Economic development around the world

The level of economic development is measured by the Gross Domestic Product (GDP) per capita, i.e. the total amount of goods and services produced in the economy, divided by its population. Below we see that the average GDP per capita in the world increased from about 8,900 dollars in 1990 to about 14,700 dollars in 2015. That is a significant increase over 25 years when you have in mind that GDP per person did not increase almost at all for several centuries before the industrial revolution.

On the graph is presented GDP per capita in purchasing power parity (PPP) terms. That means that we calculate the income of various countries using U.S. prices. For example, it shows the income of an Irish person if he/she was paying U.S. prices. Converting everything into PPP terms makes incomes comparable across countries.

Moreover, we use only the U.S. prices from year 2011. As result, the numbers capture the changes in the amounts of goods and services produced, and not the changes in prices. That makes incomes comparable over time.

GDP per capita around the world varies a lot. In 2015, the GDP per capita in the U.S. was over 52,000 dollars while in China it was less than 14,000 dollars. Some countries are developing faster than others. For example, Singapore and Ireland caught up with the U.S. during the last 25 years whereas the GDP per capita in Zimbabwe has been declining.

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