Any economist will be able to tell you what are the biggest economies in the world—and the fact the largest economy is the United States of America will probably not come as too much of a shock! But how is a country’s economic value calculated?
In order to work out what are the biggest economies in the world, the Gross Domestic Product (GDP) is calculated. This is the value of all goods and services produced by a nation over the course of a year. This figure is generally represented in dollars and is calculated at official exchange rates. Different governing bodies produce different sets of figures, but the order of the list remains the same.
According to the International Monetary Fund, the World Bank, and the CIA World Factbook, in 2009, the United States of America had a GDP of $14.4 million. In second place is Japan with a GDP of $3.3 million. People’s Republic of China is third, Germany is fourth, and France is fifth.
Sitting at the top of the list of the world’s biggest economies, the United States of America accounts for one quarter of the global GDP and is responsible for one fifth of the world’s purchasing power, which makes it an incredibly powerful nation. However, the GDP is about 5% less than the European Union, so it does not have it all its own way.
The strong capitalist mixed economy of the United States is fueled by abundant natural resources, particularly oil and natural gas, and the US is the number one producer of natural gas and the third largest producer of oil in the world. Agriculture only accounts for 1% of the GDP, but the United States produces a bigger crop of soybeans and corn than any other nation in the world.
The US has a strong and well-developed infrastructure and a high rate of productivity. The economy is described as post-industrial and the service industry accounts for 67% of the GDP. However, the United States an industrial power to be reckoned with and is the world’s largest producer of nuclear and electrical energy. The United States is also the leading importer and exporter of vehicles.
America has a huge labor force at its disposal and the government alone employs more than 21.2 million people. Other big employment sectors include health care and social assistance. The country is third in the world for labor productivity and fourth for productivity per hour.
Despite the strong economy and relative wealth of the United States, there is a great deal of income inequality. The rich are extremely rich and the top 1% of the population possesses more than 33% of the net wealth in the United States.
Although the economy is still growing, the United States has been hit very hard by the collapse of the sub-prime property market and the escalating recession. Despite a strong increase in productivity over the last two decades, income gains have slowed down and economic insecurity has risen as the recession continues to bite.