What are the most effective countries of the world? - August 28, 2019

What are the most effective countries of the world?

There are several great ways to measure a country’s productivity. GDP is the most commonly used figure, but it’s not telling us everything. The effectiveness of a country for example can’t be measured based on only that number. That’s where GDP per person and hours worked comes in. Let’s see, then, which countries’ workers are the most productive?

Gross domestic product, or GDP for short is an important figure when we’re talking about a country’s economic health and prowess. The higher it is, the more value a country produces. It’s a rather important measure, but it’s not telling us the whole story.

We already know for example that the United States and China are the biggest economies these days (not counting the European Union), but are they the most effective, too? Not necessarily.

Effective or populous?

To see the most effective countries, we should turn to other figures that are closely connected to GDP. Why? Because countries with a huge population have an advantage over smaller, but more effective countries. Luckily, IMF (and other organizations) does not only measure pure GDP. They also use it to calculate other important figures. Most notably, they have data on GDP per person. This means how much a country produces per resident. If we’re looking at this, we can see that Luxembourg, Ireland and many others far outperform the USA and China.

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IMF’s map also paints a global image of the most efficient countries:

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The most effective economies

There is another very interesting figure: GDP per hours worked. Sadly, IMF doesn’t have fresh data on this, but OECD does, although it only lists member countries. Anyhow, this number shows how much one worker contributes to the country’s GDP with one hour of work. It’s easy to see how this correlates with efficiency, too. Again, from the chart below we can see how some countries outperform the big economies.

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Biggest economies these days

This, of course, doesn’t meant that GDP is not an important figure on its own. What’s more, it still shows the importance of countries on the global market. According to IMF’s data, the United States, China, Japan, Germany and the United Kingdom are the biggest economies these days (not counting the European Union). To see how the biggest economies changed  and switched places in the last decade, just watch our video we created  not long ago.

But these are not necessarily the most productive and effective countries at the same time.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.