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GNP per capita measures a country’s economic output per citizen. It is calculated by dividing a country’s GNP by its population. However, other economic metrics such as median income, unemployment, and wealth distribution must also be examined. Two countries with the same GNP and population may have vastly different economic situations.
Gross National Product (GNP) per capita is an economic measure that evaluates a country’s overall output in terms of the number of citizens it has. Economists obtain this measurement by taking a nation’s GNP and dividing it by the total number of individuals that count as citizens. GNP per capita can provide a number to use as a starting point for assessing a country’s overall economic strength.
A nation’s GNP is a summary of the value of the various economic transactions that its citizens and businesses owned by those citizens conduct around the world. The components that add up to produce GNP are the currency expenditures of its government, the currency value of investments made by its citizens and businesses, the money its citizens themselves spend in its economy, and the money its citizens and businesses foreigners spend on products and services from the country in question. After these numbers are added up, the amount of money that native citizens and businesses of that nation spend on goods and services from another country is subtracted from that total. The result is a nation’s GNP.
All alone, a GNP does not provide a complete picture of a nation’s economic strength. Two countries that have the same GNP may appear to be equally healthy economies. When their individual populations are taken into account, however, an analyst can see that the one with the smallest population has the healthiest economy. In other words, dividing a GNP by the number of citizens of a country – or GNP output per capita – can show which country has, on average, a more economically productive citizenry.
While per capita GNP will give a more complete picture of a given country’s economic health than a simple GNP, it is still incomplete. While it produces an average of each citizen’s economic productivity, other economic metrics – such as median income, unemployment or wealth distribution – must also be examined. These details can be obscured within the per capita figures of GNP.
For example, two countries with identical gross national products and populations will generally appear identical to an analyst looking solely at the GNP numbers. This situation can arise when one country is home to a few economically active and very wealthy people, but has a large number of poor citizens, and the other nation has a much more even distribution of economic activity and wealth across its entire population.
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