Rent per capita

economic-dictionary

Per capita GDP, per capita income or per capita income is a magnitude resulting from the relationship between the income level of a country and its population. To do this, the gross domestic product (GDP) of said territory is divided by the number of inhabitants. With the intention of obtaining data that somehow shows the level of wealth or well-being of that territory at a given time.

The use of per capita income as an indicator of wealth or economic stability of a territory makes sense because through its calculation the national income (through GDP in a specific period) and the inhabitants of this place are interrelated.

It is often used as a measure of comparison between different countries, with the aim of showing differences in economic conditions.

Formula of income per capita or GDP per capita

It is important to note that the GDP that is usually used when calculating per capita income is expressed in nominal terms. In other words, current prices of the goods and services produced in said period are used and not constant, such as those of real GDP.

However, it is often a controversial ratio because it does not provide sufficient information by ignoring important aspects such as inequality in the distribution of wealth in countries, the factor of education or the level of development of these places. Although there is normally a direct relationship between the income level of a place and the level of aspects such as health, education and development, not always the per capita income is capable of showing in an absolute and truthful way the true standard of living of a citizen in a given country.

In this sense, it is often said that this magnitude does not express well the reality in situations of inequality or social discontent, especially in situations in which the economy of a country grows but this macroeconomic improvement is not always reflected in the quality of life of the individual. citizen or their purchasing power.

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