Asia is home to some of the wealthiest countries in the world, like Singapore, Japan, and South Korea. However, it is also home to some of the poorest countries. The 3 poorest countries in Asia, based on GDP per capita, are Afghanistan, Nepal, and North Korea.
What is GDP per capita?
GDP stands for Gross Domestic Product. It measures the total value of goods and services produced within a country over a specific time period, usually one year. GDP per capita divides a country’s GDP by its population to get the average GDP per person.
GDP per capita is one of the most common ways to measure a country’s standard of living and economic health. A higher GDP per capita generally indicates a more prosperous country, while a lower GDP per capita indicates a poorer country.
However, GDP per capita has limitations. For example, it does not account for income inequality within a country. A country could have a high overall GDP per capita but also have huge disparities between rich and poor residents.
Afghanistan
Afghanistan has a GDP per capita of only $509, making it the poorest country in Asia. Afghanistan has faced decades of conflict and instability that have devastated its economy. Infrastructure and institutions are extremely weak.
Agriculture is the mainstay of the Afghan economy. Around 70% of the population works in agriculture, producing crops like wheat, fruits, nuts and wool. However, agricultural productivity is low due to lack of investment and technology.
Afghanistan also has significant mineral resources like coal, copper, iron ore and lithium. But exploitation of these resources has been hampered by insecurity and lack of infrastructure.
Other key facts about Afghanistan’s economy:
- Around 55% of Afghans live below the poverty line
- Unemployment rate is around 25%
- Foreign aid makes up around 45% of GDP
- Literacy rate is only 43%
- Life expectancy is around 64 years
Decades of conflict have made Afghanistan one of the poorest and least developed countries not just in Asia, but the entire world. The Taliban takeover in 2021 led to suspension of foreign aid and has deepened the economic crisis.
Nepal
Nepal has a GDP per capita of $1,004, making it the second poorest country in Asia. Nepal is a landlocked country sandwiched between India and China. Its challenging geography of hills and mountains has hindered infrastructure development.
Nepal’s economy relies heavily on remittances and tourism. Remittances from Nepalese working abroad, mainly in Gulf countries and Malaysia, contribute around 30% of GDP. In 2019, Nepal earned $8.1 billion from tourism, though the sector has been battered by the pandemic.
Agriculture employs around 66% of the population and accounts for around 27% of GDP. Major crops include rice, corn, wheat, sugarcane, milk and vegetables.
Industry is small but growing, accounting for around 15% of GDP. Nepal has significant hydropower potential, but less than 2% has been developed so far. Garment, cement and tourism-related industries have growth prospects if Nepal can attract investment.
Other key facts about Nepal’s economy:
- Around 25% of people live below the poverty line
- Unemployment is around 11.4%
- Literacy rate is around 67%
- Life expectancy is around 71 years
While political instability and corruption remain challenges, Nepal has made good progress in reducing poverty. But sustained growth will require reforms to improve infrastructure and the business environment.
North Korea
North Korea has a GDP per capita of just $1,700, making it the third poorest nation in Asia. It is one of the most closed and centrally-planned economies in the world.
Agriculture accounts for around 22% of North Korea’s economy. Major crops include rice, corn, potatoes and soybeans. However, recurrent famines and food shortages are common.
Industry makes up around 33% of GDP. North Korea has significant mineral resources which drive mining and manufacturing. Major industries include military products, machinery, textiles, and chemicals.
Tourism and transportation account for around 8% of the economy. However, tourism is restricted to strictly controlled organized tours.
Other key facts about North Korea’s economy:
- Private enterprise is virtually non-existent
- Around 60% of the population lives in poverty
- Frequent shortages of food, electricity and other essentials
- Heavily sanctioned due to nuclear programs
- Literacy rate almost 100% due to compulsory schooling
- Life expectancy around 71 years
North Korea’s isolationist policies and military-first focus have come at the expense of economic development. Reforms in the early 2000s led to some growth, but tighter state control has reversed the gains. Regular droughts and floods also hamper agriculture. Access to foreign aid and investment could stimulate development.
Conclusion
Afghanistan, Nepal and North Korea are the 3 poorest countries in Asia due to a combination of conflict, geography, lack of infrastructure, and isolationist policies. All 3 countries have GDP per capita under $2,000 and high rates of poverty and unemployment.
However, each country also has opportunities for growth if they can leverage their natural resources, human capital and strategic locations. Attracting foreign investment, reducing corruption, developing infrastructure and building human capital and skills will be key to boosting the prosperity of the poorest nations in Asia.
