The richest country in the world is often measured by Gross Domestic Product (GDP) per capita. This measures the total economic output of a country divided by its population. However, GDP per capita has some limitations in determining how rich a country really is. Factors like income inequality, quality of life, and purchasing power parity should also be considered. Nonetheless, GDP per capita remains one of the most widely used metrics for comparing national wealth.
By Total GDP
If we look at total GDP, the largest economies in the world are:
| Country | GDP (billions USD) |
|---|---|
| United States | 22,940 |
| China | 16,642 |
| Japan | 5,065 |
| Germany | 4,150 |
| India | 3,202 |
| United Kingdom | 2,858 |
The United States has the largest total GDP at over $22 trillion. China is second at around $16 trillion. Japan, Germany, India, and the UK round out the top five.
However, looking at sheer economic size has limitations. Larger countries have an advantage here simply because they have more people. Total GDP does not account for population differences between countries.
By GDP Per Capita
GDP per capita adjusts for country size by dividing total GDP by population. This gives a better sense of the average living standards in a country.
The countries with the highest GDP per capita are:
| Country | GDP Per Capita (USD) |
|---|---|
| Luxembourg | 129,717 |
| Switzerland | 88,245 |
| Norway | 87,920 |
| Macao | 85,509 |
| Ireland | 86,824 |
Luxembourg tops the ranking with a GDP per capita of over $129,000. Switzerland and Norway swap positions from the total GDP ranking, coming in at #2 and #3. Smaller European countries dominate the top of the list.
The United States ranks 7th in the world at around $69,000 GDP per capita. China is much further down at $12,554 per capita, reflecting its large population size. Among large economies, the US maintains one of the highest standards of living in the world based on GDP per capita.
Limitations of GDP Per Capita
Despite its widespread use, GDP per capita has some notable limitations in capturing how rich a country really is:
– It does not account for income inequality – A nation’s total wealth could be heavily concentrated in the hands of a small elite. GDP per capita would still look high despite rampant inequality.
– It does not measure quality of life – High GDP per capita does not guarantee happiness or health. Countries can prioritize productivity over leisure and well-being.
– It ignores differences in purchasing power – Prices for goods and services vary significantly between countries. $100 goes much further in some nations than others.
– It focuses on economic production rather than wealth – GDP per capita looks at income rather than accumulated assets.
To get a more holistic picture, metrics like the Gini coefficient, Human Development Index, OECD Better Life Index, and household wealth should also be considered.
GDP Per Capita PPP
One way to partially address some limitations of GDP per capita is using Purchasing Power Parity (PPP).
PPP attempts to adjust for differences in price levels between countries. It calculates how much money would be needed to buy the same basket of goods in each country. PPP gives a better sense of the real purchasing power of incomes.
When looking at GDP per capita adjusted for PPP, the ranking changes notably:
| Country | GDP Per Capita PPP |
|---|---|
| Qatar | $137,743 |
| Macao | $122,489 |
| Singapore | $105,689 |
| Brunei | $85,436 |
| Ireland | $79,617 |
Small, oil-rich nations like Qatar and Brunei top the list when accounting for prices. The advantage of places like Switzerland and Norway is reduced once adjusting for their high costs of living. The US falls to 13th by this measure.
Median Wealth Per Adult
Another option is to look at median wealth per adult, which reflects assets owned rather than income. This better captures accumulated prosperity.
The Credit Suisse Global Wealth Report ranks median wealth per adult as:
| Country | Median Wealth Per Adult |
|---|---|
| Switzerland | $229,534 |
| Australia | $191,419 |
| Luxembourg | $168,960 |
| Iceland | $161,044 |
| Belgium | $157,287 |
Switzerland tops the ranking when looking at personal assets. The US comes in at #5 with median wealth of $79,274 per adult. China ranks much lower at $18,862 median wealth per adult.
The Human Development Index
The United Nations Development Programme publishes the Human Development Index (HDI) annually. This index measures national prosperity through a combination of:
– Life expectancy at birth
– Expected years of schooling
– Average years of schooling
– GNI per capita PPP
The latest HDI rankings for very high human development countries are:
| Country | HDI Score |
|---|---|
| Switzerland | 0.962 |
| Norway | 0.961 |
| Iceland | 0.959 |
| Hong Kong | 0.952 |
| Australia | 0.951 |
The HDI looks beyond just income to include health and education outcomes. Switzerland ranks at the top, followed closely by Norway and Iceland. The US is in 17th place with a score of 0.926. China ranks lower at 0.761.
The OECD Better Life Index
The Organisation for Economic Co-operation and Development (OECD) publishes the Better Life Index. This compares countries based on 11 dimensions including:
– Housing
– Income
– Jobs
– Community
– Education
– Environment
– Civic Engagement
– Health
– Life Satisfaction
– Safety
– Work-life balance
Users can customize the index by weighting dimensions based on their priorities. However, the default average ranking is:
| Country | Better Life Index |
|---|---|
| Norway | 7.9 |
| Switzerland | 7.9 |
| Denmark | 7.8 |
| Iceland | 7.6 |
| Australia | 7.5 |
This index again puts Nordic countries at the top. Norway and Switzerland lead, followed by Denmark and Iceland. The US ranks 10th with a score of 7.3. China is much lower down at 5.2.
Conclusion
Determining the world’s richest country depends heavily on the metrics used. Common measures like GDP and GDP per capita are limited in scope. Broader indices like the HDI and OECD Better Life Index take crucial factors like health, education, and life satisfaction into account.
Overall, northern European nations including Switzerland, Norway, and Denmark consistently rank near the top. Smaller economies like Luxembourg and Qatar also hold top spots depending on the measure used. Among large economies, the United States typically places in the top 10 richest nations. China ranks much lower in prosperity, despite having the world’s second largest total GDP.
While economic growth provides the means, it does not always guarantee human development or contentment. Assessing a country’s wealth requires looking beyond just productivity to see how prosperity is distributed and people’s lives enriched. GDP alone does not make a nation “rich” in the most meaningful sense. In the end, there is more to life than simple income.