Gross Domestic Product (GDP) per capita is a commonly used indicator to measure the economic prosperity of the people in a country/territory. However, this is not the only method to rank wealth. To delve deeper, rankings are also based on GDP per capita in terms of Purchasing Power Parity (PPP) or even further, taking into account the average actual working hours per capita in each country/territory.
The infographic below ranks the richest countries/territories in the world according to these 3 methods, based on data from The Economist and Data Science PhD Sondre Solstad.
GDP PER CAPITA
This ranking method shows that places with smaller populations tend to be wealthier. In the top 10 rankings according to this method, 8 places have populations below 10 million.
Specifically, Luxembourg, a country with a financial sector contributing 25% to GDP, is the richest country in the world. With a population of only 660,000 people, this European country is considered a “tax haven,” attracting foreign investment thanks to its lenient tax policies. With a developed economy and a small population, Luxembourg provides free education, healthcare, and public transportation for all its citizens.
With a GDP per capita of $82,808 in 2022, Singapore is the richest country in Asia thanks to its role as a global financial, commercial, and tourism center.
GDP PER CAPITA BASED ON PURCHASING POWER PARITY (PPP)
Another ranking method adjusts GDP per capita based on the equivalent prices of goods and services to account for differences in the cost of living and the strength of the domestic currency. This method helps to compare the standard of living in different countries because one USD can buy different amounts of goods and services in each country.
According to this ranking, Singapore has a higher position thanks to its strong domestic currency and high standard of living. Typically, countries/territories with higher rankings have a higher cost of living due to higher labor costs, advanced technology, and other factors. Like Singapore, the United Arab Emirates (UAE) is included in the top 10 according to this ranking method, surpassing Switzerland and the United States.
GDP PER CAPITA BASED ON PPP ADJUSTED FOR WORKING HOURS
According to this method, GDP per capita based on PPP is adjusted for the estimated average working hours per capita in each country. Accordingly, economies with high-quality labor, high productivity, and high standard of living have higher rankings.
According to this method, Norway is the richest country in the world. Norway has a lower average working hours per capita due to many public holidays along with other benefits regarding working hours for employees. Leading this ranking are Western European countries. The United States, the world’s largest economy, did not make it into the top 10 according to this ranking method, similar to the Netherlands, Singapore, Hong Kong, and Brunei.