- Gross domestic product (GDP) per capita quantifies a country’s economic output per person and is determined by dividing a country’s GDP by its population.
- Per capita GDP is a global measure of a country’s prosperity that economists use in conjunction with GDP to assess a country’s prosperity based on its economic growth.
- The highest per capita GDP is found in small, wealthy countries and more developed industrial countries.
What does GDP per capita mean?
The definition is long. Gross domestic product divided by midyear population equals GDP per capita. Gross domestic product (GDP) at purchaser’s prices is the sum of gross value contributed by all resident producers in the economy, plus any product taxes, minus any subsidies not included in the product value.
What is an example of GDP per capita?
GDP per capita refers to the amount of money earned per person. To put it another way, the GDP per person. It is derived by dividing GDP by the country’s population. The US, for example, has a GDP of $21.43 trillion and a population of 328 million people.
Is a high GDP per capita beneficial?
Families with higher incomes can spend more on the things they value. They can afford groceries and rent without straining their finances, obtain the dental care they require, send their children to college, and perhaps even enjoy a family vacation. In the meanwhile, it implies that governments have more capacity to deliver public services like as education, health care, and other forms of social support. As a result, higher GDP per capita is frequently linked to favorable outcomes in a variety of sectors, including improved health, more education, and even higher life satisfaction.
GDP per capita is also a popular way to gauge prosperity because it’s simple to compare countries and compensate for differences in purchasing power from one to the next. For example, Canada’s purchasing power-adjusted GDP per capita is around USD$48,130, which is 268 percent more than the global average. At the same time, Canada trails well behind many sophisticated economies. Singapore’s GDP per capita is around USD$101,532, while the US’s is around USD$62,795.
What exactly does per capita imply?
The term “per capita” comes from the Latin phrase “by head.” In statistical observances, per capita refers to the average per person and is sometimes used instead of “per person.”
Is per capita a useful metric?
Gross Domestic Product (GDP) per capita is the abbreviation for Gross Domestic Product (GDP) per capita (per person). It is calculated by simply dividing total GDP (see definition of GDP) by the population. In international markets, per capita GDP is usually stated in local current currency, local constant currency, or a standard unit of currency, such as the US dollar (USD).
GDP per capita is a key metric of economic success and a helpful unit for comparing average living standards and economic well-being across countries. However, GDP per capita is not a measure of personal income, and it has certain well-known flaws when used for cross-country comparisons. GDP per capita, in particular, does not account for a country’s income distribution. Furthermore, cross-country comparisons based on the US dollar might be skewed by exchange rate movements and don’t always reflect the purchasing power of the countries under consideration.
For the last five years, the table below illustrates GDP per capita in current US dollars (USD) by country.
Are you looking for a forecast? The FocusEconomics Consensus Forecasts for each country cover over 30 macroeconomic indicators over a 5-year projection period, as well as quarterly forecasts for the most important economic variables. Find out more.
Is having a high or low GDP better?
Gross domestic product (GDP) has traditionally been used by economists to gauge economic success. If GDP is increasing, the economy is doing well and the country is progressing. On the other side, if GDP declines, the economy may be in jeopardy, and the country may be losing ground.
What accounts for Singapore’s high GDP per capita?
In order to achieve a greater level of per capita GDP than the United States, Singapore’s economic development demonstrated that quantity was far more crucial than quality.
This is an important lesson for China and every developing country to learn as they strive to emulate Singapore’s achievements and achieve advanced-economy status.
A. Young (1995, August). The Tyranny of Numbers: Confronting the East Asian Growth Experience’s Statistical Reality The Quarterly Journal of Economics, vol. 110, no. 4, pp. 641-680.
K. M. Vu, K. M. Vu, K. M. Vu (2013). Policy insights from comparative assessments in Asia on the Dynamics of Economic Growth. Edward Elgar, Cheltenham, U.K., and Northampton, M.A., U.S.
Is Canada wealthier than the United States?
Because both Canada and the United States are developed countries, their economies are similar. While both countries will be in the top ten economies in the world in 2022, the United States will be the largest, with a GDP of US$24.8 trillion, and Canada will be ninth, with a GDP of US$2.2 trillion.
What happens if the GDP is excessively high?
- Individual investors must develop a level of understanding of GDP and inflation that will aid their decision-making without overwhelming them with unneeded information.
- Most companies will not be able to expand their earnings (which is the key driver of stock performance) if overall economic activity is dropping or simply holding steady; nevertheless, too much GDP growth is also harmful.
- Inflation is caused by GDP growth over time, and if allowed unchecked, inflation can turn into hyperinflation.
- Most economists nowadays think that a moderate bit of inflation, around 1% to 2% per year, is more useful to the economy than harmful.