gdp vs. gdp per capita

Using growth in GDP per head rather than crude GDP growth reveals a strikingly different picture of other countries’ economic health. For example, Australian politicians often boast that their economy has had one of the fastest growth rates among the major developed nations–an average of 3.3% over the past five years. But Australia has also had one of the biggest increases in population; its GDP per head has grown no faster than Japan’s over this period. Likewise, Spain has been one of the euro area’s star performers in terms of GDP growth, but over the past three years output per person has grown more slowly than in Germany, which like Japan, has a shrinking population.

Some emerging economies also look less impressive when growth is compared on a per-person basis. One of the supposedly booming BRIC countries, Brazil, has seen its GDP per head increase by only 2.3% per year since 2003, barely any faster than Japan’s. Russia, by contrast, enjoyed annual average growth in GDP per head of 7.4% because the population is falling faster than in any other large country (by 0.5% a year). Indians love to boast that their economy’s growth rate has almost caught up with China’s, but its population is also expanding much faster. Over the past five years, the 10.2% average increase in China’s income per head dwarfed India’s 6.8% gain.

Here is more.  Of course it is wrong to think that one measure is necessarily better than the other.  And immigration and more births both raise absolute gdp though you may not view the gdp gains in each case as having the same moral status.  One simple adjustment that could be made is to subtract the income an immigrant would have earned, had he or she not moved to a new country.

Comments

You say "...the same moral status.." What are you talking about?

Trivially, no measure is "necessarily" better than any other, because there is no moral hierarchy of measurements. But as an answer to the question "how well off is that group of people?" GDP/head is clearly much closer to the mark. A million starving people are not better off than a thousand starving people. Would you be better off as one of a billion impovershed Africans or one of ten billionaires?

And immigration and more births both raise absolute gdp though you may not view the gdp gains in each case as having the same moral status.

When I read the article, I thought the same thing. As Sebastian Holsclaw notes, every single person in the economy could be better off because of immigration, yet the GDP per person would be lower than it would be without the immigration.

One simple adjustment that could be made is to subtract the income an immigrant would have earned, had he or she not moved to a new country.

But I didn't come up with this simple fix -- a good answer to the question, "How do you account for the fact that the GDP per person for 1% of the population went up 400%?"

Does anyone know how GDP per person is calculated?

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