Net national income
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Net national income (NNI) is an economics term used in national income accounting. It can be defined as the net national product (NNP) minus indirect taxes. Net national income encompasses the income of households, businesses, and the government. Net national income is the difference between what is earned by nationals living inside and outside the country put together and non-nationals living in the country.
It can be expressed as shown below;
NNI = C + I + G + (NX) + net foreign factor income - indirect taxes - manufactured capital depreciation
- C = Consumption
- I = Investments
- G = Government spending
- NX = net exports (exports minus imports)
- NX also can be written as (X-M) which determines current account
This formula uses the expenditure method of national income accounting.
When net national income is adjusted for natural resource depletion, it is called Adjusted Net National Income expressed as below:
NNI* = C + I + G + NX + Net Foreign Factor Income - Indirect Taxes - manufactured capital depreciation - Natural Resource Depletion
Natural resource refers to non-critical natural capital like minerals. NNI* does not take critical natural capital into account. Examples are air, water, land, etc.
For reference, capital (K) is divided into four categories:
- K_m : manufactured capital (machines, factories, etc.)
- K_h : human capital (workers' skills)
- K_n : non-critical natural capital (minerals)
- K_h* : critical natural capital (air, water)
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