Talking Of World Economies, Economy of a state or a country is defined by the production and consumption of goods and services or services or simply money making and using amplitude of a nation.
World economy is abroad term which comprises of the economic system of all nations within one platter. The world economy is described in terms of global GDP i.e. global gross domestic product.
Top 10 countries with highest GDP are:
RANKING | COUNTRY | GDP |
1. | UNITED STATES | 21.41 trillion |
2. | CHINA | 15.54 trillion |
3. | JAPAN | 5.36 trillion |
4. | GERMANY | 4.42 trillion |
5. | INDIA | 3.16 trillion |
World economies and their GDP
This is the sum of Gross national income(GNI) of every country on the globe.
GNI = CONSUMPTION+ INVESTMENT+ GOVERNMENT SPENDING + NET EXPORT + NET FOREIGN FACTOR INCOME
GNI differs from that of GDP because it shows the effect of domestic and global trade.
GDP is a broad term, in order to compare GDP across the globe, country’s currency is converted as to make it consistent, to ease the comparison process.
The two ways of common currency comparison are:
1) NOMINAL GDP
2) PPP GDP
Nominal GDP
It is useful for GDP comparison of a region on a wide scale or on a international scale. It focuses mainly on the economic growth and performance globally.
Nominal GDP of region can be determined by the updated market price and changes according to inflation.
By including region’s inflation rate while calculating GDP the nominal GDPcan pin point whenever there is a price rise in an economy.
As per estimation made by World Bank nominal world GDP was $ 84,835.46 billion in 2018 and 2019 estimates for $ 88,081.13 billion. The growth rate measured for world GDP is 3.6%.
PPP GDP
Stands for Purchasing Power Parity. It measures for two aspect of GDP.
- Economic growth
- Country’s living standards
This uses country’s exchange rates to convert one country’s currency to other.
Factors that supports a nation to become world’s greatest economy:
- Investment in education
- Production output
- Natural resources
- Entrepreneurship
Let us ponder on to the 3 biggest economy and to why these fall into this list, according to Nominal GDP calculation.
United States of America
This is the world’s largest economy with a nominal GDP of $21,482.41 billion. The reason as to why this touches the zenith of global economy is due to multiple reasons listed below:
1) Support to entrepreneurship
2) Gradual population growth and a stable growing population
3) High average income
4) Low unemployment rate
5) High consumer spending
Is has an estimated natural resource of worth $ 45 trillion which sounds for being the second largest in terms of natural resources.
China
This is the world’s 2nd largest economy according to nominal GDP and largest according to PPP GDP , it has shown an average growth rate of 9.52% from 1989 to 2019.
Reason for it being the 2nd largest economy points below;
1) Worker efficiency being extremely high.
2) Economic reform program for business in rural and private sector.
3) Ease to state regulation on prices.
4) Investment on education.
5) Industrial output being high. It has an approximate of $ 23 trillion worth of natural resource.
Japan
This is the world’s 3rd largest economy according to nominal GDP calculations. The estimated GDP growth encountered in 2019 is about 0.9%.
Factors contributing to it being 3rd largest economy are:
1) Flourishing electronic goods industry (Largest in the world)
2) Automobile industry
3) Its urn shape population growth
4) A large contribution of work dedicated human capital.
To conclude I would say the nations working to make their economy the world’s best, need an extreme support from human capital of their nation. This is a strong call which is not only nation oriented but has an impressive impact globally. The nations competitive nature to increase their economic growth rate will not only help their nation but will also help nations under them to grow and flourish worldwide. Seeing it from the moral point of view this nature to grow and helping the neighbouring countries to grow along will bring economic prosperity and feeling of brotherhood amongst the nations and this will surely help in reducing the negativity prevailing and the terror prevailing worldwide.
