GDP per capita is the total value of all goods and services produced within a country’s borders divided by its population. How does GNI per capita differ?

• A. Adds net income residents receive from abroad minus income paid to non-residents, reflecting cross-border earnings.
• B. Uses only domestic production and excludes cross-border income.
• C. Is the market value of goods and services produced by residents, regardless of location.
• D. Measures income per person after adjusting for purchasing power parity.

Answer: (A)

The key difference is that GNI per capita measures the total income that residents of a country actually earn, including money they receive from abroad, minus income paid to non-residents. In other words, GNI = GDP plus net income from abroad (income residents earn abroad minus income foreigners earn domestically). When you divide that figure by the population, you get GNI per capita. This captures cross-border earnings that GDP misses, because GDP only counts production within the country’s borders, regardless of who owns that production.

So the best description is that GNI per capita includes cross-border earnings by residents and excludes income earned by non-residents domestically. The other options describe GDP-like production within borders, or mix the concept with production by residents regardless of location, or invoke purchasing power parity, which is a separate adjustment used for comparing living standards.