Highest GDP per capita in the country. Rating of countries by standard of living, the richest and poorest countries in the world: where a migrant can live well
If you take an interest in world events, you have undoubtedly noticed the continued strengthening of China's economy. When economists evaluate the economy of any country, they refer to GDP (gross domestic product), which is the sum of all economic activities of the country. This is not an ideal way to measure real economic growth, but it is suitable for quickly analyzing the economic situation.
When determining economic level, GDP per capita is a better tool than just GDP. To actually provide ratings, GDP per capita is adjusted for purchasing power parity (PPP), a concept in economics used to determine relative values between currencies.
Here are 10 countries with the most high GDP per capita, adjusted for PPP, as defined by the International Monetary Fund (IMF).
10. AUSTRALIA - GDP PER CAPITA: $43,073
Australia, a member of the Commonwealth and one of the countries with the highest average standard of living, has recently developed significant economic relationships with China and other growing economies in Asia. The main driver of Australia's economic growth is the export of goods, driven by the manufacturing industry.
9. CANADA - GDP PER CAPITA: $43,427 
The New York Times, in an article about the middle classes in Canada and the United States, noted that for the first time, the middle class of the Canadian population is better off than the middle class in the United States.
Over the past decade, the ranking of one of the most peaceful countries has increased. A growing economy based on rising commodity prices in the market, as well as a developing financial industry, have made Canadians much more prosperous.
8. SAN MARINO - GDP PER CAPITA: $44,480 
The tiny country of San Marino is also one of the richest per capita in the world. San Marino, surrounded on all sides by Italian territory, is the oldest sovereign state in the world, since the current political system is a direct successor to the system formed in 301 AD.
San Marino has no public debt, one of the lowest unemployment rates in Europe, thanks to a highly developed financial industry and tourism. For 32,000 citizens, these industries provide sufficient welfare.
7. SWITZERLAND - GDP PER CAPITA $46,430 
Switzerland has a long history and remains neutral in all international issues - it even joined the UN only in 2002.
Not only manufacturing, science and technology, but also the financial sector are well developed in the country, so Switzerland has become the economic center of the world. The neutrality maintained for a long time attracted not only the headquarters of transnational corporations (Nestle, etc.) to the country, but also such non-profit organizations as the Red Cross. It is likely that Switzerland will continue to lead the European economy for a long time.
6. USA - GDP PER CAPITA: $53,101 
Although the economy looks strong on a per capita basis, the widening wealth gap makes very few (less than 1%) people actually wealthy. Yet middle class The United States is better off than many countries.
5. BRUNEI - GDP PER CAPITA: $53,431 
Brunei is a little-known small country. A former British colony, the sovereign state is located on the island of Borneo, sharing it with Malaysia and Indonesia. Thanks to large oil fields, Brunei has become very rich country. Brunei is one of only two countries in the world that has no government debt. 90% of Brunei's GDP is based on crude oil sales, so the future of the country's economy will depend on oil prices.
4. NORWAY - GDP PER CAPITA: $54,947 
Unlike Brunei, Norway is a country with large oil reserves, but at the same time it is a country with a mixed economy. Gas and crude oil make up 57% of GDP. Oil reserves contribute to a sovereign wealth fund that has made, at least on paper, every Norwegian a millionaire. Of course, individual citizens do not have access to this money, but it is money that has made Norway the most stable state in the modern world.
3. SINGAPORE - GDP PER CAPITA: $64,584 
Singapore, an island state in Asia, is known as one of the most important and largest port cities in the world. Singapore is Asia's commercial hub for shipping and transportation, but could, like Hong Kong before, become a key city in the financial industry.
There is little original vegetation left for the highly developed city of 5.4 million. The importance of the Port of Singapore, and its status as a tax haven for the ultra-rich, means that Singapore will become richer every year.
2. LUXEMBOURG - GDP PER CAPITA: $78,670 
Luxembourg, like Switzerland, has an economy based on steel and chemicals. To compensate for losses after the departure of many industries to Asian countries, it well developed banking and other financial services. Beneficial taxes have attracted the headquarters of various transnational corporations here, especially Internet startups (Amazon, Skype). Luxembourg is on track to become even richer, so its small population (537,853) will have no problems.
1. QATAR - GDP PER CAPITA: $98,814 
Qatar is a monarchy ruled by the Al Thani family. It is famous for its sovereign wealth fund, which, among other things, allows it to buy up football teams and airlines around the world. Like many states, this fund is based on oil, the reserves of which put Qatar in third place in the world.
Although its population is 1.8 million people, only 280,000 of them are citizens of the country. The rest, migrants, who are not included in the calculations, act as a lower class of workers, not receiving any benefits from the national wealth. But for the lucky 280,000, Qatar is the richest country in the world.
How I changed World GDP from 1970 to 2016 in nominal and constant prices relative to 1970. This and much more interesting information you can read in this article. Where there is no data for 2016, data for 2013 is provided and there is a mention of this.
For the period 1970-2016. World GDP increased from 3398.7 to 75212.7 and increased by 71817 billion US dollars or 22.13 times; the change occurred due to an increase in the world population from 3692 to 7456 million people, i.e. the population grew by 3764 million people. or 2.02 times relative to 1970. It also grew due to an increase in GDP per capita in the world, which in 1970 was $921, and already in 2016 it was $10,167. The average annual growth of the world's GDP during this period amounted to 1561.2 billion dollars.
During 1970-2016 World GDP per capita increased by $9,246 or 11.04 times to $10,167. The average annual increase in GDP per capita in the world during this period was $201 per year.
In constant prices by 1970 the picture looks like this. Here it should be said what constant prices are.
Constant prices: A common set of prices used to estimate the output of a firm or an economy as a whole over successive periods. Changes in the real output of a business or economy are measured by estimating the value of annual real inputs and output at constant prices. Constant prices are prices for a specific date or average prices over a period. It is quite difficult to identify an appropriate set of constant prices, since the type and quality of goods are constantly changing. It is impossible to find out the price of a product in 1980 if this product went on sale only in 1990, or, conversely, the price of a product in 1990 if its sale was discontinued in 1980. The longer the period under consideration, the greater the share of the total volume of production, in estimating the value of which one has to face difficulties of this kind, and the less reliable are comparisons of income or output at constant prices.
So, constant GDP relative to 1970 prices increased from 3398.7 billion dollars. $ to 13487.4 billion dollars. $ in 2016. The growth amounted to 10,088.7 billion dollars. $ or it increased by 3.97 times.
World GDP per capita in constant prices relative to 1970 increased from $921 to $1,823 in 2016. The increase was $902, or it increased by 1.98 times. This means that the purchasing power of one inhabitant of the planet has almost doubled in 46 years.
Nominal world GDP, billion dollars, 1970-2016
Nominal GDP per capita in the world, dollars, 1970-2016, current prices
GDP nominal in the world by region
Share of regions in nominal world GDP, %, 2013
TOP 30 countries by world GDP 1970-2016 (nominal / PPP)
Leading countries in GDP par value of the world 1970-2016
Quite often the terms “economic growth” and “GDP” pop up in the news. Many people have heard about them, but I think not everyone has a good idea of what it is. Meanwhile, to assess the economic condition of the country, experts use these very indicators - so let's look at this issue in more detail.
Concept of GDP
GDP stands for gross domestic product. In other words, GDP is a measure of the value of services and goods produced by any government . That is, this is absolutely all products that are produced in the country and are expressed in monetary terms. This indicator is usually expressed in US dollars, since it is stable currency. In English, the name of the term is Gross Domestic Product with the corresponding abbreviation GDP.
Economic growth is closely related to GDP. It represents the growth of gross domestic product both per capita and in absolute terms. The main goal of economic growth is to raise the living standards of society: therefore, when measuring it, not only changes in GDP itself are taken into account, but also population growth. For example, if output increased by 5% per year, but the total population also increased by 5%, then the standard of living for each resident will remain the same.
Absolute GDP growth shows whether economic growth has occurred in a country over a certain time or not. The growth rate is accordingly used to find out whether economic growth has accelerated or slowed down. The same indicators are used per capita when taking GDP divided by population. An increase in the population with a constant GDP leads to a decrease in the standard of living - and vice versa, a decrease in the population while maintaining the volume of GDP allows us to speak of a higher standard of living.
Economic growth factors include 2 different groups:
Factors of intensive growth. These include technological progress, growth in the level of workers, improved resource allocation, improved management of production activities, etc. Intensive growth depends on qualitative changes in production factors and technology modernization.
Factors of extensive growth. These include land, capital, labor, and natural resources. Extensive growth occurs due to the use of additional resources: increasing the number of employees, equipping with equipment, etc.
Factors of economic growth are practically never found in their pure form. As statistics from the last 30 years show, in developed industrial countries the contribution of extensive and intensive factors is almost the same, while in other countries economic growth occurs due to extensive factors. This is how nominal GDP was distributed in the world in 2015, according to the International Monetary Fund:
Quite expectedly, Africa has a red-brown color with the lowest GDP, despite big sizes continent. Little Europe looks better without being inferior Latin America. And finally, the map clearly shows two leaders in the form of the United States and the Asian region. Russian GDP (about $1.3 trillion) is at the level of Brazil or Germany and is several times inferior to the United States and China. Even small Japan has an absolute GDP almost four times larger. The chart below shows the comparative values of GDP and market capitalization of various countries at the end of 2016:
Market capitalization is the total value of all securities traded on the market. As we can see, although there is a correlation between GDP and capitalization, for individual countries the indicators may differ markedly. While the United States is comfortably in first place both in terms of GDP and market capitalization, China, which is equally confident in second place in terms of GDP, barely makes it into the TOP 10 in terms of the second indicator. Does this indicate that Chinese assets are undervalued? Time will show…
There is even less correlation between GDP and stock market returns of different countries. According to investment classicist Bernstein, “bad” economies often have good stock markets. This happens because investors demand additional payment for risk (why hold assets of a developing country, if not in order to receive a higher return than in reliable American securities). The speculative component of such expectations can push asset prices up. However, in practice, among the stock markets of developing countries, there are countries with both high and low returns relative to developed markets:
In Russia, with a negative indicator, Vanguard has a question regarding the calculation methodology - before 1995, we did not have a stock market, and in the period 1995-2012, the RTS index in dollars exceeded the return of its American counterpart.
It can be added that GDP of countries This directly affects the popularity of this country’s currency in the world, as well as its position in the world basket of currencies. Thus, China’s successes in recent years have not gone unnoticed - currently the yuan occupies a larger percentage of the world’s currency basket than the yen or pound sterling. Although back in 2010, the yuan was not there at all - which, however, is not very surprising, since the state of the currency basket is revised once every five years (source - IMF annual report 2016). It is also not surprising that the introduction of the yuan came at the expense of a noticeable reduction in the share of the euro, since the Eurozone last years experiencing deflation, as well as problems with migrants. At the same time, since the last crisis in 2008, America has shown excellent growth in the stock market and maintained rates on its government. bonds in the positive zone - so the weight of the dollar in the currency basket has remained virtually unchanged, still dominating other currencies:
Types of GDP
GDP has several types. The following indicators of economic growth are distinguished:
Nominal GDP includes the value of all goods in the state and is determined by current market prices. It depends on changes in the price index (usually calculated in current year prices). The indicator grows with inflation, falling with deflationary processes.
Real GDP represents the total output produced over a given time. It is measured at base value, that is, at constant prices. It is calculated using the following formula: nominal GDP / general price level = real GDP.
The difference between them is that real GDP is affected only by changes in the volume of goods produced, while nominal GDP is affected by the price of the product itself.
The ratio of nominal GDP to real GDP is called the deflator. If inflation increased by 5% and nominal GDP by 3%, then real GDP will be negative.
Reflects the total value of all the goods of a country that are created by its residents, regardless of their location.
The ratio of GDP to GNP is shown by the following formula:
GNP =GDP + ″Income″
where ″Income″ is income received abroad by residents; however, it does not follow that GNP is always greater than GDP. If GNP is less than GDP, this means that foreigners earn more in a given country than residents of that country earn abroad.
The following factor incomes are distinguished as part of GNP:
salary and bonuses;
income from property (rent income, profit from organizations)
This is GDP divided by the population of a state. Many people think that this is an objective indicator of assessing the standard of living of each citizen of the country - but in fact, GDP per capita is not an indicator of his overall well-being. If a state has a lot of poor people, but there is at least a small number of very rich people, then the country's GDP can be large, although the real difference in the income of its citizens is huge.
In Russia, GDP per capita is $16,735. I think everyone will agree that there are few people in our country who earn that amount per year. In addition, the term “per capita” applies only to able-bodied citizens. And therefore, GDP per person is an even smaller figure.
How is economic growth measured?
The indicators by which economic growth is measured are GNP and GDP. It is traditionally believed that they characterize the standard of living and the dynamics of the well-being of society. However, an increase in any value does not mean that economic growth has occurred: it may be that as a result of the distribution of GNP, the rich will become richer and the poor poorer. So, without additional research, the GNP and GDP indicators are rather arbitrary.
The value of the real national product depends on the population size. For example, India's GNP is 70% greater than Switzerland's GNP. But in terms of share per capita, India is 60 times behind Switzerland. Average level living standards will increase only when production exceeds population growth, inflation is low and the distribution of benefits between different strata of society is more or less equal.
Economic growth can be measured by annual growth rates. This is easy to do: from the value of real GNP of the current year, you need to subtract the value of the previous year. The difference should be compared with the value of GNP for the previous year and the result expressed as a percentage. By building such indicators, it is possible to identify a trend economic development— however, research into other factors affecting living standards is less common.
Comparison of GDP of different countries
A country's GDP is usually measured in its currency. But this method will not work if you need to compare the GDP of two or more countries where different currencies are used. In this case, the GDP of each country is converted into US dollars and then compared.
Transfer to dollars is made in two ways:
Using exchange rates prevailing on the foreign exchange market.
Using exchange rates based on PPP - purchasing power parity. That is, the currency of one state must be converted into the currency of another in order to buy the same amount of goods in each country.
Example from Wikipedia: if the price of a unit of goods in Russia is 30 rubles, and in the USA - 2 dollars, then the dollar to ruble exchange rate should be 15 rubles per dollar. If the exchange rate is 25 rubles per dollar, then by buying goods in Russia (for 30 rubles), selling in the USA (for 2 dollars) and exchanging 2 dollars for 50 rubles at the current rate, on each such transaction you can receive an income of 20 rubles per unit of goods. Accordingly, prices for goods in the United States will decrease, the price of goods in Russia will rise, and the dollar/ruble exchange rate will decrease. As a result, equilibrium will be achieved at a new price level and exchange rate (for example, a product costs 1.7 dollars in the USA, 34 rubles in Russia, the dollar exchange rate is 20 rubles per dollar).
In reality, in developing countries there may be a huge gap between these methods, while in economic developed countries the difference is usually small. Data on countries' GDP is published by the International Monetary Fund (IMF) on its official website, using a method based on purchasing power. This gives an idea of how the world's GDP or the economy of a particular continent is growing.
GDP determines the state's money turnover. Like a private company, the state can incur debt by attracting loans from both its own citizens (for example, through Russia) and foreign individuals and legal entities (for example, through). Almost every country in the world has some form of government debt, which can be expressed relative to that country's GDP. Let's look at one interesting diagram:
The diagram reads like this: the greater a country's debt per capita, the larger the country's area. And the redder the color, the higher the debt to GDP ratio. The biggest debtors: Japan, Ireland, Singapore. America, which has a huge external debt, nevertheless, per capita in relation to GDP has not yet reached the 100% level. In general, a large public debt and the need for its gradual return to maintain the balance of the world economy can become an obstacle to a country's economic growth; however, this difficulty can be offset by effective monetary and economic policies.
Russian GDP
Let's take a closer look at domestic GDP:
At the same time, the dependence of Russian GDP on oil prices is very interesting:
The curves in this case are close to 1 and have remained virtually unchanged over the past 17 years. Thanks to high prices for oil in the 2000s, Russian GDP growth turned out to be noticeably higher than the world average and such leading countries as China or the USA - however, after 2010, a multi-year recession began, which ultimately led to negative GDP growth rates:
Raw material dependence is a problem that concerns not only Russia. For example, a similar problem has existed for about 20-25 years in United Arab Emirates who decided to develop it tourism infrastructure; Norway, also dependent on oil, in the fat 2000s giant fund shares, thanks to which its residents can feel confident even in times of crisis. In Russia, I don’t see a real desire to solve this problem, confirmed by decisions from above - everything is limited to conversations and observation of oil prices. The video below clearly shows the change in GDP of countries around the world over the past 60 years:
How are GDP and human well-being related?
GDP identifies the overall economic health of a country. It lets you know about the general material condition of the nation, since along with the increase in the level of production, the well-being of the state also grows. But, as mentioned above, GDP does not reflect the social state of a nation; accordingly, it cannot be considered a universal indicator of the well-being of all citizens.
In addition, GDP does not take into account the free time of citizens - but its availability also allows us to judge the standard of living of society. Does not take into account the gross product and improvements in the quality of goods, nor any changes in the consumption and distribution of goods among people.
In addition, GDP does not include some activities that affect people's living standards. These include:
Non-market operations (car and house repairs, housekeeping, free labor of scientists, etc.).
Shadow economy (odd jobs).
By all accounts, the shadow economy in Russia is quite developed. It is understood as the provision of services and the production of goods for the population for a fee, which is not officially reflected anywhere - and from the point of view of law, these can be both permitted and prohibited types of activities. The shadow economy makes it very difficult for a country to achieve effective economic growth.
At the same time, GDP takes into account costs that increase its size, but do not lead to an increase in well-being. Among them are the fight against environmental pollution, huge landfills, noise, overpopulation, etc. These are side effects that overestimate the level of material well-being. In this regard, one can cite the statement of one American economist that “garbage is a product of economic life.”
Thus, GDP cannot be called an indicator of the well-being of the population. Behind the formal figures there is a number of diverse and difficult to take into account sociological data that need to be brought together in some way to obtain a more complete picture. In addition, economic theory itself and the view of world economic processes are changing - today it is hardly possible to give a more definite answer to the question of the relationship.
P.S. In conclusion, I suggest you look very good video, available in parts here: http://arzamas.academy/authors/279 . With the permission of the project, for ease of viewing, I merged all three videos into one and post the result below:
If you take an interest in world events, you have undoubtedly noticed the continued strengthening of China's economy. When economists evaluate the economy of any country, they refer to GDP (gross domestic product), which is the sum of all economic activities of the country. This is not an ideal way to measure real economic growth, but it is suitable for quickly analyzing the economic situation.
When determining the economic level, GDP per capita is a better tool than just GDP. To actually provide ratings, GDP per capita is adjusted for purchasing power parity (PPP), a concept in economics used to determine relative values between currencies.
Here are the 10 countries with the highest GDP per capita, adjusted for PPP, as determined by the International Monetary Fund (IMF).
10. Australia - GDP per capita: $43,073
Australia is a member of the Commonwealth, one of the countries with the highest average standard of living, and has recently developed significant economic relationships with China and with other growing economies in Asia. The main factor driving the growth of Australia's economy is the production of goods, driven by the manufacturing industry.
9. Canada - GDP per capita: $43,427
The New York Times, in an article about the middle classes in Canada and the United States, noted that for the first time, the middle class of the Canadian population is better off than the middle class in the United States.
Over the past decade, the ranking of one of the most peaceful countries has increased. A growing economy based on rising commodity prices in the market, as well as a developing financial industry, have made Canadians much more prosperous.
8. San Marino - GDP per capita: $44,480
The tiny country of San Marino is also one of the richest per capita in the world. San Marino, surrounded on all sides by Italian territory, is the oldest sovereign state in the world, since the current political system is a direct successor to the system formed in 301 AD.
San Marino has no public debt, one of the lowest unemployment rates in Europe, thanks to a highly developed financial industry and tourism. For 32,000 citizens, these industries provide sufficient welfare.
7. Switzerland - GDP per capita $46,430
Switzerland, known as the producer of the most delicious and expensive chocolates, has a long history and remains neutral in all international issues - it even joined the UN only in 2002.
Not only manufacturing, science and technology, but also the financial sector are well developed in the country, so Switzerland has become the economic center of the world. The neutrality maintained for a long time attracted not only the headquarters of transnational corporations (Nestle, etc.) to the country, but also such non-profit organizations as the Red Cross. Switzerland will likely lead the European economy for a long time to come.
6. USA - GDP per capita: $53,101
Although the economy looks strong on a per capita basis, the widening wealth gap makes very few (less than 1%) people actually wealthy. Yet the United States middle class is better off than in many countries.
5. Brunei - GDP per capita: $53,431
Brunei is a little-known small country. A former British colony, the sovereign state is located on the island of Borneo, sharing it with Malaysia and Indonesia. Thanks to large oil fields, Brunei has become a very rich country. Brunei is one of only two countries in the world that has no government debt. 90% of Brunei's GDP is based on crude oil sales, so the future of the country's economy will depend on oil prices.
4. Norway - GDP per capita: $54,947
Unlike Brunei, Norway is a country with large oil reserves, but at the same time it is a country with a mixed economy. Gas and crude oil make up 57% of GDP. Oil reserves contribute to a sovereign wealth fund that has made, at least on paper, every Norwegian a millionaire. Of course, individual citizens do not have access to this money, but it is money that has made Norway the most stable state in the modern world.
3. Singapore - GDP per capita: $64,584
Singapore, an island state in Asia, is known as one of the most important and largest port cities in the world. Singapore is Asia's commercial hub for shipping and transportation, but could, like Hong Kong before, become a key city in the financial industry.
There is little original vegetation left for the highly developed city of 5.4 million. The importance of the Port of Singapore, and its status as a tax haven for the ultra-rich, means that Singapore will become richer every year.
2. Luxembourg - GDP per capita: $78,670
Luxembourg, like Switzerland, has economy based on steel and chemicals. To compensate for losses after the departure of many industries to Asian countries, it well developed banking and other financial services. Beneficial taxes have attracted the headquarters of various transnational corporations here, especially Internet startups ( Amazon, Skype). Luxembourg is on track to become even richer, so its small population (537,853) will have no problems.
1. Qatar - GDP per capita: $98,814
Qatar is a monarchy ruled by the Al Thani family. It is famous for its sovereign wealth fund, which, among other things, allows it to buy up football teams and airlines around the world. Like many states, this fund is based on oil, the reserves of which put Qatar in third place in the world.
Although its population is 1.8 million people, only 280,000 of them are citizens of the country. The rest, migrants, who are not included in the calculations, act as a lower class of workers, not receiving any benefits from the national wealth. But for the lucky 280,000, Qatar is the richest country in the world.
Do you want to know which countries' people are the happiest? See TOP 5 HAPPIEST COUNTRIES IN THE WORLD. The happiness index includes the well-being of the people and the state of the environment.
GDP AND GNP
GDP and GNP - gross domestic product and gross national product per capita are indicators of the socio-economic development of any state. These indicators are calculated using purchasing power parity. Let us recall that gross domestic product represents the volume of value of final products (goods and services) produced over a specific period of time (usually a year is taken for the reporting period, but quite often, GDP is calculated for six months, a quarter, a month as intermediate results). GDP is the total output produced by both a national manufacturer and a foreign one, but only within the state. GNP is a similar indicator and represents the total volume of products (goods and services) produced during the reporting period, but its main difference from GDP is that these products are produced only by a national manufacturer, enterprise, geographically both within the state and abroad.
GDP and GNP per capita are calculated using purchasing power parity (PPP). Purchasing power parity is the ratio between national currencies according to their purchasing power. This term means that the price level in a certain state (country) for a certain set of consumer goods and services is taken into account. The different purchasing power of the national currency can be designated as the reciprocal of the aggregate price level in the state. Accordingly, provided that the price level is based on the total cost of the consumer basket, we can conclude that the purchasing power of a unit of national currency is the reciprocal of the value of the “consumer basket.” For example, if in 2015 the cost of the consumer basket was:
- For adults – 6300 rubles;
- For pensioners – 5400 rubles;
- For children – 6400 rubles.
Therefore, the purchasing power of the Russian ruble is 1/6033 = 0.0001. The indicator 6033 was obtained as an arithmetic average - (6300 + 6400 + 5400) / 3. Naturally, different countries of the world have different levels of the consumer basket. For example, in France, the average amount in terms of Russian rubles is: 57,700 rubles, at the current euro exchange rate (beginning of March 2016) this is approximately 740 euros, respectively, 1/740 = 0.0014. Based on the above calculations, we can draw a simple conclusion that the purchasing power of 1 ruble is lower than the purchasing power of 1 euro.
It should be remembered that the “consumer basket” primarily includes a certain set of food products. Then non-food products (clothing, shoes, underwear, medications) and the third part of the consumer basket consists of services ( public utilities, transportation costs, expenses for cultural events, etc.).
Definition 1
Actually, per capita income is an economic indicator that indicates the average income per individual citizen of a state and determines the level of well-being of the country.
Method for calculating GDP per capita
Let us recall that the GDP indicator can be calculated by three methods:
- Calculation method based on gross value added;
- Income calculation method;
- Cost calculation method.
The GDP per capita indicator is a macroeconomic indicator that accurately reflects the standard of living of the population of a state. In principle, calculating GDP per capita is quite simple, because for this you just need to know the general GDP of the state and the population size, and accordingly, you need to divide the total GDP by the total population: GDPdn = GDP / CN.
Thus, an indicator in value terms is obtained that characterizes the amount of products (goods and services) produced during the economic activity of a country over a certain period of time and per capita, on average, per one resident of this country. It should be remembered that the GDP per capita indicator is not an ideal criterion for the level of well-being of the state and its citizens, like many other macroeconomic indicators. There are many reasons why GDP per capita is an indirect measure of the material standard of living as an element of human development. Here are some of the most typical of these reasons: GDP per capita is essentially a measure of labor productivity, which often does not coincide with the average per capita income in the state and is significantly removed from the income of the average household.
The real annual income of a household, almost always, does not show the objective degree of its well-being, which can depend both on the already formed (accumulated) property and on the current state of profitability. Well-being can be largely influenced by individual lifestyle, geography of residence, etc.
Note 1
A significant disadvantage of the per capita GDP indicator is the fact that as well-being increases, each unit of it brings less and less value from the point of view of human development. Of course, this disadvantage can be considered abstract, but it can be assumed that, in the limit, people do not need an infinitely high level of income to ensure a “decent standard of living.”
GNP per capita
GNP is the gross national product. GNP per capita is an indicator that determines the ratio of the gross national product to the population of a state. The GNP per capita indicator is an approximate value indicating the level of well-being of the population of a particular state. GNP is calculated in three ways:
- Value added method;
- Income method;
- Expense method.
GNP indicators fluctuate due to constant dynamics in the volume of production of the gross national product. Provided that the volume of per capita GNP increases, this may characterize an increase in the standard of living of the country's population. Negative dynamics of GNP indicates an economic crisis. Accordingly, when comparing the average per capita GNP of different years, it is possible to determine in which year the standard of living of the country’s population was higher. When comparing these indicators in different years, it is necessary to take into account that GNP is measured in monetary terms (in national currency - rubles, dollars, etc.), which in different years have different purchasing power in the process of price fluctuations. Therefore, if, for example, GNP in certain years was 1000 monetary units and in this year the price level increased, then in fact, the standard of living decreased, because for the same amount at the end of the period it was possible to purchase a smaller volume of goods than at the beginning. Therefore, in practice, concepts such as nominal and real GNP are used.
Note 2
Nominal GNP determines the volume of production in the current period, expressed in prices of the same (current) period, and real GNP shows the volume of production in a given period, but is determined by the prices of the base period, for example, the previous year. The ratio of nominal GNP to real GNP is called the GNP deflator*.
- A deflator is an index (coefficient) for converting economic indicators, calculated in current prices. For example, the average salary in Russia in 2014 (according to Rosstat of Russia) was 32,611 rubles, and in 2015 – 31,325 rubles. According to average statistics, prices during this period increased approximately 1.5 times, which will be the growth index. To express 2015 wages in 2014 prices, they must be divided by the deflator (1.5). Therefore, in 2014 prices, the 2015 salary will be approximately 20,883 rubles.
