Soyebi Adedamola

Wealth of Nations In this paper, I will attempt to explain what it means to have a wealthy nation. Using possible indicators of wealth, and try to establish a connection between these factors to see the relationship between them. In recent times, GDP has been used as a determinant to measure the wealth of a Country. However, there has been criticism about the effectiveness of GDP as the golden standard. Bobby Kennedy corroborates this in his statement “GDP measures everything…except that which makes life worthwhile” Table 1. Different Countries GDP in millions (USD) The United States has the highest GDP in the world, with China coming at a distant second with countries like Tuvalu, Nauru at the other end of the list which accounts for about-% and-% respectively of the United States’ GDP. Therefore, can we determine a country’s wealth because of its generated revenue or can we really determine what wealth really is based on Per-Capita income (which is a more accurate depiction of wealth), or life expectancy? Is there a way to determine if the population of a country leads to wealth and is there a best indicator? The aim of this paper, is to explore these possibilities. Population There has always been arguments about what the right population will look like, some believe, me included, that overpopulation is a problem as it makes Charles Darwin’s Survival of the fittest theory come alive, while there are people on the other side of the divide who believe that overpopulation is a myth and as long as the earth remains, it will continue being sustainable. How does population affect nations? Are the poorest nations the most densely populated, is a large population a blessing? Or maybe, there’s a sweet magical spot somewhere in the middle. Table 2 shows the population spread among nations with China being the most populous country and Vatican City being the least populous city. Table 2 Countries per population GDP According to Investopedia, GDP is defined as “the monetary value of all finished goods and services made within a country during a specific period. GDP provides an economic snapshot of a country, used to estimate the size of an economy and growth rate.” Figure 1 GDP across the continents in $(millions) Per-Capita Income Per capita income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. In this case, we will be dealing with the Per-Capita income of countries. Our Per-Capita income will be calculated as the total income of the country divided by its population. Below is a graphical representation of the Per-Capita income per country Figure 2 Per-Capita income per country Due to the number of the countries, Figure 2 isn’t very legible. However, the table 3 below shows the top 5countries and their Per-Capita income. Table 3 Top 5 countries with the most GDP in $(millions) Life Expectancy According to ourworldindata.org, The term “life expectancy” refers to the number of years a person can expect to live. By definition, life expectancy is based on an estimate of the average age that members of a particular population group will be when they die. Table 4: Top 5 countries with the highest life expectancy Figure 3 Life expectancy per country The figure above shows the life expectancy of the countries ranging from Japan (highest) to Sierra Leone (Lowest). Correlation After learning about the terms above, it is important to understand if there is any correlation between these indices which we’ve read about. Population Vs. Per-Capita income There are a lot of arguments in favor of underpopulation as less citizens put the less stress on the resources of a country, however, is that the truth? Below is a graph that indicates the relationship between them. Figure 4 Population vs Per-Capita Income From the graph above, we can deduce the following: • • The Per-Capita income of most countries is less than $20,000. There is no correlation between population and Per-Capita income. Population Vs. GDP Going by commonsense, we should think that as countries get bigger, there should be an increase in the number of people in the labor market, which leads to more productivity and as a result of that, have a positive impact on the GDP of nations. Below is a graph to either corroborate or refute common-sense. Figure 5 Population Vs. GDP From the figure above, we can deduce that, there is absolutely no correlation between population and GDP. This means knowing the amount of people in a country is no determinant of how big their economy is and how prosperous a nation is. Per-Capita Income Vs. Life Expectancy As per our earlier definition, Per-Capita income is the total income of the country divided by its population. We want to look at the correlation between how long we live and how much we earn as a people. Figure 6 Life Expectancy Vs. Per-Capita Income Observations: • • Countries with a higher Per-Capita income comparatively have a higher life expectancy and vice-versa. It is important to know that despite the correlation between life-expectancy and PerCapita income, correlation does not causation Conclusions Most times, when we are talking about wealthy nations, we talk about countries like the United States of America, China because they have large GDP and we term them as the most prosperous. A supposedly wealthy nation should be a nation whose citizens are high on the Per-Capita scale. USA for example is the number 1 in terms of GDP but 8th in terms of PerCapita income. Population has always been in the discussion too but we have been able to dispel any motion that a greater or less population has any effect. Finally, we have been able to determine a positive correlation between life-expectancy and Per-Capita income. However, we can’t say for certain that the reason why people live longer is because they are wealthier because this paper does not cover that research. We can however say for certain, based on our findings, that a wealthy nation is one with a high Per-Capita income (not GDP) and life expectancy.