World economy ranking?
Okay. So I checked the world economy ranking for 2010, and I was quite shocked at what I saw. I'm not disparaging or downgrading any country; I'm just stating my opinion based on my knowledge and I know I'm not a sage (hence I ask in Yahoo answers!) What factors determine each country's economy? What is exactly GDP, and how does it really affect the country? Does having high GDP determine the power of the country? I looked at the world economy ranking and saw that Mexico is in 14th place with the GDP of over 1 trillion dollars, India with a little over 1.5 trillion dollars, and Brazil with over 2 trillion dollars. How do those countries make that much money? What do they do? Do they sell natural resources? Also, many developed European nations like Scandinavian countries (Sweden, Norway, Denmark) are in lower ranks then India and Mexico. Can someone please tell me how this phenomenon works? Once again, I'm not debasing any country but I know people usually define Mexico and India as "still developing nations" and yet they have high GDP among industrialized nations? I don't understand about China either. I know the population plays a role but exactly how does population affect the nation's economy and power ranking? As far as I know, the Chinese standards of living are below Japanese or Korean's, comparing other East Asian states. So if someone who has sufficient knowledge, would someone please inform me about all these phenomena? Thank you :)
Economics - 2 Answers
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1 :
gdp is the monetary value of all the finished goods and services produced within a country's borders in a specific time period, basically a measure of the strength and size of a country's economy. one of the most important things to keep in mind when looking at gdp is that population affects it tremendously. population affects the gdp because gdp measures spending and production of goods and services in a nation so if there are more peopple they will most likely produce more goods and services. the population of brazil is 193,733,800, indias is 1,155,347,700, and mexicos is 107,431,230. the population of sweden is 9,302,123, norway is 4,827,038, and denmark is 5,529,270. so of course over a billion indians are going to have more economic power than 10 million swedes. the average swede, however, has a much better quality of life and more money than the average indian. also in places like china or india there is huge income disparity and only a small percentage of population is extremely rich, while everyone else remains extremely poor.
2 :
You are making a mistake to view a country and its GDP as if it were a corporation selling things to others and collecting revenue. That's not at all how GDP works. GDP is not a measure of how much stuff a country sells to others. Countries do not "make money" -- they are not for-profit businesses -- so that part of your question is a fallacy. GDP is not profit or sales revenue. A country's GDP is, roughly speaking, the total amount of economic transactions generated within that country during the year. (That's not the proper definition but that's close enough to set you right). This includes, most of all, people within the country selling goods and services to other people WITHIN THE COUNTRY. Mexico is a relatively poor country, but every time some guy in Mexico City gets a haircut or buys lunch or goes to his dentist, those sales transactions add to Mexico's annual GDP. Mexico does in fact sell oil as an export, and that contributes to GDP. But mostly what Mexico (or any other country) "sells" is domestic goods and services among its own businesses and people within its own borders. So a poor country with a large population (China, India, Indonesia) will have a bigger total GDP than some rich country with a very small population, like Norway or Sweden, simply because there are far more people producing and selling things to each other in China or India, and it all adds up. Think of each citizen of the country as contributing to its GDP (in reality only the employed people contribute to GDP, but nearly all countries will have around 50 - 65% of population employed, so it about evens out in comparisons). In fact Economists often like to refer to this GDP-per-capita average. Rich countries are rich precisely because their citizens create more value of product each year than does a poor country's people. They have high GDP-per-Capita. Hence GDP-per-capita is higher in Sweden or Japan than for China. HOWEVER, China has a far larger population, so the total GDP is much higher in China. Beyond that you are asking way too many questions in one post to get good answers to all. You can break it up and ask them one at a time you know.
