Wednesday, May 29, 2024
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What does it mean for a nation to be rich or poor at a time of global pandemic, high inflation and geopolitical tensions? GDP per capital adjusted for relative purchasing power gives us an idea, albeit an imperfect one.

Ireland is one of the world’s largest corporate tax havens, which benefits multinationals far more than it benefits the average Irish person.

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 gross domestic product, or 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—the sum 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 Singapore or Luxembourg ever match that of such powerhouses when they are no more than small dots on the world map?

Another problem with GDP is that it does not measure income inequality, that is, how a country’s riches are distributed among the population. 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 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 capita GDP still 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 wealthy a country’s citizens are it is necessary to understand how much they can 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 the inflation rates and the price of goods and services in each given place.

When considering whether it is better to be rich in a poor country or poor in a rich one, the best chance of enjoying a superior standard of living is to reside in a richer nation no matter where a person falls on the income distribution scale. Then again, wealth for some without a good measure of equality for everyone is problematic, to say the least. The coronavirus pandemic proved it most strikingly. Low-income workers, often migrants, living in some very wealthy nations suddenly found themselves unemployed, homeless and stranded without much of a safety net. Many less affluent nations, in the meantime, bent over backwards to take care of all those in need during the crisis.

Because energy and food are essential goods with few substitutes, higher prices are particularly painful for low-income households. It is easier for families to cut down or eliminate spending on electronics, clothing or entertainment when prices surge, but when it comes to food, heating or transportation—crucial to both live and earn a living—this becomes much more difficult. As a result, an inflationary scenario can often pose a threat to economic and social stability.

This is why, in the long run, it is better not only to be rich but to be egalitarian as well. Too much economic inequality stifles growth for all, political instability is more likely, healthcare care costs and mortality rates are higher, and so are crime and corruption rates. Being rich in a poor country also has costs.



GDP-PPP per capita ($)

1 Ireland 145,196
2 Luxembourg 142,490
3 Singapore 133,895
4 Qatar 124,848
5 Macao SAR 89,558
6 United Arab Emirates 88,221
7 Switzerland 87,963
8 Norway 82,655
9 United States 80,035
10 San Marino 78,926
11 Brunei Darussalam 75,583
12 Hong Kong SAR 74,598
13 Denmark 73,386
14 Taiwan 73,344
15 Netherlands 72,973
16 Iceland 69,779
17 Austria 69,502
18 Andorra 68,998
19 Germany 66,132
20 Sweden 65,842
21 Belgium 65,501
22 Australia 65,366
23 Saudi Arabia 64,836
24 Malta 61,939
25 Finland 60,897
26 Guyana 60,648
27 Bahrain 60,596
28 Canada 60,177
29 France 58,828
30 South Korea 56,706
31 United Kingdom 56,471
32 Israel 54,997
33 Cyprus 54,611
34 Italy 54,216
35 New Zealand 54,046
36 Kuwait 53,037
37 Slovenia 52,641
38 Japan 51,809
39 Czech Republic 50,961
40 Aruba 49,627
41 Spain 49,448
42 Lithuania 49,266
43 Estonia 46,385
44 Poland 45,343
45 Portugal 44,708
46 The Bahamas 43,913
47 Hungary 43,907
48 Puerto Rico 43,845
49 Croatia 42,531
50 Oman 42,188
51 Romania 41,634
52 Slovak Republic 41,515
53 Turkey 41,412
54 Latvia 40,256
55 Panama 40,177
56 Seychelles 39,662
57 Greece 39,478
58 Malaysia 36,847
59 Maldives 36,358
60 Russia 34,837
61 Kazakhstan 32,688
62 Trinidad and Tobago 32,054
63 Bulgaria 32,006
64 St. Kitts and Nevis 29,662
65 Chile 27,608
66 Mauritius 29,164
67 Uruguay 28,470
68 Montenegro 27,761
69 Argentina 27,261
70 Costa Rica 26,422
71 Dominican Republic 25,896
72 Serbia 25,432
73 Libya 24,559
74 Antigua and Barbuda 24,012
75 Mexico 23,820
76 Belarus 23,447
77 China 23,382
78 Thailand 22,675
79 Georgia 21,923
80 North Macedonia 21,111
81 Grenada 20,075
82 Turkmenistan 19,974
83 Bosnia and Herzegovina 19,604
84 Iran 19,548
85 Armenia 19,489
86 Colombia 19,460
87 Botswana 19,398
88 Gabon 19,197
89 Albania 19,029
90 Barbados 18,858
91 Brazil 18,686
92 Azerbaijan 18,669
93 Equatorial Guinea 18,510
94 St. Lucia 18,435
95 Suriname 18,427
96 St. Vincent and the Grenadines 17,793
97 Egypt 16,979
98 Moldova 16,840
99 Palau 16,394
100 Peru 16,132


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