Normal residents
Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 12, Ch 2 "National Income Accounting"
Meaning
Normal residents are the people and institutions whose centre of economic interest lies in a country, usually because they live and operate there. Their output counts in the country's GNP, whether they produce it at home or abroad. This is the basis of "national" measures such as GNP and NNP, while GDP is based on "domestic" territory.
Example
An Indian nurse works in Saudi Arabia for a short period but remains a normal resident of India. Her wage adds to India's net factor income from abroad (NFIA), and so to India's GNP. In contrast, the profits of the Korean-owned Hyundai plant in India belong to non-residents. They are part of India's GDP but are subtracted when working out India's GNP.
Don't confuse with
- Citizens: residence depends on where a person's economic interest lies, not on their passport.
- Domestic territory: this decides what counts in GDP (where output is produced). Normal residents decide what counts in GNP (who produces it).
Related concepts
- Gross National Product
- Net factor income from abroad
- Domestic territory
- Net Domestic Product
- NDP at factor cost
- Net National Product
- GNP at factor cost
- National income
- Personal income
- Undistributed profits