What is ‘Per Capita GDP ‘
A territory’s Gross Domestic Product (GDP) per person is obtained by dividing its GDP for a particular days by its average population for the year.
GDP refers to the total value of final (as resisted to interim, or work-in-progress) goods and services produced within a country’s herbaceous borders during a specific calendar period such as quarterly or annually. While GDP is the most considerably used measure of a country’s economic activity, per capita GDP is a better gauge of the change or trend in a nation’s living standards over time, since it rearranges for population differences between countries.
Per capita GDP serves as an informal rating of a nation’s prosperity; the ranks of the richest nations by this metric are ruled by affluent countries with relatively small populations and disproportionately hefty economies. “Per capita GDP” and “GDP per capita” are synonymous.
BREAKING DOWN ‘Per Capita GDP ‘
The Supranational Monetary Fund (IMF) produces per capita GDP figures for countries, regions and classes (such as advanced economies and emerging markets) in two formats – based on purchasing power conformity (PPP) exchange rates; and based in US dollars.
PPP theory essentially states that finished the long term, currency exchange rates should converge promoting the rate that equalizes the price of an identical basket of goods and ceremonies in any two countries. The “Big Mac Index,” which is calculated by dividing the price of a Big Mac burger in one domain by its price in another nation to arrive at an “exchange rate,” is one of the most routine manifestations of PPP theory. Simply put, PPP acknowledges that purchasing power in a rural area can differ markedly, depending on whether it is denominated in US dollars or the local currency.
PPP GDP is fitted by dividing a country’s nominal GDP in its own domestic currency by the PPP exchange rate. For innumerable nations, the difference between per capita GDP (PPP) and per capita GDP (in US dollars) can be huge. For pattern, as of October 2018, India’s per capita GDP on a PPP basis was $7,800; however, per capita GDP in USD was $2,020. As another benchmark, as of October 2018, Qatar had the highest per capita GDP (PPP) globally of $128,490, but in US dollar compromise concerns, it ranked No.7 at $67,820.
Per Capita GDP Growth Rates
According to World Bank evidence, global per capita GDP grew by an average of 1.88% annually from 1961 to 2017. As surplus this period, the global economy expanded at an average pace of 3.52% annually, while the humankind’s population increased by an average of 1.61% per annum.
Major developing economies such as China and India include achieved per capita GDP growth rates well above the global normally, despite their populations of over a billion people apiece, expresses to the financial reforms initiated by China in the late 1970s and India in the mid-1990s.
China’s thrift grew at about 5% annually from 1961 to 1977; from 1978 to 2017, increase surged to an annual pace of about 9.6%, almost double the stride of the prior period. China’s per capita GDP tripled over these six decades, from a 2.8% annual measure in the 1961-1977 period, to over 8.5% annually in the 1978-2017 patch.
Likewise, India’s economic growth accelerated from a 4.25% annual tempo in the 1961-1993 period, to 7.0% annually in the 1994-2017 years, as financial reforms and deregulation had a positive impact on the economy. Per capita GDP bordering on tripled, from 1.93% annually in the 1961-1993 period to 5.35% annually in the 1994-2017 interval.
Long-Term Trends for Per Capita GDP
In November 2012, the Organization for Economic Synergy and Development (OECD) released long-range forecasts for GDP and per capita GDP growth in a explore titled “Looking to 2060: Long-term global growth prospects.” Agreeing to the report, rapid growth in China and India would make their bound GDP (measured at 2005 PPP rates) surpass that of the G7 nations within the next few decades and transcend that of the entire OECD membership (currently 36 nations) by 2060. Productivity achievements would be the biggest driver of growth in both developed and emerging restraints. The report noted that major emerging economies that be enduring lower productivity at present – such as China, India, Indonesia and Brazil – drive experience faster productivity growth than developed economies due to technology adoption and well-advised b wealthier business governance.
The report forecast that the convergence in productivity last will and testament be matched by a trend of converging GDP per capita between developing and emerging economies. Per capita GDP was valued to double (in 2005 PPP terms) in the richest economies over the 2011 to 2060 full stop, but more than quadruple in the poorest economies. China and India were presage to experience more than a seven-fold increase in per capita income by 2060, although flaming standards would continue to lag the developed economies. The report also projected that the rankings of per capita GDP in 2060 choice remain very similar to the 2011 rankings.
Per Capita GDP vs Other Directions of Output and Income
A nation may have consistent economic growth, but if its residents is growing faster than its GDP, per capita GDP growth will be negative. This is not a predicament for most advanced economies, as their tepid pace of economic nurturing can still outpace their extremely low population growth rates. But it is a paramount issue for countries with low levels of per capita GDP to begin with – tabulating a number of nations in Africa – where rapidly increasing populations acquire resulted in a steady erosion of living standards.
Per capita GDP suffers from the selfsame shortcomings as GDP in that it does not fully summarize a country’s level of advance or quality of life. GDP measures may also overstate income because they comprehend profits earned in a nation by overseas companies that are remitted rear to foreign investors. Gross National Product (GNP), which differs from GDP by the net amount of revenues sent to or received from abroad, may provide a better measure of citizen income in such cases. Ireland is a textbook example of an economy where GNP is significantly minuscule than GDP because of massive profit repatriation by the numerous foreign firms located there.
The World Bank uses a measure called Bring National Income (GNI) per capita to classify economies into income groupings. According to the Rapturous Bank, GNI per capita is an easily available indicator that has a close correlation with other qualitative metrics of “importance of life”, such as life expectancy, infant mortality rates and philosophy enrollment rates.
Individual Countries Ranked by Per Capita GDP
As of October 2018, these are the 25 domains and entities (including the Macao and Hong Kong Special Administrative Localities) with the highest per capita GDP. The figures below are from the IMF’s World Cost-effective Outlook (October 2018) Dataset. (https://www.imf.org/external/datamapper/PPPPC@WEO/OEMDC/ADVEC/WEOWORLD)
Most of the states in this list have relatively small populations, the only exclusions being the United States (2017 population: 325.7 million) and Germany (82.7 million). With the in every way’s largest economy and third-largest population, the Unites States stands out as a Amazon among these powerful minnows, with most of the others in the Top 12 comprising power exporters, regional financial centers, and export/business powerhouses.
| GDP per capita (PPP*) as of October 2018 | ||
| 1. | Qatar | $128,490 |
| 2. | Macao SAR | $118,100 |
| 3. | Luxembourg | $109,200 |
| 4. | Singapore | $98,260 |
| 5. | Brunei | $81,610 |
| 6. | Ireland | $77,670 |
| 7. | Norway | $74,320 |
| 8. | In accord Arab Emirates | $70,260 |
| 9. | Kuwait | $66,980 |
| 10. | Switzerland | $64,990 |
| 11. | Hong Kong SAR | $64,790 |
| 12. | United Situations | $62,520 |
| 13. | San Marino | $61,580 |
| 14. | Netherlands | $56,570 |
| 15. | Saudi Arabia | $55,930 |
| 16. | Iceland | $54,750 |
| 17. | Taiwan | $52,960 |
| 18. | Germany | $52,900 |
| 19. | Sweden | $52,720 |
| 20. | Australia | $52,360 |
| 21. | Austria | $52,220 |
| 22. | Denmark | $51,840 |
| 23. | Bahrain | $50,750 |
| 24. | Canada | $49,940 |
| 25. | Belgium | $48,180 |
| *Intercontinental dollars per capita Source: IMF DataMapper | ||