Understanding Gross Domestic Product
The table in Figure 6 above shows the GDP per capita for the most populous economic regions in the world. However, the information in this table leaves out all the other countries, so it doesn't answer the question: Which country has the highest GDP per capital in the world? Let's do that now.
To answer this question, take a look at the table in Figure 7 below. In this case, because we are interested in all countries, I have included the countries with a high GDP per capita that are part of the European Union: Luxembourg, Norway, Denmark, Sweden, Austria, Netherlands, and Germany.
Figure 7: GDP of all economic regions, ranked by per capita GDP
(Note: I have purposely left out two tiny countries, Monaco and Liechtenstein, because they are much too small to be of interest to us. However, I will point out that, because of their size and characteristics, both these countries actually have a larger GDP per capita than the regular-sized countries in this list.)
Let's take a few minutes to analyze the data in this table. The first thing I want you to notice is that, of the 15 countries with the highest GDP per capita in the world, more than half are European: the seven countries I mentioned above, plus Switzerland (which is not part of the European Union).
Next, you will remember that when we looked at the GDP per capita for the most populous economic regions in the world (Figure 6 above), the United States had the highest GDP per capita. However, when we open the competition to all countries in the world regardless of population, the U.S. barely makes it into the top 10.
The most astonishing statistic in the table, however, is the GDP per capita for Luxembourg, a small, land-locked country in north-west Europe. This is a country with a population of only 500,000 people and a land mass of barely 2,500 square kilometers.
How small is this? To put this in perspective for U.S. readers, Luxembourg has less people than Wyoming in an area significantly smaller than Rhode Island. In other words, if Luxembourg were part of the United States, it would be the smallest state, both in population and in land mass (size). And yet, this tiny country has, by far, the highest GDP per capita in the world, in fact, more than 2.27 times that of the U.S., and more than 2.7 times that of Germany, the economic powerhouse of Europe.
How do we make sense out of this? Is it possible that the half million people who live in Luxembourg are economic mutants who have found a secret for making money that has eluded the rest of the world?
© All contents Copyright 2019, Harley Hahn