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What do people think about the richest country in the world? And what do they think of the smallest country in the world? Many may be surprised to learn that many of the richest countries on the planet are also among the smallest.
Smaller and wealthier countries such as San Marino, Luxembourg, Switzerland and Singapore benefit from modern financial and tax systems that attract foreign investment, professional talent and large bank deposits. Other countries, such as Qatar and the United Arab Emirates, have large reserves of hydrocarbons or other lucrative natural resources. Glitzy casinos and plenty of tourists are also good for business: despite nearly three years of temporary closures and restrictions, Asian gambling destination Macau remains the richest in the world. Epidemiological processes.
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But what do we mean when we say that a country is “rich”, especially at a time when income inequality between rich and poor is growing? Although gross domestic product (GDP) measures the value of all goods and services produced in a country, dividing that output by the number of full-time residents is a better way to determine a country’s population. Rich or Poor Countries Compared to Others Why “rich” often equates to “small” is obvious: the economies of these countries are disproportionately large compared to their small populations.
However, we can get a more accurate picture of the country’s average standard of living only by considering the inflation rate and the price of domestic goods and services: the result is the so-called purchasing power parity (PPP), which is often expressed in international dollars. . To enable comparison between different countries.
Should we automatically assume that a country with a high purchasing power parity, especially as a whole, is better off than the rest of the world? Not true. We are dealing with averages, and the structural inequality of each country can easily shift the balance to satisfy those who already qualify.
The COVID-19 pandemic has raised these barriers in ways few could have predicted. While there is no doubt that wealthier countries, often at risk from Covid-19 due to their aging populations and other risks, have the resources to provide better care to those who need it. These resources may not be the same for everyone In addition, the ongoing recession has significantly affected low-wage workers compared to higher-wage occupations, creating a new disparity between those who can easily work from home and those who risk their health and safety. Traveling to work. Those who lost their jobs due to the closure of their industries found they didn’t have much of a safety net, and huge holes were exposed in the world’s most famous welfare system.
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Then, as the pandemic slowed, inflation rose worldwide and Russia invaded Ukraine, exacerbating food and oil price crises. Again, low-income households suffer the most as they are forced to spend more of their income on basic needs such as housing, food, energy and transport, where prices are more volatile. and grows the most.
According to the International Monetary Fund (IMF), the world’s 10 poorest countries have an average purchasing power of $1,380 per capita, compared to over $105,000 for the 10 richest countries. Since last October, per capita purchasing power has risen to just $30 in poor countries and over $5,000 in high-income countries.
A word of caution about these numbers: The IMF has repeatedly warned that this should be taken with a grain of salt. For example, many of the countries in our ranking are tax havens, meaning that their wealth is first created elsewhere, thereby artificially increasing their GDP. Although more than 130 governments have signed up to a global agreement to guarantee a 15 percent minimum tax for big business by 2021 (the agreements have yet to be implemented in many due to opposition from lawmakers and politicians), critics. It claimed the rate was higher than taxpayers such as Ireland, Qatar and Macau. It is estimated that more than 15% of jurisdictions worldwide are taxed, and the IMF estimates that by the end of 2020, around 40% of global foreign direct investment worldwide can be attributed to avoidance strategies. The smart tax increased from 30 percent in 2010. On the other hand, these investments go through empty shell companies and bring little or no return to those who run out of money.
Tiny San Marino is the oldest republic in Europe and the fifth largest country on the map. It may only have a population of 34,000, but it has one of the wealthiest citizens in the world. It helps that income tax rates are very low, around a third of the EU average. However, San Marino is working to harmonize its financial laws and regulations with European Union (EU) and international standards.
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The small country has shown remarkable resilience during the pandemic and through difficult financial conditions and energy crises, with tourism and manufacturing particularly strong.
Are we saying that the richest countries are the smallest? That’s certainly not the case, as the US entered the top 10 in 2020 after being in the top 10 for the past two decades.
The U.S.’s escape and continued presence in the top 10 is due to the fall in energy prices and government spending due to the pandemic. Falling electricity prices pushed oil-based economies such as Qatar, Norway and the United Arab Emirates down a few places, while Brunei dropped out of the top ten.
At the same time, a sharp increase in government stimulus spending, an increase in food stamp benefits, and an expansion of Medicaid enrollment boosted aggregate demand.