What Is GNP Per Capita?

Per capita GNP is the total value of the final socially produced goods and services produced by a country in a certain period of time (usually one year). The factors that determine and affect per capita GNP are the amount of GDP growth of a country and the rate of population growth of a country. It is directly proportional to the gross national product and inversely proportional to the population. Increasing the per capita gross domestic product must develop the economy and control population growth simultaneously.

GDP per capita

GDP per capita relationship

1. Proportional relationship between per capita GDP and changes in economic structure and degree of industrialization

leading industry

According to Kuznets's research, there is a certain proportional relationship between per capita GNP and structural change rate. The per capita GDP is the first period with the highest rate of change in the structure of output value when it is 50-130 US dollars, and the per capita GDP is the second period with the highest rate of change in the structure of output value when it is 220-360 US dollars In the 360-860 US dollar period is a period of high rate of change in output value structure. Since China's reform, according to the World Bank chart method, the per capita GDP level is about 300 US dollars. Therefore, we know that China's industrial structure in this period is at a stage of high rate of change.

The transformation of industrial structure can be divided into three stages according to the theory of Channari et al .: (1) the stage of production of primary products, (2) the stage of industrialization, and (3) the stage of developed economies. The industrialization stage is the period when the structural transformation is the largest. During this period, the demand structure, production structure, and foreign trade structure changed significantly. At the beginning of the reform, China's industrialization level was quite high, but the per capita income level was quite low. This is due to the extreme imbalance in the one-sided evolution of the industrialization process and the industrial structure caused by China's policy tendency to prioritize the development of industries, especially heavy industries, before the reform. Generally speaking, the beginning of industrialization is premised on a certain level of income and consumption. The situation that the degree of industrialization exceeds the per capita income level will inevitably affect further changes in the industrial structure.

At present, China's economic structure still has unreasonable conditions, which severely restricts the sustained, rapid, and healthy development of the national economy. However, this unreasonable situation was not caused by the tilt policy of the heavy industry in the past, but because the upgrading of the current consumer demand structure caused the current economic structure to no longer adapt to today's economic development. At present, from the overall perspective of China's consumption sector, a new consumption upgrade, "residential consumption upgrade", is brewing (before, there have been several upgrades in the consumption structure). In the meantime, the consumption input was large and the savings time was long. This makes the phenomenon of insufficient consumer demand exist in a certain period.

Reasons for GDP per capita

2. Reasons for structural changes caused by income and consumption levels

The increase in income will inevitably lead to an increase in consumption levels, and the increase in consumption levels will cause changes in the economic structure. This change can be clearly demonstrated by Engel's law. Engel's law can be expressed as a trend in which the share of residents' food consumption in the gross national product declines with the growth of the per capita gross domestic product. It can also be expressed as a trend in which the share of residents 'food consumption in total residents' consumption decreases with the growth of per capita GDP and total per capita consumption. The Engel coefficient and consumption structure of urban and rural residents in China from 1987 to 1997 As an example, from 1987 to 1997, the Engel coefficient of urban residents dropped from 0.53 to 0.46, while the Engel coefficient of rural residents did not change much, only from 0.56 to 0.55, and the consumption structure of urban residents changed greatly. The consumption structure of rural residents has not changed much. It can be seen that the rise in consumption level will inevitably lead to the upgrading of the demand structure, but how does the demand structure cause changes in the entire economy? According to the principles of economics, changes in the demand structure will cause resources to shift to industrial sectors with high consumer demand, thereby realizing changes in the economic structure.

3. The change in structure will in turn lead to an increase in income and consumption.

Economic growth is mainly due to the increase in input of production factors and the change brought about by economic structural changes. A reasonable structure can increase the productivity of the total social factors and achieve higher economic growth rates, which will inevitably bring consumption Increase in level.