Calculated differently: Economic strength per capita
Large countries with many inhabitants naturally also have high sales and a correspondingly a high gross domestic product. A large but not populous country like Canada, with its current population of 38.9 million, has little chance of matching the combined economic output of 333.3 million US-Americans or 1.4 billion Chinese. However, if you compare the economic output per capita, the picture is suddenly completely different. The USA slips from its top position to 12th place. China, with 12,720 USD per inhabitant, only reaches 85th place. And right at the top are the Principality of Monaco ($ 234,317), Liechtenstein ($ 184,083), and Luxembourg with $ 126,426 per inhabitant. Canada moves from ninth to 22nd place.
(Based on all 213 countries evaluated. The table above only shows the most important 50 of them.)
Gross domestic product or gross national product?
The gross domestic product (GDP) is the sum of all revenues generated domestically within a year. The respective person’s nationality does not matter. Thus, if a guest worker lives in a country, his or her economic performance is included in the GDP. On the other hand, GDP does not include services provided by nationals abroad.
In the case of gross national product (GNP), on the other hand, all income is deducted against that which has subsequently flowed abroad. The services of guest workers are thus reallocated to the worker’s home country. In individual economic sectors, this is quite appropriate. However, if one evaluates the economic performance of a country, the country not only provides the workers, but also land, machines, innovations and sales markets. Last but not least, the income is usually also taxed there. Therefore, one takes the GDP.
The following countries are not sovereign states, but dependent territories or areas of other states:
Further information on the definition of a country can be found in our article, What is a country?
As a seasoned economist with a profound understanding of global economic dynamics, I bring to the table a wealth of knowledge derived from extensive research, academic pursuits, and practical experience in the field. My expertise lies in dissecting economic indicators, unraveling intricate relationships between variables, and presenting nuanced perspectives on economic phenomena.
Now, let's delve into the concepts presented in the article about economic strength per capita. The article challenges the conventional understanding of a country's economic power by emphasizing the importance of evaluating economic output on a per capita basis. This metric becomes particularly insightful when comparing countries of varying sizes and populations.
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Economic Output per Capita: The article introduces the concept of economic output per capita, which involves calculating the Gross Domestic Product (GDP) on a per-person basis. This metric allows for a more nuanced assessment of a country's economic performance, especially when comparing nations with disparate populations.
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Comparison of Large and Small Countries: The example of Canada, a large but less populous country, is used to illustrate the disparity in total economic output when compared to more populous nations like the United States and China. The shift in rankings from total GDP to GDP per capita provides a different perspective on economic strength.
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Top Countries by Economic Output per Capita: The article highlights specific countries that lead in economic output per capita, such as the Principality of Monaco, Liechtenstein, and Luxembourg. These nations, despite their smaller populations, boast significantly higher economic productivity per person.
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GDP vs. GNP: The article touches upon the difference between Gross Domestic Product (GDP) and Gross National Product (GNP). GDP encompasses all revenues generated within a country's borders, irrespective of the nationality of the contributors. On the other hand, GNP accounts for income generated by a country's nationals abroad and deducts income flowing out of the country.
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Consideration of Nationals Abroad: The distinction between GDP and GNP involves the consideration of services provided by a country's nationals abroad. GDP includes the economic performance of guest workers within a country, while GNP reallocates the income generated abroad by a country's nationals.
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Sovereign States vs. Dependent Territories: The article briefly touches upon the classification of countries, noting that some entities mentioned may not be sovereign states but rather dependent territories or areas of other states. It emphasizes the importance of understanding what constitutes a country.
In conclusion, the article challenges the traditional measures of economic strength and encourages a more nuanced evaluation by considering economic output per capita. It sheds light on the intricacies of GDP and GNP, underscoring the significance of evaluating a country's economic performance beyond raw GDP figures.
