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Home » Investment Banking Tutorials » Economics Tutorials » GDP Per Capita Formula

GDP Per Capita Formula

Formula to Calculate GDP Per Capita of the Country

GDP Per Capita Formula can be defined as the measurement of the output of the country which considers its number of people as well. The formula for calculating GDP Per Capita is represented as follows

GDP Per Capita = GDP of the Country / Population of that Country

GDP Per Capita Formula

  • GDP per capita can be said to be a measure of a nation’s economic output which shall account for its population that is the count of the person.
  • The formula divides the nation’s gross domestic product that is the GDP by its number of people, in short, the total population of the nation. This would make a better measurement of a nation’s standard of living.
  • Further, if one is looking at just one point in time then Nominal GDP can be used and if one is comparing across timeline then Real GDP would make better sense.

Examples

You can download this GDP Per Capita Formula Excel Template here – GDP Per Capita Formula Excel Template

Example #1

Country X is a growing small economy. Last year the country has reported its GDP around $400 million and the population of the country as per the last census report available is 200,000. You are required to calculate GDP per capita or the country X.

Solution

Use below given data for calculation of GDP Per Capita.

  • GDP of Country X: 400000000
  • Population of Country X: 200000

 Calculation of GDP Per Capita can be done as follows:

GDP Per Capita Formula Example 1.1png

= $400,000,000 / 200,000

GDP Per Capita will be –

GDP Per Capita Formula Example 1.2png

  • GDP Per Capita = $2000

Therefore, the GDP per capita of country X is $2000.

Example #2

Country MCX is trying to figure out the GDP of the country and also then wants to know what the GDP is and per capita of the country. The statistic department of the government has provided them with the below data:

Use below given data for calculation of GDP Per Capita.

Particulars 2017 2018
Private Consumption 1330000000.00 1945790000.00
Gross Investment 465500000.00 742938000.00
Government Investment 6650000000.00 9021390000.00
Imports 997500000.00 1180740750.00
Exports 3325000000.00 4554917500.00

The elections of the nation are due next year, and the president is concerned if they made growth in GDP per capita? As per the last census conducted, the population of the country is 3,237,450,050. It was estimated that the population since the last census would have grown at 3% and 5% for the year 2017 and 2018 respectively.

Based on available information, you are required to estimate the GDP Per Capita.

Solution

The GDP figure is not mentioned directly here and therefore we shall calculate the GDP of the country first by using the expenditure method in which all the investment is added and only imports are deducted.

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GDP of the country for the Year 2017 is as follows

GDP Per Capita Formula Example 2.1png

  • = (130000000+465500000+6650000000)+3325000000-997500000
  • GDP of the Country =10773000000

GDP of the country for the Year 2018 is as follows

GDP Per Capita Formula Example 2.2png

  • = (1945790000+742938000+9021390000)+4554917500-1180740750
  • GDP of the Country = 15084294750

Further, there has been also growth in the population of the country.

The population has grown by 3% and 5% for the year 2017 and 2018 based upon the last census count.

Population of the Country for the Year 2017 is as follows –

GDP Per Capita Formula Example 2.3png

  • =3237450050*3%
  • Population of the Country for the Year 2017 = 97123501.50

Population of the Country for the Year 2018 is as follows –

Example 2.4png

  • =3237450050*5%
  • Population of the Country for the Year 2018 = 161872502

Therefore, calculation of GDP Per Capita for the Year 2017 is as follows

 Example 2.5png

=10773000000/97123501.50

GDP Per Capita will be –

Example 2.6png

  • GDP Per Capita = 110.92

Therefore, calculation of GDP Per Capita for the Year 2018 is as follows

GDP Per Capita Formula Example 2.7png

=15084294750/161872502.50

GDP Per Capita will be –

 Example 2.8png

  • GDP Per Capita = 93.19

Therefore, the GDP per capita of country MCX has diminished from the year 2017.

Example #3

As per the data available on the worldpopulationview.com, the GDP and the population of the various countries are available per below:

Use below given data for calculation of GDP Per Capita.

Particulars USA China Japan India United Kingdom
GDP 21410230000000 15543710000000 5362220000000 3155230000000 3022580000000
Population 329064917 1433783686 126860301 1366417754 67530172

You are required to calculate the GDP Per Capita and comment upon the same.

Solution

Therefore, the calculation of GDP Per Capita is as follows

 Example 3.1png

= 21410230000000/329064917

GDP Per Capita will be –

GDP Per Capita Formula Example 3.2png

  • GDP Per Capita = 65063.85

Similarly, we can calculate GDP Per Capita for other countries as shown below

Example 3.4png

It can be observed that the population of India and China is more and hence their GDP per capita is depicting a low figure. Further, the GDP of India is more than the United Kingdom but again due to its oversize population, it’s showing that India is way behind than UK which doesn’t appear when the only GDP is compared. The USA is doing well in absolute GDP and per capita as well. Japan is having the advantage of a lower population and hence it is per capita is good.

Relevance and Use of GDP Per Capita Formula

Per capita GDP can serve as an informal measure of a country’s prosperity; while making a comparison if there are nations with disproportionately large economies and relatively small populations then the ranking will be dominated by those richest and affluent nations. Henceforth,  more developed industrial countries, rich countries, and smaller ones shall tend to have the GDP per capita the highest. As the developing countries grow economically, their GDP per capita shall tend to come in line with the most developed countries.

Recommended Articles

This has been a guide to GDP Per Capita Formula. Here we discuss the calculation of GDP per capita with practical examples and downloadable excel template. You can learn more about economics from the following articles –

  • Calculate GDP Deflator
  • Real GDP Per Capita
  • Compare – GDP vs GNP
  • Calculate Real GDP
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