What does it mean for a nation to be rich? GDP per capita adjusted for relative purchasing power provides a clue into that.

Author: Luca Ventura
Project Coordinator: Pham Binh
Rich and poor in Mumbai, India

WHAT DOES IT MEAN FOR A NATION TO BE RICH? 

Would you rather be rich in a poor country or poor in a rich one? Measuring how rich a country is not that easy (spoiler: it is not just about the GDP). Measuring how rich you are depends to a large degree on how rich and poor countries are defined.

 

If we simply consider a nation's gross domestic product (GDP)—the sum total of all goods and services produced by a country during one year—then we would have to conclude that the richest nations are exactly the ones with the largest GDP: United States, China, Japan, Germany. But how could the economies, for example, of San Marino or Luxembourg ever match that of such powerhouses when they are no more than tiny dots on the world map?

Another problem with GDP is that it does not measure wealth distribution. That is why a more accurate representation of people’s living conditions begins with dividing a nation's GDP by the number of people that live there: per capita GDP and its growth rate tell tells us much more about the social wealth potentially available to each person and whether this wealth is either increasing or decreasing over time.

However, using per capital GDP poses a problem: the very same income can buy very little in some countries and go much further in others where basic necessities—food, clothing, shelter, or healthcare—cost far less. To gauge how a country’s citizens are wealthy it is necessary to understand how much they are able to buy. That is why, when comparing per capita GDP across countries, GDP should be adjusted for purchasing power parity, which helps us take into account inflation rates and price of goods and services in each given place.

In conclusion, then, when considering whether it is better to be rich in a poor country or poor in a rich one, the best chance of enjoying an excellent living standard is to reside in a richer nation no matter where a person falls on the income distribution scale. Averages, however, never tell the whole story. The coronavirus pandemic proved it most strikingly. Low-income workers, often migrants, living in very wealthy nations suddenly found themselves unemployed, homeless and stranded. By contrast, some poor and developing nations were spared, or cleverly prevented, the worst health and socio-economic effects of the outbreak, allowing their citizens to continue their lives in a mostly unchanged way. Whether you are rich or you are poor, these—indeed—are very strange and frightening times.


Rank

Country

GDP-PPP ($)

1 Qatar 132,886
2 Macao SAR 114,363
3 Luxembourg 108,951
4 Singapore 103,181
5 Ireland 83,399
6 Brunei Darussalam 80,384
7 Norway 76,684
8 United Arab Emirates 69,435
9 Kuwait 66,387
10 Switzerland 66,196
11 United States 65,112
12 Hong Kong SAR 64,928
13 San Marino 61,575
14 Netherlands 58,341
15 Iceland 56,066
16 Saudi Arabia 55,704
17 Taiwan Province of China 55,078
18 Sweden 54,628
19 Denmark 53,882
20 Germany 53,558
21 Austria 50,931
22 Australia 50,725
23 Bahrain 49,529
24 Canada 48,246
25 Belgium 49,529
26 Finland 47,975
27 Malta 47,405
28 Oman 47,366
29 France 47,223
30 United Kingdom 46,828
31 Japan 45,546
32 South Korea 44,704
33 Spain 41,592
34 Cyprus 41,407
35 New Zealand 40,943
36 Italy 40,470
37 Aruba 39,121
38 Puerto Rico 40,067
39 Israel 39,121
40 Czech Republic 38,834
41 Slovenia 38,462
42 Lithuania 36,701
43 Slovak Republic 36,640
44 Estonia 35,852
45 Hungary 34,046
46 Poland 33,665
47 Portugal 33,665
48 The Bahamas 33,665
49 Malaysia 33,333
50 Trinidad and Tobago 32,881
51 Seychelles 31,693
52 Latvia 31,402
53 St. Kitts and Nevis 30,578
54 Greece 30,252
55 Russia 29,642
56 Antigua and Barbuda 29,346
57 Kazakhstan 28,849
58 Turkey 28,264
59 Romania 27,887
60 Croatia 27,729
61 Panama 26,822
62 Chile 26,317
63 Mauritius 24,996
64 Bulgaria 24,595
65 Uruguay 23,581
66 Maldives 23,312
67 Equatorial Guinea 21,300
68 Mexico 20,868
69 Belarus 20,644
70 Turkmenistan 20,411
71 Thailand 20,365
72 Montenegro 20,084
73 Argentina 20,055
74 China 19,504
75 Dominican Republic 19,411
76 Gabon 19,057
77 Barbados 18,921
78 Barbados 18,921
79 Azerbaijan 18,616
80 Serbia 18,564
81 Botswana 18,558
82 Costa Rica 18,037
83 Iraq 18,025
84 Iran 17,662
85 Grenada 16,717
86 North Macedonia 16,486
87 Brazil 16,462
88 Palau 16,234
89 Algeria 15,696
90 Colombia 15,541
91 Suriname 15,532
92 Lebanon 15,049
93 Peru 14,719
94 St. Lucia 14,492
95 Mongolia 14,309
96 Bosnia and Herzegovina 14,220
97 Egypt 14,023
98 Indonesia 13,998
99 Albania 13,991
100 Sri Lanka 13,897
101 South Africa 13,754
102 Paraguay 13,584
103 Tunisia 12,661
104 St. Vincent and the Grenadines 12,454
105 Kosovo 12,322
106 Georgia 12,227
107 Fiji 12,147
108 Dominica 12,008
109 Ecuador 11,742
110 Namibia 11,266
111 Eswatini 11,160
112 Armenia 10,866
113 Bhutan 9,876
114 Ukraine 9,774
115 Jamaica 9,692
116 Jordan 9,649
117 Philippines 9,471
118 Libya 9,358
119 Morocco 9,235
120 Guyana 9,094
121 Uzbekistan 9,000
122 Nauru 8,999
123 Guatemala 8,705
124 Belize 8,664
125 India 8,378
126 El Salvador 8,313
127 Bolivia 8,172
128 Lao P.D.R. 8,110
129 Vietnam 8,066
130 Cabo Verde 7,729
131 Moldova 7,703
132 Republic of Congo 7,174
133 Ghana 6,956
134 Angola 6,752
135 Myanmar 6,707
136 Tonga 6,486
137 Samoa 6,152
138 Nigeria 6,054
139 Pakistan 5,872
140 Djibouti 5,568
141 Honduras 5,395
142 Nicaragua 5,290
143 Timor-Leste 5,254
144 Bangladesh 5028
145 Mauritania 4,881
146 Cambodia 4,664
147 Còte d'Ivoire 4,457
148 Tuvalu 4,277
149 Zambia 4,148
150 Sudan 4,072
151 Kyrgyz Republic 4,056
152 Papua New Guinea 3,983
153 Cameroon 3,955
154 Kenya 3,875
155 Marshall Islands 3,868
156 Senegal 3,853
157 Lesotho 3,614
158 Tajikistan 3,589
159 Micronesia 3,562
160 Benin 3,446
161 Tanzania 3,402
162 Sao Tomè and Prìncipe 3,387
163 Nepal 3,318
164 Vanuata 2,957
165 Comoros 2,799
166 The Gambia 2,746
167 Zimbabwe 2,702
168 Uganda 2,631
169 Ethiopia 2,511
170 Chad 2,480
171 Mali 2,471
172 Rwanda 2,452
173 Guinea 2,441
174 Solomon Islands 2,303
175 Yemen 2,280
176 Kiribati 2,138
177 Afghanistan 2,095
178 Burkina Faso 2,077
179 Guinea-Bissau 2,019
180 Haiti 1,878
181 Togo 1,826
182 Madagascar 1,699
183 Sierra Leon 1,690
184 South Sudan 1,602
185 Liberia 1,414
186 Mozambique 1,303
187 Malawi 1,240
188 Niger 1,106
189 Eritrea 1,060
190 Democratic Republic of the Congo 849
191 Central African Republic  823
192 Burundi 727

Source: International Monetary Fund, World Economic Outlook October 2019. Values are expressed in current international dollars, reflecting the corresponding exchange rates and PPP adjustments.