GROSS DOMESTIC PRODUCT (GDP)

Gross domestic product (GDP) is the standard measure of the value of final goods and services produced
by a country during a period. While GDP is the single most important indicator to capture these
economic activities, it is not a good measure of societies’ well-being and only a limited measure of
people’s material living standards. The sections and indicators that follow better address this and other
related issues and this is one of the primary purposes of this publication. Countries calculate GDP in
their own currencies. In order to compare across countries these estimates have to be converted into a
common currency. Often the conversion is made using current exchange rates but these can give a
misleading comparison of the true volumes of final goods and services in GDP. A better approach is to
use purchasing power parities (PPPs). PPPs are currency converters that control for differences in the
price levels of products between countries and so allow an international comparison of the volumes of
GDP and of the size of economies.

Comparability All OECD countries now follow the 1993 System of National Accounts, although in some
countries, for example in specific areas such as the own account production of software or financial
intermediation services (indirectly measured) (FISIM), differences remain, which can impact on
comparisons of GDP. The measurement of the non-observed economy (NOE, often referred to as the
informal, grey, shadow, economy) can also have an impact on comparability, although for OECD
economies, in general, this is not thought to be significant. (See also “Reader’s Guide”, relating to PPP
based comparisons.) For some countries, the latest year has been estimated by the Secretariat.
Historical data have also been estimated for those countries that revise their methodologies but only
supply revised data for some years. This estimation process mechanically links the new and old series to
preserve growth rates.

Definition

What does gross domestic product mean? “Gross” signifies that no deduction has been made for the
depreciation of machinery, buildings and other capital products used in production. “Domestic” means
that it is production by the resident institutional units of the country. The products refer to final goods
and services, that is, those that are purchased, imputed or otherwise, as: the final consumption of
households, non-profit institutions serving households and government; fixed assets; and exports
(minus imports). GDP at market prices can be measured in three different ways: • as output less
intermediate consumption (i.e. value added) plus taxes on products (such as VAT) less subsidies on
products; • as the income earned from production, equal to the sum of: employee compensation; the
gross operating surplus of enterprises and government; the gross mixed income of unincorporated
enterprises; and net taxes on production and imports (VAT, payroll tax, import duties, etc., less
subsidies); • or as the expenditure on final goods and services minus imports: final consumption
expenditures, gross capital formation, and exports less imports.

GROSS NATIONAL PRODUCT (GNP)

This is the total value of all finished goods and services produced by a country’s citizens in a given
financial year, irrespective of their location. GNP also measures the output generated by a country’s
businesses located domestically or abroad. It can be defined as a piece of economic statistic that
comprises Gross Domestic Product (GDP), and income earned by the residents from investments made
overseas.
Simply put, GNP is a superset of the GDP. While GDP confines its analysis of the economy to the
geographical borders of the country, GNP extends it to also take account of the net overseas economic
activities performed by its residents.

Basically, GNP signifies how a country’s people contribute to its economy. It considers citizenship,
regardless of the location of the ownership. GNP does not include foreign residents’ income earned
within the country. GNP also does not count any income earned in India by foreign residents or
businesses, and excludes products manufactured in the country by foreign companies.

What Is Gross National Product (GNP)?

Gross national product (GNP) is an estimate of the total value of all the final products and services
turned out in a given period by the means of production owned by a country's residents.

GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic
investment, government expenditure, net exports, and any income earned by residents from overseas
investments, then subtracting income earned by foreign residents. Net exports represent the difference
between what a country exports minus any imports of goods and services.

GNP is related to another important economic measure called gross domestic product (GDP), which
takes into account all output produced within a country's borders regardless of who owns the means of
production. GNP starts with GDP, adds residents' investment income from overseas investments, and
subtracts foreign residents' investment income earned within a country.

Understanding Gross National Product (GNP)

GNP measures the total monetary value of the output produced by a country's residents. Therefore, any
output produced by foreign residents within the country's borders must be excluded in calculations of
GNP, while any output produced by the country's residents outside of its borders must be counted.

GNP does not include intermediate goods and services to avoid double-counting since they are already
incorporated in the value of final goods and services.

First, GDP corresponds more closely to other U.S. economic data of interest to policymakers, such as
employment and industrial production, which, like GDP, measure activity within the boundaries of the
U.S. and ignore nationalities. Second, the switch to GDP was to facilitate cross-country comparisons
because most other countries at the time primarily used GDP.

What Does Gross National Product Measure?

Gross national product is one metric for measuring a nation’s economic output. Gross national product
is the value of all products and services produced by the citizens of a country both domestically, and
internationally minus income earned by foreign residents. For instance, if a country had production
facilities in a neighboring country and its home country, gross national product would account for both
of these production outputs.

What Is an Example of Gross National Product?

Consider a country that has a gross national product that exceeds its gross domestic product. This
indicates that its citizens, businesses, and corporations are providing net inflows to the country through
their overseas operations. Consequently, this higher gross national product may signal that a country is
increasing its international financial operations, trade, or production.

WHAT IS NET NATIONAL PRODUCT (NNP)?

Net national product (NNP) is the monetary value of finished goods and services produced by a country's
citizens, overseas and domestically, in a given period.1 It is the equivalent of gross national
product (GNP), the total value of a nation's annual output, minus the amount of GNP required to
purchase new goods to maintain existing stock, otherwise known as depreciation.

KEY TAKEAWAYS

 Net national product (NNP) is gross national product (GNP), the total value of finished goods and
services produced by a country's citizens overseas and domestically, minus depreciation.
 NNP is often examined on an annual basis as a way to measure a nation's success in continuing
minimum production standards.
 Gross Domestic Product (GDP) is the most popular method to measure national income and
economic prosperity, although NNP is prominently used in environmental economics.

Understanding Net National Product (NNP)

NNP is often examined on an annual basis as a way to measure a nation's success in continuing
minimum production standards. It can be a useful method to keep track of an economy as it takes into
account all its citizens, regardless of where they make their money, and acknowledges the fact
that capital must be spent to keep production standards high.

The NNP is expressed in the currency of the nation it represents. That means that in the United States
the NNP is expressed in dollars (USD), while for European Union (EU) member nations the NNP
is expressed in euros (EUR).

The NNP can be extrapolated from the GNP by subtracting the depreciation of any assets. The
depreciation figure is determined by assessing the loss of the value of assets attributed to normal use
and aging.

The relationship between a nation's GNP and NNP is similar to the relationship between its gross
domestic product (GDP) and net domestic product (NDP).

Calculating Net National Product (NNP)

The formula for NNP is:

NNP=MVFG+MVFS−Depreciationwhere:VFG=market value of finished goodsMVFS=market value of finis

hed services
NNP=MVFG+MVFS−Depreciationwhere:MVFG=market value of finished goodsMVFS=market value of fini
shed services

Alternatively, NNP can be calculated as:

NNP=Gross National Product−DepreciationNNP=Gross National Product−Depreciation

For example, if Country A produces $1 trillion worth of goods and $3 trillion worth of services in 2018,
and the assets used to produce those goods and services are depreciated by $500 billion, using the
formula above, Country A's NNP is:

Recording Depreciation

Depreciation in the overall economy, also referred to as capital consumption allowance (CCA), is a key
component when calculating a country's NNP. CCA is an indicator of the need to replace certain assets
and resources to maintain a specified level of national productivity. It is divided into two
categories: physical capital and human capital.

Physical capital and human capital depreciate in different ways. Physical capital
experiences depreciation based on physical wear and tear, while human capital experiences
depreciation based on workforce turnover—when staff leave, companies must spend more of their
resources on training and finding new talent.

Special Considerations
Environmental Economics

NNP has particular usefulness for the field of environmental economics. NNP is a model associated with
the depletion of natural resources, and it can be used to determine whether certain activities
are sustainable within a particular environment.

Foreign-Made Products

As previously mentioned, NNP also factors in the value of goods and services produced overseas. That
means that the activities of U.S. manufacturers in Asia, for example, count toward the U.S.' NNP.

That is not the case for GDP and NDP, which limit their interpretation of the economy to the
geographical borders of the country.

WHAT IS GROSS NATIONAL INCOME (GNI)?

Gross national income (GNI) is defined as gross domestic product, plus net receipts from abroad
of compensation of employees, property income and net taxes less subsidies on production.
Compensation of employees receivable from abroad are those that are earned by residents who
essentially live inside the economic territory but work abroad (this happens in border areas on a regular
basis), or for people who live and work abroad for short periods (seasonal workers) and whose centre of
economic interest remains in their home country. Property income receivable from/payable to abroad
includes interest, dividends, and all (or part of) retained earnings of foreign enterprises owned fully (or
in part) by resident enterprises (and vice versa). This indicator is based on GNI at current prices and is
available in different measures: US dollars and US dollars per capita (both in current PPPs). All OECD
countries compile their data according to the 2008 System of National Accounts (SNA). This indicator is
less suited for comparisons over time, as developments are not only caused by real growth, but also by
changes in prices and PPPs.
 The more widely-known term GDP is an estimate of the total value of all goods and services
produced within a nation for a set period, usually a year. GNI is an alternative to gross domestic product
(GDP) as a means of measuring and tracking a nation's wealth and is considered a more accurate
indicator for some nations. The U.S. Bureau of Economic Affairs (BEA) tracks the GDP to measure the
health of the U.S. economy from year to year. The two numbers are not significantly different. Finally,
there's gross national product (GNP), which is a broad measure of all economic activity.

Understanding Gross National Income (GNI)

GNI calculates the total income earned by a nation's people and businesses, including
investment income, regardless of where it was earned. It also covers money received from abroad such
as foreign investment and economic development aid.

Residence, rather than citizenship, is the criterion for determining nationality in GNI
calculations, as long as the residents spend their income within the country. GNI has come to be
preferred to GDP by organizations such as the World Bank. It also is used by the European Union to
calculate the contributions of member nations.

To calculate GNI, compensation paid to resident employees by foreign firms and income from
overseas property owned by residents is added to GDP, while compensation paid by resident firms to
overseas employees and income generated by foreign owners of domestic property is subtracted.
Product and import taxes that are not already accounted for in GDP are also added to GNI, while
subsidies are subtracted.

To convert a nation’s GDP to GNI, three terms need to be added to the former:

Foreign income paid to resident employees

Foreign income paid to residential property owners and investors

Net taxes minus subsidies receivable on production and imports

Real-World Examples of GNI

For many nations, there is little difference between GDP and GNI, since the difference between
income received by the country versus payments made to the rest of the world does not tend to be
significant. For instance, the U.S. GNI for 2021 was about $23.6 trillion.1 The GDP in that same year was
$23.3 trillion.2

GDP vs. GNI vs. GNP

Of the three measures, GNP is the least used, possibly because it might be deceptive. For
instance, if a nation's wealthiest citizens routinely move their money offshore, counting that money
would inflate the nation's apparent wealth.

In fact, GNI may now be the most accurate reflection of national wealth given today's mobile
population and global commerce.

GDP is the total market value of all finished goods and services produced within a country in a
set time period.
 GNI is the total income received by the country from its residents and businesses regardless of
whether they are located in the country or abroad.

GNP includes the income of all of a country's residents and businesses whether it flows back to
the country or is spent abroad. It also adds subsidies and taxes from foreign sources.

WHAT IS GROSS DOMESTIC INCOME (GDI)?

Gross domestic income (GDI) is a measure of a nation's economic activity that is based on all of the
money earned for all of the goods and services produced in the nation during a specific period.

In theory, GDI should be identical to gross domestic product (GDP), a more commonly used measure of a
country's economic activity. However, the different sources of data used in each calculation lead to
somewhat different results.

Generally, GDP tends to be the more reliable metric as it is based on fresher and more expansive data.

Understanding Gross Domestic Income (GDI)

GDI is the total income that all sectors of an economy generate, including wages, profits, and taxes.

It is a lesser-known statistic than gross domestic product (GDP), which is used by the Federal Reserve
Bank to measure total economic activity in the United States.

One of the core concepts in the field of macroeconomics is that income equals spending. This means
that the money spent buying what was produced must equal the source of that money.

Formula and Calculation of Gross Domestic Income

Note the differences in formula for GDI compared to the formula for GDP:
GDI = Wages + Profits + Interest Income + Rental Income + Taxes - Production/Import Subsidies +
Statistical Adjustments
GDP = Consumption + Investment + Government Purchases + Exports – Imports
Wages encompass the total compensation to employees for services rendered. Profits, also called "net
operating surplus," are the surpluses of incorporated and unincorporated businesses. Statistical
adjustments may include corporate income tax, dividends, and undistributed profits.

GDI vs. GDP

According to the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce, GDI and GDP
are conceptually equivalent in terms of national economic accounting, with minor differences attributed
to statistical discrepancies. The market value of goods and services consumed often differs from the
amount of income earned to produce them due to sampling errors, coverage differences, and timing
differences.

But while the difference between GDI and GDP is usually minimal, they can sometimes vary up to a full
percentage point for some quarters. The gap also varies over different periods of time.

GDI differs from GDP, which values production by the amount of output that is purchased, in that it
measures total economic activity based on the income paid to generate that output. In other words, GDI
aims to measure what the economy makes or "takes in" (like wages, profits, and taxes) while GDP seeks
to measure what the economy produces (goods, services, technology).

GDI calculates the income that was paid to generate GDP. So, an economy at equilibrium will see GDI
equal to GDP.

Some economists have argued that GDI might be a more accurate gauge of the economy. The reason is
that more advanced estimates of GDI are closer to the final estimates of both calculations. Research
from Federal Reserve economist Jeremy Nale walks showed that early estimates of GDI captured the
Great Recession of 2007-2009 better than GDP, suggesting that policymakers would have been better
prepared if GDI was the main indicator used.

Over time, according to the BEA, "GDI and GDP provide a similar overall picture of economic activity."
For annual data, the correlation between GDI and GDP is 0.97, according to BEA calculations.

GDI figures have various analytical uses:

One important metric is the ratio of wages and salaries to GDI. The BEA compares this ratio with
corporate profits as a share of GDI to see where the constituents, mainly workers and company owners,
stand relative to each other with respect to their share of GDI. A rule of thumb states that workers'
share of GDI should be higher when unemployment is low.

Employee compensation share of GDI is also compared with the inflation trendline. Economists generally
anticipate that higher employee compensation share will correlate with an upward trend in inflation.

NET NATIONAL INCOME

Net National Income (NNI) is an indicator of the total economic activity in a country. It is related to the
better known Gross Domestic Product (GDP), but its differences to GDP makes it a more appropriate
indicator for Ireland.

Net National Income (NNI) is an important economic indicator that measures the total income earned by
a country's residents, both domestically and abroad, minus depreciation.

NNI also differs from GDP by the subsidies the European Union (EU) pay to us, and the taxes we pay to
them. The EU pay subsidies to Irish producers in activities such as farming, and customs duties are paid
to the EU by Irish resident firms and households. These taxes and subsidies are quite small relative to
the total.

In summary then, Net National Income (NNI) is:

 GDP
 Minus Consumption of Fixed Capital
 Plus factor income received from abroad
 Minus factor income paid to abroad.
 Plus subsidies received from abroad
 Minus subsidies paid to abroad.

As with indicators like GDP and GNI, the value of NNI in a particular year may not tell us very much in
itself: we are usually more interested in its Growth Rate, which can tell us whether our economy is
growing or shrinking and by how much. As we mentioned above, NNI excludes some of the value added
of domestic producers – their Consumption of Fixed Capital. However, this CFC tends to be fairly steady,
so it does not contribute much to the change in NNI. So when we look at the growth rate of NNI, the
exclusion of domestic CFC is not a major drawback to its use as an indicator.
Net National Income, is calculated as part of National Accounts all around the world so it can be
compared between countries. In Ireland we also calculate Modified GNI to give an even more precise
indicator of the domestic economy. While NNI excludes depreciation on all assets, Modified GNI only
excludes the depreciation on certain types of asset (IP and leased aircraft). Modified GNI also excludes
the net income of redomiciled PLCs, while this income remains in NNI.
If we then think back to How GDP is Calculated by the income method: what is left after these
deductions? NNI is largely made up of Compensation of Employees paid here to workers, net profits of
Irish-owned enterprises and Taxes received by the government. Almost all of these are available for
spending and investment by domestic sectors, which makes NNI a good indicator of the domestic
economy.
Definition and Calculation

NNI represents the sum of all incomes earned by residents of a nation, after accounting for the loss in
value of capital goods due to depreciation. It is calculated as:

Components of NNI:

1. Gross National Income (GNI): This includes the total domestic and foreign output claimed by residents
of a country. It consists of Gross Domestic Product (GDP) plus net income from abroad (net income
receipts from the rest of the world).

2. Depreciation: Also known as capital consumption allowance, it accounts for the reduction in the value
of fixed assets over time due to wear and tear, obsolescence, or aging.

Significance

1. Indicator of Economic Health: NNI provides a clearer picture of the economic well-being of a country
by showing the net income available for consumption, savings, and investment.

2. Policy Making: Governments use NNI to formulate economic policies, as it indicates the sustainable
income level after accounting for capital maintenance.

3. International Comparisons: NNI allows for more accurate comparisons between countries by
considering income from international investments and the depreciation of assets.

Implications

1. Investment Decisions: A rising NNI suggests a healthy economy with potential for investment,
whereas a declining NNI might signal underlying economic problems.

2. Sustainability By incorporating depreciation, NNI emphasizes the importance of sustainable economic

practices that ensure long-term growth without depleting capital assets.

3. Income Distribution: NNI can highlight disparities in income distribution, both domestically and
internationally, prompting measures to address inequality.

Challenges and Limitations

1. Data Accuracy: Calculating NNI requires accurate data on depreciation, which can be difficult to
measure precisely.

2. Informal Economy: NNI may not fully capture the contributions of the informal economy, leading to
an underestimation of actual income.

3. External Factors: External economic shocks, such as global financial crises or trade disruptions, can
significantly affect NNI, making it volatile.

Conclusion

Net National Income is a crucial metric for understanding the real economic performance of a country.
By accounting for depreciation, it provides a more accurate representation of the income that can be
reinvested in the economy, helping policymakers, investors, and analysts make informed decisions.
However, its accuracy depends on the quality of data and the ability to measure depreciation effectively.
As such, NNI should be used in conjunction with other economic indicators to gain a comprehensive
view of a nation's economic health and sustainability.

WHAT IS PER CAPITA INCOME (PCI)?

Per capita income (PCI) or “average income” is the measurement of average income per person in a
specific country, city, or region within a definitive time period. Used primarily in economics, PCI utilizes
average income to calculate and present the standard of living and quality of life for a population or area
in study.
In many countries, per capita income is determined using regular population surveys, such as
the American Community Survey. This allows the calculation of per capita income for both the country
as a whole and specific regions or demographic groups. However, comparing per capita income across
different countries is often difficult, since methodologies, definitions and data quality can vary
greatly. Since the 1990s, the OECD has conducted regular surveys among its 38 member countries using
a standardized methodology and set of questions.
Per capita income is often used to measure a sector's average income and compare the wealth of
different populations. Per capita income is also often used to measure a country's standard of living.
When used to compare income levels of different countries, it is usually expressed using a commonly
used international currency, such as the euro or United States dollar. It is one of the three components
of the Human Development Index of a country.
Limitations
While per capita income can be useful for many economic studies, it is important to keep in mind its
limitations.

 Comparisons of per capita income over time need to consider inflation. Without adjusting
for inflation, figures tend to overstate the effects of economic growth.
 International comparisons can be distorted by cost of living differences not reflected in
exchange rates. Where the objective is to compare living standards between countries,
adjusting for differences in purchasing power parity will more accurately reflect what
people are actually able to buy with their money.
  It is a mean value and does not reflect income distribution. If a country's income
distribution is skewed, a small wealthy class can increase per capita income substantially
while the majority of the population has no change in income. In this respect, median
income is more useful when measuring of prosperity than per capita income, as it is less
influenced by outliers.
 Non-monetary activity, such as barter or services provided within the family, is usually not
counted. The importance of these services varies widely among economies.
 Per capita income does not consider whether income is invested in factors likely to improve
the area's development, such as health, education, or infrastructure.
Compared to other economic indicators that measure income relevant to employment, per capita
income considers every person within the population or specific area. It means that people without jobs,
such as children or the homeless, get accounted for within the PCI calculation. As such, per capita
income can be considered a less accurate depiction of average national income, especially compared to
the average employment income per nation.

Per Capita Income Within the United States

Within the United States, the organization responsible for calculating per capita income is the U.S.
Census Bureau. The United States Census Bureau conducts a survey of per capita income every ten
years, revising the estimates each September.

The census conducted by the organization measures earned income, interest income, dividends, income
from trusts, and other income activities such as welfare. Although it seems as if a number of income
activities are included, the survey does not include income such as borrowing, gifts, food stamps, and,
surprisingly, capital gains.

During calculation, the bureau gathers total income information from the previous year for every
American 15 years or older. Once such information is obtained, they calculate the statistical average,
thus obtaining the per capita income figure in the United States.

Implications of Per Capita Income

Considering per capita income is such a widely used economic tool, it is important to know the
important implications of such a measurement. Such implications are depicted below:

 Wealth Management

The main purpose of per capita income – to present the average income of a nation – is a great tool to
manage wealth among nations. Using the ratio explicitly, an increase in PCI allows national leaders to
realize their prosperity and successful economic initiatives during the year.

When per capita income decreases, it allows national leaders to prepare and analyze what happened
and to plan measures to reverse the trend.

 National Aid

Considering that per capita income presents a nation’s mean income, it is a helpful tool to assess which
countries require aid.
Specifically, within the United Nations, making such information available allows organizations to assess
a nation’s wealth and see what assistance needs to be provided. If the nation is experiencing an
economic downturn, programs and activities can be implemented to help the nation out of its slump.

 Developmental Opportunities

When a nation experiences high per capita income, large organizations are more likely to pursue
developmental opportunities within that nation.

Used more commonly within regions, PCI is a tool used by businesses. For example, the per capita
income is higher in the state of California compared to New Mexico. As the composition of the states
suggests, more industrialization and development lies within California.

 Drawbacks of Per Capita Income

When using per capita income, the user must be aware of some of the drawbacks and flaws inherent in
the calculation. The drawbacks are explained in detail below:

 Inflation

When comparing per capita income over time, this measurement does not consider the adjustment
needed to account for inflation. Without accounting for inflation, the figure tends to overestimate the
exact effects of economic growth for a region or nation.

THE HUMAN DEVELOPMENT INDEX (HDI)

The Human Development Index (HDI) is a statistical composite index of life expectancy, education (mean
years of schooling completed and expected years of schooling upon entering the education system),
and per capita income indicators, which is used to rank countries into four tiers of human development.
A country scores a higher level of HDI when the lifespan is higher, the education level is higher, and the
gross national income GNI (PPP) per capita is higher. It was developed by Pakistani economist Mahbub
ul-Haq and was further used to measure a country's development by the United Nations Development
Programme (UNDP)'s Human Development Report Office.
The 2010 Human Development Report introduced an Inequality-adjusted Human Development
Index (IHDI). While the simple HDI remains useful, it stated that "the IHDI is the actual level of human
development (accounting for this inequality), while the HDI can be viewed as an index of "potential"
human development (or the maximum level of HDI) that could be achieved if there was no inequality."
The index is based on the human development approach, developed by Mahbub ul-Haq, anchored
in Amartya Sen's work on human capabilities, and often framed in terms of whether people are able to
"be" and "do" desirable things in life. Examples include – being: well fed, sheltered, and healthy; doing:
work, education, voting, participating in community life. The freedom of choice is central – someone
choosing to be hungry (e.g. when fasting for religious reasons) is quite different from someone who is
hungry because they cannot afford to buy food, or because the country is in a famine.
The index does not take into account several factors, such as the net wealth per capita or the
relative quality of goods in a country. This situation tends to lower the ranking of some of the
most developed countries, such as the G7 members and others.
Origins
The origins of the HDI are found in the annual Human Development Reports produced by the Human
Development Report Office of the United Nations Development Programme (UNDP). These annual
reports were devised and launched by Pakistani economist Mahbub ul-Haq in 1990, and had the explicit
purpose "to shift the focus of development economics from national income accounting to people-
centered policies". He believed that a simple composite measure of human development was needed to
convince the public, academics and politicians that they can, and should, evaluate development not only
by economic advances but also improvements in human well-being.

The underlying principles behind the Human Development Index

Dimensions and calculation
New method (2010 HDI onwards)

HDI trends between 1990 and 2021

World Developing countries:
OECD countries Arab States
East Asia and the Pacific
Europe and Central Asia
Latin America and the Caribbean
South Asia
Sub-Saharan Africa
Published on 4 November 2010 (and updated on 10 June 2011), the 2010 Human Development Report
calculated the HDI combining three dimensions:

 A long and healthy life: Life expectancy at birth

 Education: Mean years of schooling and expected years of schooling
 A decent standard of living: GNI per capita (PPP international dollars)
In its 2010 Human Development Report, the UNDP began using a new method of calculating the HDI.

THE ENVIRONMENTAL DEMOCRACY INDEX (EDI)

WHAT IS EDI? | The Environmental Democracy Index (EDI) is the first-ever publicly available, online
platform that tracks countries’ progress in enacting national laws to promote transparency, access to
justice and citizen engagement in environmental decision making. EDI was developed by The Access
Initiative (TAI) and World Resources Institute (WRI) in collaboration with partners around the world. The
index evaluates 70 countries, across 75 legal indicators, based on objective and internationally
recognized standards established by the United Nations Environment Programme’s (UNEP) Bali
Guidelines. EDI also includes a supplemental set of 24 limited practice indicators that provide insight on
a country’s performance in implementation. The national laws and practices were assessed and scored
by more than 140 lawyers around the world. Country assessments were conducted in 2014 and will be
updated every two years. EDI launched in its beta version in May, 2015. The scores became final in
September 2015 following a 90 day feedback period which resulted in a few score changes.
W H A T C A N U S E R S D O W I T H T H I S INFORMATION? This new, dynamic online platform enhances
the capacity of governments and civil society to establish, enforce, monitor and protect people’s rights
to create a more equitable and sustainable world for all people.

• GOVERNMENT OFFICIALS can make better policy decisions and improve laws by drawing on clear
examples of good practice from around the world.

• CIVIL SOCIETY can benchmark progress of their national government in promoting environmental
democracy and can hold their leaders accountable.

• ACADEMICS can use the freely downloadable results to support their research and analysis.

• INTERNATIONAL FINANCIAL INSTITUTIONS can use the results to help inform assessment of national
environmental governance.

WHAT IS NOT INCLUDED? | EDI provides an assessment of the content of laws for 70 countries,
measured against the 2010 UNEP Bali Guidelines, an internationally-recognized set of guidelines on
legislating for environmental democracy. However, the index does not provide a comprehensive
measurement of implementation of the law, nor does it assess laws at the subnational level. Countries
with a federal (or decentralized) legal system may have enacted legislation at the subnational level that
would enhance or undermine environmental democracy rights. EDI also does not measure the degree to
which civil society can function free of harassment or persecution, the pervasiveness of corruption, or
the extent to which human rights are respected, upheld or enjoyed in a country.

COUNTRY SELECTION The countries in the inaugural EDI include those from North America and the
Caribbean, South and Central America, Europe, Africa and Asia that are part of The Access Initiative
network. It also includes countries that have joined the Open Government Partnership. Finally, there are
a few countries included from Africa, Asia and the South Pacific that are not part of either network.

PARTNERSHIPS EDI is part of the Eye on Earth Access for All (A4A) Special Initiative, developed by the
Abu Dhabi Global Environmental Data Initiative. The goal of A4A is to promote and encourage further
implementation of environmental democracy by engaging global stakeholders and advocates that strive
to fill the data and information gaps in its implementation. EDI was also made possible by the funding
and support of Irish Aid and institutional funding from the Agency for Development Cooperation of
Norway, Ministry of Foreign Affairs of the Netherlands and Swedish International Development
Cooperation Agency

S P O T L I G H T O N EDI INDICATORS EDI includes 75 legal indicators and 24 limited practice indicators
developed to measure the degree to which countries are implementing the UNEP Bali Guidelines. Legal
indicators measure the strength of the law while practice indicators provide insight on a country’s
performance in implementation. This type of information can help mobilize advocacy and help
policymakers prioritize reforms. Example of a legal indicator for access to justice: “To what extent does
the law recognize broad legal standing in proceedings concerned with environmental matters?” Example
of a practice indicator on access to information: “Are real time air quality data for the capital city of your
country made available online by the government?”