What Is GDP Per Capita?

GDP Per Capita Explained

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The gross domestic product per capita, or GDP per capita, is a measure of a country's economic output that accounts for its number of people. It divides the country's gross domestic product by its total population.

Learn what the GDP is and how a country's overall GDP doesn't always accurately show how prosperous a country is for those living there.

What Is GDP Per Capita?

A country's GDP or gross domestic product is calculated by taking into account the monetary worth of a nation's goods and services after a certain period of time, usually one year. It's a measure of economic activity. Then, this amount of wealth is divided among a given country's population to solve for its GDP per capita.

For example, the U.S. GDP in 2019 was $20.6 trillion. With a population of 328.2 million in 2019, that means the U.S. GDP per capita was $65,240.

How Does GDP Per Capita Work?

Essentially, GDP per capita acts as a metric for determining a country's economic output per each person living there. Often times, rich nations with smaller populations tend to have higher per capita GDP. Once you do the math, the wealth is spread among fewer people, which raises a country's GDP.

The fact that the GDP per capita divides a country's economic output by its total population makes it a good measurement of a country's standard of living, especially since it tells you how prosperous a country feels to each of its citizens.

GDP per capita
© The Balance, 2018

How to Calculate GDP Per Capita

The formula is GDP divided by population. If you’re looking at just one point in time in one country, then you can use regular “nominal” GDP divided by the current population. “Nominal” means GDP per capita is measured in current dollars.

If you want to compare GDP per capita between countries, you must use purchasing power parity. That creates parity, or equality, between economies by comparing a basket of similar goods. It's a complicated formula that values a country's currency by what it can buy in that country, not just by its value as measured by its exchange rates.

Economies and GDP Per Capita

The United States is the third most populous country after China and India. The United States had to spread its wealth among 328.2 million people in 2019. As a result, the 2019 U.S. GDP per capita was $65,240. That makes it one of the most prosperous countries per person.

GDP per capita allows you to compare the prosperity of countries with different population sizes.  

When talking about China, the most populous country on earth, it produced a GDP of $27.31 trillion (factoring in purchasing power parity) in 2019. But its GDP per capita was only $19,098 because it has more than four times the number of people as the United States. It's the most populous country in the world, with 1.43 billion people. 

The European Union, an economy made up of 27 separate countries, is the world's second most prosperous economy, at $22.7 trillion in 2019. Its GDP per capita was only $43,206 since it must spread the wealth among 513.5 million people for that year.

In 2019, India's GDP was $11 trillion but spread among its 1.38 billion people, its GDP per capita was $7,971.

Countries With Highest GDP Per Capita in 2019

The countries with the highest economic production per person have thriving economies and few residents. The top 10 GDP per capita according to Statistics Times are:

  1. Luxembourg: $113,197
  2. Switzerland: $83,717
  3. Macao: $81,152
  4. Norway: $77,976
  5. Ireland: $77,771
  6. Qatar: $69,688
  7. Iceland: $67,037
  8. United States: $65,112
  9. Singapore: $63,987
  10. Denmark: $59,795

Countries With Lowest GDP Per Capita in 2019

The world's poorest countries, as measured by GDP per capita (Statistics Times), are:

  1. South Sudan: $275
  2. Burundi: $310
  3. Eritrea: $343
  4. Malawi: $371
  5. Niger: $405
  6. Central African Republic: $448
  7. Madagascar: $464
  8. Mozambique: $485
  9. Democratic Republic of the Congo: $501
  10. Afghanistan: $513

Key Takeaways

  • GDP per capita is a country’s economic output divided by its population.
  • It's a good representation of a country's standard of living. 
  • It also describes how much citizens benefit from their country's economy. 
  • Purchasing power parity compares different countries’ economic output.