenses, which are significant in measuring the GNP
• Business Expenditure

  • Invests in fixed capitals (machineries, buildings, changes)
• Personal Expenditure

  • Household expenses (for food, clothing, etc.); anything for personal consumption
• Factor Income Approach


  • Important to measure NI (National Income) because in stock & inventories, etc.
• Exports & imports are the main determinants of the Net Export
• Government Expenditure

  • Government spends for the salaries of employees in the government (nurses, president, etc.), expenses for infrastructure projects (bridges, school buildings, etc.), travelling expenses of the president, & delivery of social services
• Industrial Origin Approach

  • When the value of goods is added together as contribution from each sector, then the GDP (Gross Domestic Product) is computed
• Factor Income Approach components

  • Net Export (X & M)
  • Net Factor Income from Abroad (NFIA)
  • Statistical Discrepancy (SD)
• Final Expenditure Approach components

  • Government Expenditure
  • Personal Expenditure
  • Business Expenditure
• Net Export (X & M)

  In order to know the country’s spending on foreign goods & services; expenses in Imports (M) are deducted from the expenses in Exports (X) — will result in a positive if the (X) are higher than the (M)
• Net Factor Income from Abroad (NFIA)

  Difference between income of the Filipino workers abroad (as factors of production) & the income of foreigners working in our country (as factors of production)
• Employees, workers, & all consumers spend more to satisfy their needs & wants, while the government spends more on infrastructures & social services
• Statistical Discrepancy (SD)


  Errors in measuring the GNP/GNI represent this component
• Industrial Origin Approach

  AKA Value Added Approach; where all contribution of each sector (agriculture, services, industry) are computed; GDP should be determined 1st then the NFIA is added
• Industrial Origin Approach sectors

  • Agriculture
  • Industry
  • Services
• This approach shows what sector has more contribution to our economy (EX: there are instances where we can see GNP/GNI is higher than the GDP because of the contributions of the OFW’s)
• CE (Compensation of Employees)


  Includes all monetary benefits, commission, allowances (like Cost of Living Allowance/COLA), clothing, salaries that employees receive on specific time, etc.
• There are instances where GNP/GNI is higher than the GDP because of the contributions of the OFW’s
• Economic Indicators reflect the living conditions of the people; total income received by the sectors of the economy
• The approach of Agriculture (A), Industry (I), and Services (S) shows what sector has more contribution to our economy
• Whatever approach is used, the total GNP/GNI is always the same; all sectors have contributions to the economic performance of the country
• Factor Income Approach - each factor of production gets payment for its services & serves as income, various payments are rent for land, wages for workers, etc.
• EI (Entrepreneurial Income)


  Payment received by an individual (not classified as wage/salary; income of the entrepreneur as a factor of production
• GI (Government Income)


  All income received by the government (taxes, income of government-owned, etc.)