Introduction to GDP Per Capita
Gross Domestic Product per capita or GDP per capita is a measure that calculates the country’s economic output that accounts for the number of people in the country or the country’s population.
GDP per capita is calculated by dividing the country’s GDP by the country’s total population. GDP per capita is used by economists along with real and nominal GDP to analyse the economic strength and growth of the country.
What is GDP Per Capita and how does it work?
GDP per capita is a measure that helps to determine the economic strength and growth of the nation, which ultimately indicates the prosperity of the nation. GDP per capita is calculated considering the financial worth of the nation’s produce. This means that the GDP per capita is nothing but a measure of the nation’s economic activity.
After taking into account this economic activity, the calculated wealth is divided by the population of the country. By doing so the GDP per capita measures the country’s economic output per person in that country.
Very often, the small nations that are rich and well developed turn out to have a higher GDP per capita, which indicates that these nations are prosperous and economically strong and growing. This also indicates that the nation is a good place to live for its people as their needs are being satisfied as the total wealth is divided among a smaller population. This is why the country’s having smaller populations often seem to have a higher GDP per capita as compared to the highly populated countries.
Importance of GDP Per Capita
The Gross Domestic Product per capita or GDP per capita can be used by the government to understand the distribution of wealth among the people of the country. This also helps the government to understand the economic activity and growth of the nation which proves to be beneficial in managing the economic and financial affairs in future.
Economists on the other hand also study the GDP per capita of different nations to judge the nations’ prosperity and economic growth.
