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What I learned from my topic and surprised me most is that Canadian GDP per capita has not grown during the last 12 years. Conversely the population of Canada has been rising normally. Therefore, Canadian government must adopt measures aimed at recovering the tremendous economic growth shown in the period between the years 2002 and 2008, and consequently improving the Canadian living standard.

I had the opportunity to live in Argentina and visiting the United states, and there are significant differences between these countries such as infrastructure, entrepreneurship freedom, tax burden and opportunities offered by the market. Undoubtedly, these issues reflect GDP, GDP per capita and purchasing power of citizens of these two countries.
Basically, according to the researching I made in this assignment, there is a direct relationship between economic freedom and economic growth.

There is a very informative and educational documentary I would like to share not only with family or friends but whoever is interested in improving their understanding of the economic system.

Thank you so much, I hope you enjoyed and learned something new from my posts.

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Free To Choose 1980 - Vol. 01 The Power of the Market - Full Video

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This line graph illustrates the increase of the population in Canada. In addition, it depicts the steady growth of Canadian population throughout the years.

I have selected this image because the rise in population directly affects the GDP per capita. As we have seen in the post Website#2, GDP per capita is calculated by dividing the Gross Domestic Product (GDP) of a country by its population.

The population in Canada accounted for 33,628,895
at 2009. Ten years later, in 2019 this figure increased to exactly 37,589,262. This means an increase of 12% in this figure for 10 years. Therefore, GDP should increase more than 12% in a 10-year period to be positively reflected in the GDP per capita.

Reference:
The World Bank. (2019). Population, total – Canada. https://data.worldbank.org/indicator/SP.POP.TOTL?locations=CA&start=1960&end=2019&view=chart

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Website #4: Ease of doing business in Canada

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Website #4: Ease of doing business in Canada

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This website shows the Ease of Doing Business index which is developed by the world bank and it measures business regulations for: starting a business, dealing with construction permits, getting credit, registering property, paying taxes and so forth. Canada has a score of 79.6 situated in the 23rd position.

I have selected this website because there is a lot of information about Canadian economy such as charts, diagrams and pdf’s.

Undoubtedly, there is a direct relationship between economic growth and the ease of doing business index. The top 5 in this index are usually countries with highest GDP growth.

Canada economy is lagging behind in Doing Business ranking compared to USA and UK which are situated in the 6th and 8th position respectively.

Hope you enjoy this post.

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Website #3: 2021 The index of economic freedom - Canada

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Website #3: 2021 The index of economic freedom - Canada

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This website shows us the position of Canada in the world ranking of Index of economic freedom and it addresses some of the main issues about the stagnation of Canadian Economy in the last decade.

I selected this website because you can find lots of information about Canadian economy. First, the economic freedom index measures Canadian economy in four pillars of economic freedom: Rule of law, government size, regulatory efficiency, and open markets. Canada is the 9th freest country in the 2021 index with an overall score of 77.9.

Although Canada is ranked first in the region, its overall score has decreased in the last years due to a decline in property rights. Moreover, over the past three years budget deficits have averaged 0.3 percent of GDP which it is not good, no matter how minimal.

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Download PDF

Quick Facts

Canada's economic freedom score is 77.9, making its economy the 9th freest in the 2021 Index. Its overall score has decreased by 0.3 point, primarily because of a decline in property rights. Canada is ranked 1st among 32 countries in the Americas region, and its overall score is above the regional and world averages.

Background

Canada is the world's second-largest country by land area and has its 10th-largest economy. Prime Minister Justin Trudeau's Liberal Party managed to win a second term in office in October 2019 national elections despite a corruption scandal that tarnished Trudeau's political brand. Although he remains in power, Trudeau was forced to form an inherently unstable minority government that could fall well before the next election, which is scheduled to be held 2023. Canada's market-oriented economic system closely resembles that of the U.S. Leading sectors include automotive and other manufactures, forest products, minerals, and petroleum. About three-quarters of Canada's exports are to the United States, so the new U.S.-Mexico-Canada Agreement that entered into force on July 1, 2020, is vital to Canada's continued economic well-being.

Property rights are generally well protected by law and through the enforcement of contracts. Expropriation is highly unusual. The judiciary is independent, and courts are considered procedurally competent, fair, and reliable. Canada's reputation for clean government with little corruption was tainted by scandal in 2020 when a government education contract kickback scheme was alleged to have involved members of the prime minister's family.

The top individual income tax rate is 33 percent, and the top corporate tax rate is 15 percent. Other taxes include value-added and property taxes. The overall tax burden equals 33.0 percent of total domestic income. Government spending has amounted to 40.9 percent of total output (GDP) over the past three years, and budget deficits have averaged 0.3 percent of GDP. Public debt is equivalent to 88.6 percent of GDP.

Business freedom in Canada is relatively unchanged and remains at a high level. However, the recovery rate during insolvency procedures has declined slightly. Labor laws vary by jurisdiction. There is a shortage of skilled trade professionals. In addition to subsidizing health care, the government funds large subsidies for a wide range of business sectors including energy and agriculture.

Canada has 15 preferential trade agreements in force. The trade-weighted average tariff rate is 3.1 percent, and 459 nontariff measures are in effect. Foreign investment in some sectors, including aviation and telecommunications, is capped by the government. The banking sector, dominated by six major banks, remains sound. A wide range of nonbank financial companies operate in a prudent regulatory environment.

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Download PDF Quick Facts Canada's economic freedom score is 77.9, making its economy the 9th freest in the 2021 Index. Its overall score has decreased by 0.3 point, primarily because of a decline in property rights. Canada is ranked 1st among 32 countries in the Americas region, and its overall score is above the regional and world averages.

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Video # 4: 2021 Index of Economic Freedom

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Video # 4: 2021 Index of Economic Freedom

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This video shows us a brief explanation about the index of economic freedom. This index measures economic freedom of countries based in data from sectors such as business, trade, governance, and policy to generate a score and create a ranking.

I selected this video because I found interesting how this index shows us the direct relationship between economic freedom and economic growth. Moreover, countries with higher Index of economic freedom not only enjoy a better financial prosperity but have better health systems, better education, and surprisingly better protection systems to the environment.

In the following posts I will show the position of Canada in the ranking of the index of economic freedom.

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2021 Index of Economic Freedom Intro Clip

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Image #1: GDP per capita (current US$)- Canada

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Image #1: GDP per capita (current US$)- Canada

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As we have seen in the last posts, GDP per capita is the measure of productivity and purchasing power of people in a country. In this opportunity we are going to take a glance at Canada GDP per capita.

This line graph below shows the evolution of Canada GDP per capita from 1960 to 2019. In the last two decades the GDP per capita of Canada has doubled. However, it has not been witnessed a significant rise in the GDP per capita in the last 12 years.

Undoubtedly, GDP per capita underwent a rapid increase throughout the period from 2002 to 2008 accounting for USD$ 24,169 at 2002 and USD$ 46,594 at 2008. These figures show us the tremendous potential of Canadian economy.

However, Canada GDP has been stagnated in the last decade. The current Canada GDP per capita (2019) is USD$ 46,194 which is slightly lower than the GDP per capita in 2008.

Why has economic growth stopped? What prevents economic growth? What are politicians doing wrong? So many questions to answer, we will try to address these issues in the following posts.

I have selected this image because it is very important to know the evolution of Canadian GDP. Moreover, the world bank is one of the most prestigious resources of information about economics in the world.

Reference:
The World Bank. (2019). GDP per capita (current US$) – Canada. https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=CA

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This article explains the GDP per capita, and how this global measure estimates productivity and purchasing power of people in a particular country. Here you will find some special considerations about the application of per capita GDP, for instance, a nation can show economic growth but if its population is growing faster than its GDP, per capita GDP is negatively affected.

I have selected this website because of its concise explanations and examples. Moreover, it is shown the ranking of nations with the highest per capita GDP which I found very interesting.

Although, Canada does not appear in the top ten of nations with highest GDP per capita in the world, Canada has a great GDP per capita. In the following posts I will thoroughly address this topic.

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What Is GDP Per Capita?

Gross domestic product (GDP) per capita is an economic metric that breaks down a country's economic output to a per person allocation. Economists use GDP per capita to determine the prosperity of countries, based on their economic growth.

GDP per capita is calculated by dividing the GDP of a nation by its population. Countries with a higher GDP per capita tend to be those that are industrial, developed countries and countries with smaller populations compared to others.

Understanding GDP Per Capita

Gross domestic product per capita is a global measure used by economists to gauge the prosperity of nations based on economic growth.

There are a few ways to analyze a country's wealth and prosperity. GDP per capita is the most universal because its components are regularly tracked on a global scale, providing ease of calculation and usage. Income per capita is another measure for global prosperity analysis, though it is less broadly used.

The most basic interpretation of GDP per capita shows how much economic production value can be attributed to each individual citizen. Alternatively, GDP per capita translates to a measure of national wealth since GDP market value per person also readily serves as a prosperity measure.

GDP Per Capita vs. GDP

GDP itself is the primary measure of a country's economic productivity. A country's GDP shows the market value of goods and services it produces. In the United States, the Bureau of Economic Analysis (BEA) reports GDP every quarter.

Economists watch this quarterly report closely for the quarter-over-quarter and annual growth figures that can assist them in analyzing the overall health of the economy. They also use GDP for insight into how their domestic productivity compares to the productivity of other countries.

Legislators use GDP figures when making fiscal policy decisions. GDP can also influence central bankers when they are deciding on the course of future monetary policy.

GDP per capita is often analyzed alongside GDP. It relates to both a country's GDP and its population. Therefore, it can be important to understand how each factor affects GDP per capita growth.

Implications of GDP Per Capita

Governments can use GDP per capita to understand how their economies are growing along with their populations. GDP per capita analysis on a national level can provide insights into a country's domestic population influence.

It is important to look at each variable's contribution to the per capita figure to understand how an economy is growing or contracting relative to its population. There can be several numerical relationships that affect GDP per capita.

If a country's GDP per capita is growing while the population level remains stable, that growth potentially can be the result of technological advances that increase productivity with no change in population. In fact, technology can be a revolutionary factor that helps countries increase their per capita rankings even as population figures are unchanged or decline.

Some countries may have high GDP per capita but a small population. This usually means that they have built up a self-sufficient economy based on an abundance of special resources.

Negative GDP Per Capita

A nation may have consistent economic growth but if its population is growing faster than its GDP, GDP per capita growth will be negative. This is not a problem for most established economies, as even a tepid pace of economic growth can still outpace their population growth rates.

However, countries with existing low levels of GDP per capita (such as nations in Africa) and rapidly increasing populations combined with little GDP growth can experience a steady erosion of living standards.

GDP and Population Growth

Both GDP and population are factors in the per capita equation. This means that countries with the highest GDP may or may not have the highest GDP per capita.

According to the latest World Bank data, global GDP per capita increased by an average of 2.3% in 2022.

Economies such as those of China and India have achieved GDP per capita growth rates well above the global average in the 21st century despite their populations of over a billion people apiece. This is thanks to the financial reforms initiated by China in the late 1970s and India in the mid-1990s.

Countries With the Highest GDP Per Capita

Here are the 10 countries with the highest GDP per capita in 2024, according to the International Monetary Fund (IMF).

Many of the countries on the list have relatively small populations. Luxembourg, at the top of the list, has one of the smallest populations, with about 660,000 people in 2023. Most of the small population countries are energy exporters, regional financial centers, and export business powerhouses.

Countries With the Lowest GDP Per Capita

Here are the 10 countries with the lowest GDP per capita in 2024, according to the IMF.

Global Growth Projections

The IMF provides a regular outlook on global growth of GDP. It expects global growth of 3.1% in 2024 and 3.2% in 2025. The projection is slightly higher than the projection the IMF provided in October 2023, due to the resilience of the U.S. economy and many large emerging market and developing economies.

The 2024/2025 projection, however, is lower than the 3.8% annual average global growth from 2000 to 2019. The reasons given by the IMF include higher interest rates set by central banks as they continue to fight inflation, withdrawals of fiscal support because of high debt weighing on economic activity, and low underlying productivity in growth.

Emerging market and developing economies are expected to see the highest rates of growth, and advanced economies much slower rates of growth.

How Do You Calculate GDP Per Capita?

The formula to calculate GDP per capita is a country's gross domestic product divided by its population. GDP per capita reflects a nation's standard of living.

Which Countries Have the Highest GDP Per Capita?

The countries with the highest GDP per capita tend to be those that are the most industrialized and developed. According to the IMF, the three countries with the highest GDP per capita are Luxembourg, Ireland, and Switzerland.

What Is the Difference Between GDP Per Capita and Per Capita Income?

GDP per capita is the economic output of a nation per person. It is used to measure the prosperity of a nation. Per capita income is the amount of money earned per person. It is used to determine the standard of living and quality of life of a population.

Which Country Has the Lowest GDP Per Capita?

Of the countries for which the IMF publishes data, Burundi, Sierra Leone, and Malawi have the lowest GDP per capita.

The Bottom Line

GDP per capita is a popular metric used to measure the average prosperity and well-being of a country. Unlike some other measures of economic productivity, it takes populations into account, allowing easy comparisons between countries with different sized populations.

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GDP Per Capita: Definition, Uses, and Highest Per Country

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GDP per capita is a metric that breaks down a country's GDP to an amount per person and is calculated by dividing the GDP of a country by its population.

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This video explains the definition of economic growth, how it takes place, and its direct relationship with GDP. Generally, Economic growth takes place when the price of goods and services in an economy increases in one period compared to another.

I selected this video because I found it very didactic. The edition and pictures are simple and easy to understand, and it only takes 2 minutes to watch it. Moreover, there is also a brief explanation about GDP per capita which is the ability of people to purchase goods and services.

This video is a brief introduction to understand concepts of content of Canada’s economy that I will show you later.

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Website #1: Real Gross Domestic Product (Real GDP)

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Website #1: Real Gross Domestic Product (Real GDP)

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This website explains the differences of real GDP and Nominal GDP in a very concise way. Here you will find a clear concept of Nominal GDP, Real GDP and how inflation which is an increase in price of the basket goods affects its estimation.

I have selected this article because it focuses on different approaches of this topic. It is not only explained in detail the differences of Nominal and real GDP, in addition at the last part of the article you can find a section about Frequently Asked Questions. For instance, informal economy in Canada does not count for GDP.

Here is the link to the article, hope you enjoy it.

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What Is Real Gross Domestic Product (Real GDP)?

Real gross domestic product (Real GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year (expressed in base-year prices) and is often referred to as constant-price GDP, inflation-corrected GDP, or constant dollar GDP.

Understanding Real GDP

Real GDP is a macroeconomic statistic that measures the value of the goods and services produced by an economy in a specific period, adjusted for inflation. Essentially, it measures a country's total economic output, adjusted for price changes. Governments use both nominal and real GDP as metrics for analyzing economic growth and purchasing power over time. This is done using the GDP price deflator (also called the implicit price deflator), which measures the changes in prices for all of the goods and services produced in an economy. The GDP price deflator is considered to be a more appropriate inflation measure for measuring economic growth than the consumer price index (CPI) because it isn't based on a fixed basket of goods.

The Bureau of Economic Analysis (BEA) provides a quarterly report on GDP with headline data statistics representing real GDP levels and real GDP growth. Nominal GDP is also included in the BEA's quarterly report under the name current dollar. Unlike nominal GDP, real GDP accounts for changes in price levels and provides a more accurate figure of economic growth.

Nominal GDP vs. Real GDP

Because GDP is one of the most important metrics for evaluating the economic activity, stability, and growth of goods and services in an economy, it is usually reviewed from two angles: nominal and real. Nominal GDP is a macroeconomic assessment of the value of goods and services using current prices in its measure. Nominal GDP is also referred to as the current dollar GDP. Real GDP takes into consideration adjustments for changes in inflation. This means that if inflation is positive, real GDP will be lower than nominal, and vice versa. Without a real GDP adjustment, positive inflation greatly inflates GDP in nominal terms.

Economists use the BEA's real GDP headline data for macroeconomic analysis and central bank planning. The main difference between nominal GDP and real GDP is the adjustment for inflation. Since nominal GDP is calculated using current prices, it does not require any adjustments for inflation. This makes comparisons from quarter to quarter and year to year much simpler, though less relevant, to calculate and analyze.

As such, real GDP provides a better basis for judging long-term national economic performance than nominal GDP. Using a GDP price deflator, real GDP reflects GDP on a per quantity basis. Without real GDP, it would be difficult to identify just from examining nominal GDP whether production is actually expanding-or it's just a factor of rising per-unit prices in the economy.

A positive difference in nominal minus real GDP signifies inflation and a negative difference signifies deflation. In other words, when nominal is higher than real, inflation is occurring and when real is higher than nominal, deflation is occurring.

Real GDP Calculation

Calculating real GDP is a complex process typically best provided by the BEA. In general, calculating real GDP is done by dividing nominal GDP by the GDP deflator (R).

The BEA provides the deflator on a quarterly basis. The GDP deflator is a measurement of inflation since a base year (currently 2012 for the BEA). Dividing the nominal GDP by the deflator removes the effects of inflation. ﻿﻿

For example, if an economy's prices have increased by 1% since the base year, the deflating number is 1.01. If nominal GDP was $1 million, then real GDP is calculated as $1,000,000 / 1.01, or $990,099.

Frequently Asked Questions

What does 'real' mean in real GDP?

Real GDP tracks the total value of goods and services calculating the quantities but using constant prices that are adjusted for inflation. This is opposed to nominal GDP that does not account for inflation. Adjusting for constant prices makes it a measure of "real" economic output for apples-to-apples comparison over time and between countries.

What does real GDP measure?

Real GDP is an inflation-adjusted measurement of a country's economic output over the course of a year. The U.S. GDP is primarily measured based on the expenditure approach and calculated using the following formula: GDP = C + G + I + NX (where C=consumption; G=government spending; I=Investment; and NX=net exports).

How will real and nominal GDP differ from one another?

In inflationary periods, real GDP will be lower than nominal GDP. In deflationary times, real GDP will be higher.

Take for example a hypothetical country that had a nominal GDP of $100 Billion in 2000, which grew by 50% to $150 billion by 2020. Over the same period of time, inflation reduced the relative purchasing power of the dollar by 50%. Looking at just the nominal GDP, the economy appears to be performing very well, whereas the real GDP expressed in 2000 dollars would actually indicate a reading of $75 billion, revealing in fact a net overall decline in economic growth had occurred. It is due to this greater accuracy that real GDP is favored by economists as a method of measuring economic performance

Why is measuring real GDP important?

Countries with larger GDPs will have a greater amount of goods and services generated within them, and will generally have a higher standard of living. For this reason, many citizens and political leaders see GDP growth as an important measure of national success, often referring to "GDP growth" and "economic growth" interchangeably. GDP enables policymakers and central banks to judge whether the economy is contracting or expanding, whether it needs a boost or restraint, and if a threat such as a recession or inflation looms on the horizon. By accounting for inflation, real GDP is a better gauge of the change in production levels from one period to another.

What are some critiques of using GDP?

Many economists have argued that GDP should not be used as a proxy for overall economic success, much less the success of a society more generally. Like any measure, GDP has its imperfections. For instance, it does not account for the informal economy, does not count care work or domestic labor done in the home, ignores business-to-business activity, and counts costs and wastes as economic activity, among other shortcomings. In recent decades, governments have created various nuanced modifications in attempts to increase GDP accuracy and specificity. Means of calculating GDP have also evolved continually since its conception so as to keep up with evolving measurements of industry activity and the generation and consumption of new, emerging forms of digital and other intangible assets.

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Real Gross Domestic Product (Real GDP) Definition

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Real gross domestic product (Real GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year (expressed in base-year prices) and is often referred to as constant-price GDP, inflation-corrected GDP, or constant dollar GDP.

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Video #2: Components of GDP | GDP: Measuring national income

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Video #2: Components of GDP | GDP: Measuring national income

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This video shows the components of GDP in a simple way from an approach of expenditure. In short, It is shown the components of GDP which are: Consumption(households), Investments(firms), Government spending and net exports (foreign purchase minus foreign products).

I have selected this five-minute video because it is didactic and easy to understand. Although, there is no pictures or graphics shown in this video, the methodology used by the narrator is clear and simple. If you usually feel overwhelmed by courses such as economics, math, due to the complexity of its formulas, here you will find a straightforward and interesting video from start to finish.

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Components of GDP | GDP: Measuring national income | Macroeconomics | Khan Academy

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This 4-minute video explains in a concise way what is GDP.

GDP is the value for all the goods and services produced within a country in a given period of time. Moreover, it is revealed the differences between GDP, GNP and GDP per capita, and why the only measure of GDP is not a determinant factor to estimate a country’s prosperity.

I have chosen this video because it is very straightforward, well explained, and concise. Moreover, I like the way this video is exposed, the differences between GDP, GNP and GDP per capita. For instance, Cars produced by general motors assembly plant in Oshawa- Ontario counts as Canadian GDP and as American GNP.

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GDP, GNP - what does it all mean? Jonathan explains what economists mean when they bring up these common economic indicators. Learn more at HowStuffWorks.com: http://money.howstuffworks.com/gross-national-happiness.htm Share on Facebook: Share on Twitter: Subscribe: http://goo.gl/ZYI7Gt Visit our site: http://www.brainstuffshow.com OK, let's say you've just gotten a job offer to work in the majestic country of Bumpsylvania.

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Here you will learn about Gross Domestic Product (GDP) which is a measure of the economy of a country, and how It is related to Economic growth. I will post reports, websites, videos and charts to explain in detail about this interesting topic.