World's richest country: Which is the richest country in the world? This question may sound quite simple at first glance, but the answer is in fact highly complex because "wealth" of a nation is measured using different methods including per capita income, inflation, total GDP, and comparing working hours and work-life balance.
How national wealth is measured?
There are basically three methods to measure the Gross Domestic Product (GDP) of a country, according to recent report.
- The first method involves calculating GDP per capita at market exchange rates, which divides the total income of a country by its population, with the US dollar being the measuring stick. Small, high-income countries score higher on this scale due to smaller populations and higher incomes.
- In the second method, price-adjusted GDP or Purchasing Power Parity (PPP) is taken as the yardstick to measure how wealthy a country is. This involves measuring the real value of USD in a country by determining the amount of goods and services dollar can buy. Some Asian and European nations score higher on this country.
- The third method is rather interesting as it measures GDP adjusted for prices and hours worked. This essentially measures how much people earn for the number of hours they work. Countries where people work fewer hours for better pay, enjoying a higher standard of living and a good work-life balance, score higher on this metric with Norway emerging as the "richest" nation according to this method.
Which is the world's richest country?
Taking into account these three methods of measuring GDP, the results show drastic variations with countries like Switzerland, Singapore, and the United States appearing as winners on the basis of the first method due to their stronger currencies which translates to higher global income.
However, the PPP method, which includes price differences, presents a different picture, with smaller countries like Singapore, Norway, and Qatar surging ahead due to the higher real purchasing power of their incomes.
The thirds method shows how countries like Norway, Denmark, and Belgium achieve higher productivity and a better standard of living even with shorter working hours.
Why there is no clear 'winner' on the richest list?
The list, which involves three different methods to measure the GDP of a country, showcases why GDP is not merely a function of earnings, but a combination of purchasing power, productivity, and work-life balance.
Thus ranking the world's "richest country" purely depends upon perspective as different methods yield varying results, proving that in the modern age, wealth is more than about having more money, but also contingent upon others factors like better systems, shorter working hours, and a comfortable work-life balance.
Where are India and Pakistan ranked?
According to the list, both India and Pakistan rank at the bottom when measured with the second and third method. However, India ranks higher on the first metric due its large economy, courtesy of the country's gigantic 1.4 billion population.