When measuring the largest / best economies, there are different ways of ranking countries.
- Nominal GDP in $US. This is the simplest measure and shows the actual final market value of GDP produced in the economy. It is useful for comparing levels of international trade. It uses the official exchange rate.
- GDP in Purchasing Power Parity (PPP). This takes into account the different costs of living in countries. For example, a country like India will have a higher PPP GDP because although GDP is low, official exchange rates don’t reflect the lower living costs. You can see a comparison here GDP at PPP v GDP in nominal terms
- Real GDP per capita. This gives an impression of average incomes in a country. Clearly, the countries with the most people will have high GDP (e.g. India, China). But, GDP per capita will be relatively lower. It can involve Nominal GDP per capita or GDP per capita PPP.
- Human Development Index (HDI). The Human Development Index is different to GDP; it tries to take into account living standards by looking at levels of life expectancy, literacy, education, standards of living, and quality of life for countries worldwide.
Top 10 Economies by Nominal GDP
Top 10 Economies by PPP
|(01) United States||15,076|
|(08) United Kingdom||2,288|
Top 10 Economies by GDP Per Capita
Top 10 Economies by Human Development Index
Source: HDI HDRC pdf
Top 10 Economies by Current Performance
An entirely subjective way to measure economies would be to look at how they are currently performing and their likely prospects for the future. In this regard, the under-performing Eurozone economies would be ranked much lower – despite their relative high GDP per capita. Also, it could give much greater importance to unemployment and social instability. The mass unemployment and social unrest in Greece and Spain is arguably more important than GDP per capita or nominal GDP. Using this criteria, a top 10 list could include
- United States
- Mongolia Fastest growing economy in 2013
Economist latest data on Growth
Top 10 Economies in 2020
The largest economies are currently dominated by western economies. However, over the next decade this is likely to change. Developing economies, such as China, India and Russia are forecast to overtake some of the western economies. This is because they are predicted to have a faster rate of economic growth. At their stage in their economic development, there is usually greater potential for a faster rate of economic growth as they catch up with more developed economies. This process of catch up could occur quicker than expected.