2015 Rankings are based on the GDP (PPP) of a country, which compares the generalized differences in the cost of living and standards between countries.

Author: Valentina Pasquali
Project Coordinator: S.J. Yun


Overall, there are two standard methods of measuring the wealth of countries and how rich or poor its inhabitants are. The measure most often used is Gross Domestic Product (GDP), which represents the size of a country’s economy. A refinement of this is per-capita GDP, which is a measure of the average welfare and affluence, or poverty, of residents of a country. However, GDP and per-capita GDP are less useful when comparing economies across national boundaries – which one must do to determine the poorest countries in the world – because GDP is expressed in a country’s local currency.

The measure that most economists prefer is, and the one used here, GDP at purchasing power parity. GDP (PPP) compares generalized differences in living standards on the whole between nations because PPP takes into account the relative cost of living and the inflation rates of countries, rather than using just exchange rates, which may distort the real differences in income.

Values are expressed in current international dollars, reflecting a single year's (the current year) currency exchange rates and PPP adjustments.



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