GDP Per Capita with its Formula and Country Comparisons

Why the World's Largest Economies Aren't the Richest

© The Balance, 2018

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. That makes it a good measurement of a country's standard of living. It tells you how prosperous a country feels to each of its citizens.

GDP per Capita Formula

The formula is GDP divided by population, or GDP/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 the purchasing power parity GDP. 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. You can find every country’s purchasing power parity GDP in the CIA World Factbook.

The Largest Economies Aren't the Richest per Capita

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

U.S. GDP was $20.5 trillion in 2018 according to the International Monetary Fund. But one reason America is so prosperous is that it has so many people.

The United States is the third most populous country after China and India. The United States must spread its wealth among 328 million people. As a result, the 2018 U.S. GDP per capita is $62,518. That makes it the 12th most prosperous country per person.

China has the largest GDP in the world. It produced $25.3 trillion in 2018. But its GDP per capita was only $18,120 because it has four times the number of people as the United States. It's the most populous country in the world, with 1.4 billion people. 

The European Union is the world's second most prosperous economy, at $22 trillion. It's an economy made up of 28 separate countries. Its GDP per capita was only $43,052 because it must spread the wealth among 511 million people. India's GDP was $10.4 trillion but spread among its 1.3 billion people, its GDP per capita was $7,796. Japan's GDP is $5.6 trillion, the fifth largest in the world. Its GDP per capita was $44,550 since it has 126 million people. 

The 10 Highest GDP per Capita (2018)

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

  1. Qatar: $124,487
  2. Macau: $118,099
  3. Luxembourg: $109,199
  4. Singapore: $98,299
  5. Brunei: $81,612
  6. Ireland: $77,670
  7. Norway: $74,318
  8. United Arab Emirates: $70,262
  9. Kuwait: $66,982
  10. Switzerland: $64,988

Liechtenstein is listed by the CIA WorldFactbook as the world's richest country but isn't listed by the IMF. Its GDP per capita was $139,100 according to a 2009 estimate. Three other potential top 10 countries were also not listed by IMF: Monaco—$115,700 (2015 estimate), Bermuda—$99,400 (2016 estimate), and Isle of Man—$84,600 (2014 estimate).

Five of the IMF’s top 10, Qatar, Brunei, Norway, United Arab Emirates, and Kuwait are oil exporters with small populations. These countries were fortunate enough to have access to a large, abundant natural resource that is not labor intensive to develop.

Ireland’s GDP per Capita is inflated due to the number of multinationals that “locate” profits there to avoid paying tax elsewhere. Irish leaders have proposed relying on a modified version of GNP that strips out the effect of multinationals as a measure of Ireland’s standard of living, instead.

The other countries have worked hard to become regional technology and financial centers. Low tax rates and friendly business climates have induced global corporate headquarters to locate there. These sectors are not labor-intensive to develop, so wealth can be generated and distributed among a small population. Bermuda, for example, has fewer than 70,000 people.

The 10 Poorest Countries per Capita (2018)

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

  1. Central African Republic: $712
  2. Burundi: $733
  3. Democratic Republic of the Congo: $816
  4. Malawi: $1,202
  5. Niger: $1,218
  6. Mozambique: $1,295
  7. Liberia: $1,327
  8. South Sudan: $1,527
  9. Sierra Leone: $1,618
  10. Madagascar: $1,626

Nine of the world's poorest countries are in Africa, and Madagascar is an island near the continent. There are many theories as to why African countries are so poor, some of which are compelling, but none of which can be adequately explained here.

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Article Sources

  1. United States Census. “U.S. And World population Clock,” Accessed Nov. 2, 2019.

  2. Central Intelligence Agency. “The World Factbook,” Accessed Nov. 2, 2019.

  3. International Monetary Fund. “World Economic Outlook Database,” Accessed Nov. 2, 2019.

  4. Central Intelligence Agency. “The World Factbook,” Accessed Nov. 2, 2019.