GDP is without a doubt one of the most common measures of economic strength. It is used by economists and policy makers 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 simply 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 104,103 in 2017. 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 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 87.9% of GDP, followed by industry (11.9%) and agriculture (0.2%).
The country with the world’s second highest per capita GDP is Switzerland with a value of USD 80,189. 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 is 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 75,504 in 2017 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 66.5% services, 31.1% industry, and 2.4% 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.
The world’s 4th most competitive economy in terms of per capita GDP is Iceland with a value of USD 70,056. 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 74.4%, followed by the industry sector with 19.8% 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.
Number 5 on the list is Ireland with an official per capita GDP of USD 69,330 in 2017. The country has strong industries in the areas of pharmaceuticals, chemicals, computer software, food products, beverages and brewing, and medical devices. In Ireland 60.7% of GDP originate from the services sector, followed by 38.2% from industry and 1% 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 6th most competitive economy by per capita GDP is Qatar with a value of USD 63,505. 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%). In fact, Qatar is the only country on this list that does not have a dominant services sector.
7. United States
Next up on the list is the United States with a per capita GDP of USD 59,531 in 2017. 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. The strongest sector in the US is services, which makes up 80.2% of GDP, followed by the industry sector (18.9%) 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.
With an official per capita GDP of USD 57,714 Singapore is the world’s 8th most efficient economy. 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%.
The next country on the list is Denmark with a per capita GDP of USD 56,307 in 2017. The country’s strongest industries are the following: 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 79.3% of total GDP, followed by the industry sector (18.3%) and the agriculture sector (2.4%). 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 53,799 in 2017. 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 70.3% of GDP. Meanwhile, the industry sector is responsible for 26.1% 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, Switzzerland, Norway, Iceland, Qatar, United States, Denmark, and Australia.