Published Oct 25, 2023 Per Capita GDP, also known as GDP per capita, is a measure of the average economic output per person in a given country. It is calculated by dividing the total Gross Domestic Product (GDP) of a country by its population. Per Capita GDP provides insight into the standard of living and productivity of the population. Let’s consider two countries: Country A and Country B. Country A has a GDP of $1 trillion and a population of 10 million people, while Country B has a GDP of $500 billion and a population of 5 million people. To calculate the Per Capita GDP for each country, we divide the GDP by the population. So for Country A, the Per Capita GDP would be $1 trillion divided by 10 million, which equals $100,000. For Country B, the Per Capita GDP would be $500 billion divided by 5 million, which equals $100,000 as well. Although both countries have the same Per Capita GDP, it is important to note that this measure does not reflect income distribution or disparities within the population. It simply provides an average value of economic output per person. Per Capita GDP is a widely used indicator to compare the standard of living and economic performance between countries. It helps to understand the overall economic well-being of a nation’s population. Higher Per Capita GDP generally indicates a higher standard of living, as more economic output is available per person. Additionally, Per Capita GDP can be a useful tool for policymakers to identify areas of economic growth and measure the effectiveness of policies aimed at improving people’s lives.Definition of Per Capita GDP
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Why Per Capita GDP Matters
Economics