What is GDP per capita?
Gross domestic product (GDP) per capita is one standard that can be used to measure and compare economic productivity. It is based on the total value of goods and services produced in a particular country, divided by the number of people in this country. Several different technical methods can be used to calculate this value. GDP per capita is a useful statistic in the measurement of economic activity, but does not include every form of economic activity and does not in itself represent the complete image of the economic health of the nation. Economists
use several different methods to calculate GDP per capita of the country, but generally begin with the determination of the GDP part of this image. The total value of all produced goods and services can be added together. Alternatively, the total income obtained by all economic agents can be calculated or the total expenditure of all actors can be determined. These sums are given somewhat different characters, but all provide a roughly simivative picture of economic activities in the nation. All these values are formovOna geography rather than ownership and economic activity taking place in a particular geographical area is attributed to the economy of this area, regardless of the nationality of the participating economic agents.
As soon as a certain rate of raw GDP has been established, it is then divided by the population to obtain GDP per capita. Usually, all nation's inhabitants are considered to be residents for the purposes of this calculation regardless of citizenship status. In the case of some small countries like Luxembourg, many people who work in the country actually live outside and contribute by the value of their work on GDP without not counting as the people of the nation to calculate GDP per capita.
GDP per capita is often used to compare the relative wealth of nations, but this purpose is not a perfect tool. This measurement is only captured by the market activity that takes place on the legitimate market. Activity on the black market is common and notmeasured. Nor is the value that is not part of this calculation.
Another serious problem with the use of GDP per capita when comparing countries stems from the fact that certain key goods and services are not part of the market in all countries. For example, health care and education in Europe and the United States are very different and for this difference, the real comparison of the wealth between these two regions must correspond. Other measurements try to map the typical purchasing power of individuals in each company or calculate the actual value rather than the nominal market value, all consumed goods and services.