GDP is, without a doubt, one of the most common measures of economic strength. It is used by economists and policymakers to measure and compare the economic power of countries all around the world (see also Gross Domestic Product). In an earlier article, we have created a list of the world’s top 10 economies by GDP. However, in addition to raw output, we also often want to compare the competitiveness (i.e., efficiency) of different countries around the world. To do this, we use per capita GDP. That is, we divide a country’s GDP by its population. This essentially tells us what share of total GDP an average individual produces, which in turn allows us to compare the competitiveness of countries of different sizes. Fortunately for us, the World Bank already provides a comprehensive database of GDP per capita for most countries. So let’s take a look at the world’s top 10 economies by per capita GDP.
The world’s most competitive economy in terms of per capita GDP is Luxembourg, with a value of USD 114,341 in 2018. The country is known to have a small but stable and high-income economy. It is said to be a financial powerhouse because its financial sector accounts for more than 35% of the total GDP. Apart from that, other important industries include real estate services, information technology, cargo transportation, and logistics, engineering, tourism, and biotechnology. If we look at the economic sectors, services make up 86.9% of GDP, followed by industry (12.8%) and agriculture (0.3%).
The country with the world’s second-highest per capita GDP, is Switzerland, with a value of USD 82,838. This makes Switzerland the world’s second most competitive economy. Apart from its neutrality, the country is known for its efficient capital markets, low unemployment, and highly skilled labor force. Switzerland’s most important industries include chemicals, watchmaking, precision instruments, banking, insurance, pharmaceuticals, and tourism. As a consequence, the country has a strong services sector, which makes up 73.7% of GDP. Meanwhile, the industry sector accounts for 25.6% and agriculture for the remaining 0.7%.
The next country on the list is Norway. With a per capita GDP of USD 81,807 in 2018, it is the world’s 3rd most efficient economy. The country has many natural resources, such as oil and gas, fish, forests, and minerals. Accordingly, its strongest industries include petroleum and gas, shipping, fishing, food processing, chemicals, timber, and mining. By sector of origin, Norway’s GDP is composed of 64% services, 33.7% industry, and 2.3% agriculture. The country’s highest per capita GDP was measured in 2013 at USD 103,059. However, this was followed by a significant pullback to USD 70,890 (in 2014 – 2016), before the economy rebounded to its current value.
Number 4 on the list is Ireland, with an official per capita GDP of USD 78,806 in 2018. The country has strong industries in the areas of pharmaceuticals, chemicals, computer software, food products, beverages and brewing, and medical devices. In Ireland, 60.2% of the GDP originates from the services sector, followed by 38.6% from industry and 1.2% from agriculture. Ireland was hit particularly hard by the 2008 financial crisis. However, with the help of the European Union, it has managed to recover and has experienced a steady increase in per capita GDP since 2012.
The world’s 5th most competitive economy in terms of per capita GDP is Iceland, with a value of USD 73,201. The country has strong industries in fish processing, aluminum smelting, geothermal power, hydropower, medical products, as well as tourism. If we look at the composition of GDP by sector of origin, the services sector dominates with 74.5%, followed by the industry sector with 19.7% and agriculture with 5.8%. Due to its ability to provide cheap and clean energy, Iceland has sparked interest from many high-tech firms looking to establish data centers on the island. This has helped significantly to diversify the local economy.
Qatar is Number 6, with a per capita GDP value of USD 69,027. The country’s oil and natural gas resources are the main drivers of its economic growth and income. Thus, the most important industries include natural gas, crude oil production and refining, ammonia, petrochemicals, steel, and commercial ship repair. This results in an incredibly strong industry sector, which makes up 50.3% of GDP, followed by services (49.5%) and agriculture (0.2%). Qatar is the only country on this list that does not have a dominant services sector.
Next up on the list is Singapore, with a per capita GDP of USD 64,582 in 2018. Despite its small size, the country has a highly developed and successful economy. Its most important industries include electronics, chemicals, financial services, biomedical products, ship repair, and entrepot trade. The most dominant economic sector in Singapore is the services sector, which makes up 83.5% of GDP. Meanwhile, the industry sector accounts for 15.5% and the agriculture sector for the remaining 0.96%.
8. United States
With an official per capita GDP of USD 62,641, the United States is the world’s 8th most efficient economy. The US is said to have the most technologically powerful economy in the world with highly diversified industries like petroleum, steel, motor vehicles, aerospace, chemicals, electronics, food processing, and consumer goods. Services are the strongest economic sector in the US, making up 80.2% of GDP, followed by the industry sector (19.1%) and agriculture (0.9%). Despite increasing pressure from low-wage producers such as China, the US has managed to consistently increase economic output and per capita GDP over the last few years.
The next country on the list is Denmark, with a per capita GDP of USD 60,727 in 2018. The country’s strongest industries are wind turbines, pharmaceuticals, maritime shipping, medical equipment, chemicals, steel, food processing, construction, as well as furniture and other wood products. Denmark has a dominant services sector, which makes up 75.8% of the total GDP, followed by the industry sector (22.9%) and the agriculture sector (1.3%). Apart from that, the Danish economy is characterized by an equitable distribution of income, partly due to extensive government welfare measures.
Finally, the world’s 10th strongest economy, according to per capita GDP, is Australia, with an official value of USD 57,305 in 2018. The country’s most important industries include mining, industrial and transportation equipment, food processing, chemicals, and steel. By sector of origin, the services sector makes up about 71.2% of GDP. Meanwhile, the industry sector is responsible for 25.3%, while the agriculture sector adds the remaining 3.6%. Australia’s highest per capita GDP was measured in 2013 at USD 67,990. However, after 2013, that value has decreased for three consecutive years before rebounding in 2017.
In a Nutshell
Gross Domestic Product (i.e., GDP) is one of the most common and widely available measures of economic output. It allows us to compare the economic strength of countries around the world. However, to compare their efficiency and competitiveness, we need to consider GDP per capita (i.e., GDP per inhabitant). The world’s top 10 economies by per capita GDP (1 to 10) are Luxembourg, Switzerland, Norway, Ireland, Iceland, Qatar, Singapore, United States, Denmark, and Australia.