If you’ve had any active participation and awareness of the world we live in over the last decade or so, you no doubt have noticed the unstoppable growth of China and its economy. China began leveraging its massive population to become the manufacturing capital of the world in the early 1980s, and they’ve successfully built on that to become the most important economy in the world. Like the United Kingdom and the United States before them, they’ve used manufacturing as a springboard into trying to become a broader, more professional service based economy. They’re on course to surpass the United States as the world’s largest economy sometime later this year, a changing of the guard that will have both real and symbolic consequences.
Generally, when economists are referring to the size of any given nation’s economy they are referring to the GDP (gross domestic product), which is the sum of all economic activity within that nation’s borders. It isn’t a perfect way to measure real economic growth (e.g. being diagnosed with cancer and beginning treatment will increase GDP because treatment is expensive), but it’s a good basis to get a quick snapshot of economic health.
For those of you who do not follow economic news at all, this information may come as quite a shock. Anyone who’s ever been to China – or even read about it or watched video footage – knows that there’s still a sizeable gap in the average quality of life between the standard American and the standard Chinese citizen. In short, that difference in lifestyle can explained by the difference in GDP per capita. China may soon have the larger GDP, but it’s also burdened with the largest population. That means that, on average, a citizen of China has significantly less money than a citizen of the United States, even though China is the richer country. When determining individual economic prosperity, GDP per capita is a more appropriate tool than just comparing GDPs. It can therefore be assumed that the countries with the highest GDPs per capita have the richest citizens. To really ensure the figures are comprehensive and the rankings are appropriate, GDP per capita is then adjusted based on purchasing power parity (PPP) a concept in economics that’s used to determine the relative value between currencies. These are the 10 countries with the highest GDP per capita in the world adjusted for PPP, as determined by the International Monetary Foundation (IMF).
10. Australia – GDP Per Capita: $43,073
The land down under opens the list with a GDP per capita of $43,073. Australia is a member of the commonwealth and thus has close trade ties with the UK and its affiliates, but has recently developed an important economic relationship with China and other rising Asian economies. The export of commodities – at the expense of a manufacturing industry – has been the focal point of Australia’s recent economic growth.
9. Canada – GDP Per Capita: $43,427
You may have heard about the factoid that the New York Times turned into a story regarding the middle classes of Canada and the United States. For the first time, the middle class of Canada is estimated to be better off than the middle class of the USA. While this is undoubtedly true, Canada still ranks lower than the United States in GDP per capita. Therein lies the main flaw with calculating wealth by using GDP per capita – a massive concentration of wealth among a small group of the elite can skew the rankings. Regardless, Canada has done quite well for itself in the past 10-20 years. A resource based economy mixed with the soaring price of commodities in the international market (and a growing financial industry) has made Canadians much wealthier than they were a generation ago.
8. San Marino – GDP Per Capita: $44,480
The tiny microstate of San Marino is also one of the world’s wealthiest per capita. Landlocked and surrounded by Italy, San Marino claims to be the world’s oldest sovereign state, as the current political system is a direct continuation of the one founded in 301 AD. San Marino has no national debt and one of the lowest unemployment rates in Europe, all of which are a product of successful financial and tourism industries. With only 32,000 citizens, there’s more than enough wealth to be shared amongst the population.
7. Switzerland – GDP Per Capita $46,430
Switzerland has a long and parodied history of neutrality in all international issues – they didn’t even join the United Nations until 2002 – but that hasn’t stopped them from amassing a small fortune. Switzerland’s economy isn’t reliant on a single industry – the manufacturing, science and technology, and financial sectors are all very strong and have made Switzerland an economic hub in the world. The country’s long history of neutrality has also made it an ideal location for the HQs of multinational companies (like Nestle, Glencore and others) but also for the HQs of non-profit organizations like the Red Cross. Switzerland looks set to be an economic leader in Europe for many years to come.
6. United States – GDP Per Capita: $53,101
As previously mentioned, the inclusion of the United States at #6 illustrates the flaws when creating rankings based solely on a single economic tool. Although the middle class has been struggling since 2008, on a per capita basis the economy looks strong – but it’s been propped up by the a widening wealth gap that’s making a very small (forget the 1%, think 0.001%) of the population unimaginably rich. Still, the middle class of the United States is still infinitely better than most nations of the world, which is an important point to keep in perspective. It may not be what it used to be, but being born in the USA is generally still a great roll of the dice.
5. Brunei – GDP Per Capita: $53,431
Like San Marino, Brunei is another microstate that’s practically unknown to many people in the world. Originally a British colony, the sovereign state is located on the island of Borneo that it shares with Malaysia and Indonesia. Thanks to large petroleum deposits, Brunei has become a wildly rich country. The public debt is at 0% of GDP, one of only two countries in the world to achieve debt-free status. Sales of crude oil account for 90% of Brunei’s GDP, so the economic future of the country is tied to the price of oil.
4. Norway – GDP Per Capita: $54,947
Unlike Brunei, Norway is an example of a nation blessed with oil reserves that has seen diversification to become a mixed economy. Although crude petroleum and petroleum gasses account for 57% of GDP activity, Norway has been steadily using that money to gain entry into other industries. Norway nationalized much of the oil reserves, allowing that money to contribute to a sovereign wealth fund that has made – on paper – each Norwegian a millionaire. Obviously the individual citizens don’t have access to that money, but the money has helped the Norwegian state become the most stable in the world.
3. Singapore – GDP Per Capita: $64,584
The Asian island state of Singapore is renowned as the one of the largest and most important port cities in the world. Singapore is a commercial hub for shipping and transportation into Asia, and has also – much like Hong Kong before – become a key a city in the financial industry. Highly urbanized, there is little of the island’s original vegetation to be enjoyed by the 5.4 million inhabitants. The importance of the port of Singapore – and its status as a tax haven for the ultra wealthy – means that Singapore will only become richer as the years go on.
2. Luxembourg – GDP Per Capita: $78,670
Luxembourg, like Switzerland, traditionally had a manufacturing economy based on steel and chemicals. With the departure of manufacturing to Asian countries, banking and other financial services quickly stepped forward to more than compensate for the loss. Attractive corporate tax rates have made it an ideal location for the HQs of several multinational corporations, particularly Internet startups such as Amazon and Skype. Questionable banking practices, such as its development as a tax haven and allegedly holding the wealth of notorious international figures such as Kim Jong-Il, have attracted negative attention in recent years. Still, Luxembourg remains on track to become even wealthier; something its small population of 537,853 can’t have any problems with.
1. Qatar – GDP Per Capita: $98,814
Qatar is well known for its massive sovereign wealth fund that buys up soccer teams and airlines – among other things – all over the world. The origin of that massive fund is, as with many of the countries on the list, rooted in oil. Qatar has the 3rd largest reserves in the world, which it has leveraged to become the wealthiest nation per capita on Earth. Although it has a population of 1.8 million people, only 280,000 are actually citizens. The rest are migrant workers who are not included in the calculations since they don’t benefit from the nation’s wealth and instead act as a laboring underclass. Qatar is still a monarchy ruled by the Al Thani family, and –including but not limited to the migrant workers – has ethically questionable business practices and social conditions. However, for those who are part of that lucky 280,000, Qatar is the wealthiest place in the world.