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What Is GNP per Capita?

Micah MacBride
Micah MacBride

The gross national product (GNP) per capita is an economic measurement that assesses a country's global 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 it counts as citizens. GNP per capita can provide a number to use as a starting point when assessing the overall economic strength of a country.

A nation's GNP is a summation of the value of the various economic transactions that its citizens, and businesses owned by those citizens, conduct around the world. The components added together to produce a GNP are the currency value expenditures by its government, the currency value of investments made by its citizens and businesses, the money its own citizens spend in its economy, and the money foreign citizens and businesses spend on products and services from the country in question. After these numbers are added together, the amount of money that citizens and businesses native to that nation spend on goods and services from another country are subtracted from that total. The result is a nation's GNP.

Businessman with a briefcase
Businessman with a briefcase

All alone, a GNP does not give a full picture of a nation's economic strength. Two countries that have the same GNP can appear to have equally healthy economies. When their individual populations are taken into account, however, an analyst may see that the one with the smaller population has a healthier economy. In other words, dividing a GNP by the number of citizens a country has — or producing GNP per capita — may show which country has a citizenry that is, on average, more economically productive.

While GNP per capita will give a fuller picture of the economic health of a given country than a simple GNP, it is still incomplete. Although it produces an average of each citizen's economic productivity, other economic metrics — such as median income, unemployment, or wealth distributions — must be also examined. These details may be obscured within GNP per capita figures.

For example, two countries with identical gross national products and populations will generally look identical to an analyst looking solely at GNP numbers. This situation can come about when one country is home to a few economically-active, very wealthy people but has large numbers of impoverished citizens, and the other nation has a much more even distribution of economic activity and wealth across its entire population.

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