Source: International Monetary Fund, World Economic Outlook April 2022. Values are expressed in current international dollars, reflecting the corresponding exchange rates and PPP adjustments.ISLAMABAD: Business leaders of Pakistan and Belarus signed 12 contracts worth $42 million on Monday. Being rich in a poor country also has costs. 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. This is why, in the long run, it is better not only to be rich but to be egalitarian as well. For food, heating, and transportation-often essential to earn a living-this is much harder.” As a result, IMF economists say the current situation poses a threat to both economic and social stability. Many less affluent nations, in the meantime, bent over backwards to take care of all those in need during the crisis.īecause energy and food are essential goods with few substitutes, higher prices are particularly painful for low-income households, the IMF writes in World Economic Outlook July 2022 update: “When the price of other items, such as electronics, furniture, or entertainment, increases, families can simply reduce or even eliminate spending on them. Low-income workers, often migrants, living in some very wealthy nations suddenly found themselves unemployed, homeless and stranded without much of a safety net. The coronavirus pandemic proved it most strikingly. Then again, wealth for some without a good measure of equality for everyone is problematic, to say the least. 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. 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. To gauge how wealthy a country’s citizens are it is necessary to understand how much they can buy. 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. 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.Ĭlick here to read more about the world's poorest countries.Ĭlick here to read more details about the world's richest countries. 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?Īnother problem with GDP is that it does not measure wealth distribution. 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. Measuring how rich you are depends to a large degree on how rich and poor countries are defined. 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 GDP). Luca Ventura One of the world's poorest countries-Yemen-is being bombed by its far richer neighbor, Saudi Arabia.
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