How to calculate gdp per capita growth rate
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The GDP per capita growth rate is a key indicator to measure the economic performance of a country. It indicates the living standard of the population and serves as a useful metric for comparing the prosperity level of different countries. In this article, we will explore how to calculate the GDP per capita growth rate by breaking it down into simple steps.
What is GDP Per Capita?
Gross Domestic Product (GDP) refers to the total value of goods and services produced in a country over a specific time period, usually annually. GDP per capita, on the other hand, is obtained by dividing the GDP by the total population of the country. It represents the average economic output per person and is used as an indicator of individual income levels and economic well-being.
Step-by-step Guide to Calculating GDP Per Capita Growth Rate:
1. Gather Data:
To calculate the GDP per capita growth rate, you will need access to data on both GDP and population for two different years (usually consecutive years). This data can typically be sourced from official government websites or international organizations like World Bank or IMF.
2. Calculate GDP Per Capita:
For each year, divide the GDP value by its corresponding population. The result is the GDP per capita for that year.
– For example:
Year 1: GDP = $1,000,000; Population = 5,000
Year 1: GDP per capita = $1,000,000 / 5,000 = $200
Year 2: GDP = $1,200,000; Population = 5,200
Year 2: GDP per capita = $1,200,000 / 5,200 = $230.77
3. Calculate Growth Rate:
Subtract the initial year’s GDP per capita from the final year’s figure. Divide this difference by the initial year’s GDP per capita and multiply the result by 100 to get the growth rate as a percentage.
– For example:
Growth Rate = [(Year 2 GDP per capita – Year 1 GDP per capita) / Year 1 GDP per capita] * 100
Growth Rate = [($230.77 – $200) / $200] * 100 = 15.38%
In this example, the GDP per capita growth rate between Year 1 and Year 2 is 15.38%.
Conclusion:
Calculating the GDP per capita growth rate enables us to analyze the performance of a country’s economy over time. By understanding how to properly calculate this metric, you gain valuable insights into a nation’s economic development and can make better-informed decisions regarding investments, policy-making, and other aspects related to development and progress.