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Monday, November 22, 2010

The 10 Richest Countries in the World

By DOUGLAS MCINTYRE <link to original post>The economic strength of nations is typically measured by Gross Domestic Product (GDP). By this measure, the U.S. is still No. 1 and when China passed Japan in August to become the second wealthiest country, it was big news.

However, GDP doesn't tell you how much income -- the money that actually ends up in people's pockets -- is produced in a given country. To understand which nation has the most income, 24/7 Wall St. used Gross National Income (GNI) as a measure. We ranked the ten countries with the highest GNI per capita using the most recent data available from the World Bank. To factor in a nation's quality of life, we collected information on literacy, unemployment, and percentage of GDP spent on education. Sources include the World Bank, the United Nations Educational, Scientific, and Cultural Organization, (UNESCO), and the CIA World Factbook.

Our methodology makes for a surprising list. Very few are superpowers. These are countries where there is either a small group of extremely wealthy people (Kuwait and Brunei, for example), or where the government heavily influences the distribution of income (such as Norway and the Netherlands).
Gross National Income Per Capita: $58,810
Literacy Rate: 99%
Unemployment Rate: 4.8%
Percent of GDP Spent on Education: 3.7%
This tiny, landlocked nation about the size of Rhode Island is bordered by France, Germany, and Belgium. Luxembourg's location near major powers on the continent, along with its educational system, which requires fluency in French and German, has made it one of Europe's premier investment centers. The Duke of Luxembourg plans to provide the country with ultra-high bandwidth cable service within the next three years, which will foster development of a sophisticated digital economy.

GNI: $55,190
Literacy Rate: 100%
Unemployment Rate: 1.7%
Percent of GDP Spent on Education: 6.7%
Norway has profited handsomely since it began receiving significant sums of money from petroleum exports in the 1970s. Thanks to the government's income from oil and natural gas and an abundance of jobs in the technology and telecommunications sector, Norway has been able to meaningfully fund social programs and education without burdensome taxes on business. The government's heavy spending on social programs has resulted in a highly literate, well-educated and affluent population.

GNI: $53,390
Literacy Rate: 94%
Unemployment Rate: 1.3%
Percent of GDP Spent on Education: 3.8%
This Arab nation, which is smaller than New Jersey, contains roughly 9% of the world's oil reserves. Crude makes up 90% of its exports. Unlike many of its oil-rich neighbors, it has recently remained politically stable, thanks in part to its largely homogeneous and relatively small population. It was the first Middle Eastern country to have a democratically elected parliament. Relative to other countries in the Gulf region, Kuwaiti citizens are highly educated and literate. More than 98% of the population is employed, either in oil production or through Kuwait's export businesses, which focus on raw goods such as cement and brick. The government also supports public works projects in order to to keep unemployment low.

GNI: $52,410
Literacy Rate: 93%
Unemployment Rate: 3%
Percent of GDP Spent on Education: 2.2%
This Special Administrative Region within the People's Republic of China is almost entirely composed of a single harbor on the Southeast shore. The region operates as a highly productive seaport and is a heavy exporter of textiles and other manufactured goods. By far, however, the main reason for Macau's wealthy citizenry and low unemployment is China's 2006 decision to relax travel restrictions to the port. Macau capitalized on this by reinvesting in its successful gambling sector, transforming it into one of the most prosperous places in the world. By the end of 2006, the country's gambling revenue surpassed that of Las Vegas. Most of Macau's citizens are either employed by casinos, hotels, or are hired to construct new resorts to meet the ever-growing influx of international tourists.

Oil, Economic Development and Diversification in Brunei , Cleary, Wong.
GNI: $50,920
Literacy Rate: 95%
Unemployment Rate: 3.7%
Percent of GDP Spent on Education: 3.7%
At one time, Brunei's Sultan was the wealthiest man in the world. Like Norway and Kuwait, the chief sources of the government's revenue is crude oil and liquefied petroleum exports. However, there are concerns that the depletion of oil reserves will eventually damage the country's high standard of living. Brunei's government is attempting to diversify the economy by expanding into the eco-tourism and agricultural export businesses. For now, however, Brunei citizens maintain healthy incomes because of the oil, liquid petroleum and service industries, with over 60% employed in these fields. A 30% income tax ensures that most needs are met, and this allows the Government to provide free education at least through high school and, often through university.

GNI: $50,780
Literacy Rate: 95%
Unemployment Rate: 3.95%
Percent of GDP Spent on Education: 2.2%
Like several other nations on this list, Singapore's government tightly controls the country's economy. This has worked out well for its citizens, thanks to the nation's leadership in the electronics and pharmaceutical industries. Singapore's government spends heavily on public welfare and services. In many ways, Singapore's budget agenda mirrors Luxembourg's. It devotes particular attention to education, as it promotes itself as a friendly and accessible port of international trade.

United States
GNI: $46,760
Literacy Rate: 99%
Unemployment Rate: 9.6%
Percent of GDP Spent on Education: 5.6%
Some may be surprised that the U.S. isn't higher on our list of wealthiest countries, but considering its size and diversity, it is surprising it makes it on at all. The United States has an unemployment rate of 9.6%, double that of the Luxembourg, the next highest. Most other countries on the list have governments which tightly control their economies or spend heavily on social welfare programs. The United States is a capitalist economy that spends fairly little on social programs as a percent of GDP. Though the US spends a significant amount of its budget on education relative to other countries on this list, that is largely due to inefficiencies arising from the decentralized nature of its public school system. There is growing disparity in wealth in the U.S., but the relatively large salaries of country's middle and upper-middle class and wealthy drives up the country's GNI, allowing it to make the cut.

Hong Kong
GNI: $44,090
Literacy Rate: 94.6%
Unemployment Rate: 3.6%
Percent of GDP Spent on Education: 3.3%
Hong Kong, the other special Chinese Special Administrative Region, along with Macau, is unique because it is one of the few places in the world that relies heavily on re-exporting goods. China uses the port city as an intermediary for much of its trade with the world. Hong Kong's citizens have benefited from the economy's transition from an industrial exporter to a center of international banking. The Hong Kong government is pro free trade, but also spends heavily on general welfare and education for its population.

GNI: :$43,440
Literacy Rate: 99%
Unemployment Rate: 4%
Percent of GDP Spent on Education: 5.3%
The Swiss people benefit from the country's business-friendly policies. This has allowed the country to become a major center for international banking and investment. Extremely lenient tax policies have made Switzerland a haven for large numbers of wealthy businessmen and retirees. A prosperous service sector has grown to meet the demands of these groups. The Swiss government spends a considerable 5% of GDP on education. The country also has sizable exports of machinery and chemicals.

GNI: $40,940
Literacy Rate: 99%
Unemployment Rate: 3%
Percent of GDP Spent on Education: 5.5%
The government of the Netherlands plays a very active role in maintaining a high standard of living for its citizens. Unemployment is low because thousands of people have simply dropped out of the labor force and are living on government benefits. The Netherlands is a model of liberal social policy and laissez-faire economics. Holland has a free market economy, supporting strong petroleum refining and electrical machinery industries. Socially liberal policies have resulted in a booming drug and sex tourism sector.

As this list shows, a country doesn't have to be an economic giant to be among the richest countries in the world. It just has to have either a government that makes sure wealth is distributed broadly across the population or a small population that includes some extremely wealthy people.
With reporting and research from Michael B. Sauter
See full article from DailyFinance:

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