What is the most common attribute amongst the world's wealthiest countries as measured by GDP per capita (adjusted for purchasing power parity) in 2016?
What do the world’s richest countries have in common? As becomes clear from Global Finance’s 2016 "Top Ten" list, it helps to have large reserves of hydrocarbons or other natural resources. That is certainly true of gas-rich Qatar, which retains its pole position as the world’s richest nation, as it is of Brunei, Kuwait, Norway and the United Arab Emirates. But lower oil prices have meant that Qataris’ average income decreased by some $15,000 compared to what it had been in 2015, while the figures for Brunei and Kuwait also came in lower than the previous year—in contrast to Norway and the UAE whose more diversified economies helped cushion them from international commodities price-swings.
Three of the other five countries in the list—Luxembourg, Singapore and Switzerland—all benefit from having highly developed financial services sectors and relatively low tax rates that help them attract global wealth flows, and residents of these finance-driven states saw their average wealth grow in 2016. Macao has rebounded on the back of a revival of its casinos and associated tourism. Tiny San Marino again squeezes into the top ten, while larger economies are shut out.
This underlines the key common attribute amongst the world’s wealthiest countries: they all have small populations compared to countries that lead the world in overall economic output. Most of these small but wealthy nations depend to a large extent on immigrant workers who are not granted resident status. In Europe, they may commute daily from a larger neighbouring country, be it France, Italy or Germany. In the Gulf they come on longer contracts—from South Asia, Europe and other Middle Eastern Countries—but they are rarely granted resident status and therefore are not counted in GDP per capita calculations, even though they may outnumber ‘nationals’ and contribute to most of the country’s economic activity.
The standard methodology for measuring how wealthy a given country is relative to others is to work out what is the average wealth of each resident in that country (GDP per capita). While the commonly accepted measure of the overall size of a country’s economy is total gross domestic product (GDP) – which results in large and populous countries such as the United States, China and Japan at the head of most tables – the methodology preferred by most economists to determine the wealth of a nation is to divide a country’s total GDP by the number of full-time residents.
The result is the commonly used measure of GDP per capita. This is then further refined by applying calculations based on purchasing power parity (PPP), which factors in differing costs of living and relative inflation rates that impact on the real buying power of residents in each country. The resulting, widely accepted measure of how rich a country is relative to others is therefore GDP per capita (PPP).
Values are expressed in current international dollars, reflecting a single year's (the current year) currency exchange rates and PPP adjustments. Data source: International Monetary Fund, World Economic Outlook Database, October 2016