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THE WORLD’S TOP 10 ECONOMIES

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When it comes to the top 10 national economies around the globe, the order may shift a bit, but the key players usually remain the same, and so does the name at the head of the list. The United States has been the world’s biggest economy since 1871. But that top ranking is now under threat from China.

The Top 10 Economies in the World

Note: This list is based on estimates for 2017 by IMF’s World Economic Outlook Database, April 2017. Select data is from the CIA World Factbook. (Nominal GDP = gross domestic product, current prices, U.S. dollars, GDP per capita (PPP) = gross domestic product based on purchasing-power-parity (PPP) per capita, current international dollar, and GDP based on PPP = gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP, current international dollar)

1. United States

The U.S. economy remains the largest in the world in terms of nominal GDP. The $19.42 trillion U.S. economy is 25% of the gross world product. The United States is an economic superpower that is highly advanced in terms of technology and infrastructure and has abundant natural resources. However, the U.S. economy loses its spot as the number one economy to China when measured in terms of GDP based on PPP. In these terms, China’s GDP is $23.19 trillion exceeds the U.S. GDP of $19.42 trillion. However, the U.S. is way ahead of China in terms of GDP per capita in nominal terms as well as PPP; GDP per capita (PPP) for the U.S. economy is approximately $59,609 versus $16,676 in China. In nominal terms, China’s GDP per capita further falls to $8,480.

2. China

China has transformed itself from a centrally-planned closed economy in the 1970s to a manufacturing and exporting hub over the years. Since it initiated market reforms in 1978, the Asian giant has achieved economic growth averaging 10% annually (though it’s slowed recently) and, in the process, lifted almost half of its 1.3 billion population out of poverty and become the undisputed second-largest economy on Earth. The Chinese economy has already overtaken the U.S. economy in terms of GDP, based on another measure known as purchasing power parity (PPP), and is estimated to pull ahead of the U.S. steadily in the following years. However, the difference between the economies in terms of nominal GDP remains large with China’s $11.8 trillion economy. The Chinese economy has long been known for its strong growth, a growth of over 7% even in recent years. However, the country saw its total GDP growth go down to 6.7% in 2016 and is projected to slow to 6.6% in 2017, and further decline to 5.7% by 2022. The country’s economy is propelled by an equal contribution from manufacturing and services (45% each, approximately) with a 10% contribution by the agricultural sector.

The nominal GDP for the U.S. and China for the year 2022 is estimated at $23.76 trillion and $17.71 trillion respectively, while the GDP in terms of PPP is projected at $23.76 trillion for the U.S. and $34.31 trillion for China.

3. Japan

Japan’s economy currently ranks third in terms of nominal GDP, while it slips to fourth spot when comparing the GDP by purchasing power parity. The economy has been facing hard times since 2008, when it first showed recessionary symptoms. Unconventional stimulus packages combined with subzero bond yields and weak currency have further strained the economy (for related reading, see: Japan’s Economy Continues to Challenge Abenomics). Economic growth is once again positive, to about 1% in 2016 and further to around 1.2% in 2017; however, it is forecasted to stay below 1% during the next five years. The nominal GDP of Japan is $4.84 trillion, its GDP (PPP) is $5.42 trillion, and its GDP (PPP) per capita is $42,860.

4. Germany

Germany is Europe’s largest and strongest economy. On the world scale, it now ranks as the fourth largest economy in terms of nominal GDP. Germany’s economy is known for its exports of machinery, vehicles, household equipment, and chemicals. Germany has a skilled labor force, but the economy is facing countless of challenges in the coming years ranging from Brexit to the refugee crisis (for related reading, see: 3 Economical Challenges Germany Faces in 2016). The size of its nominal GDP is $3.42 trillion, while its GDP in terms of purchasing power parity is $4.13 trillion. Germany’s GDP (PPP) per capita is $49,814, and the economy has moved at a moderate pace of 1-2% in recent years and is forecasted to stay that way.

5. United Kingdom

The United Kingdom, with a $2.5 trillion GDP, is currently the world’s fifth largest. Its GDP in terms of PPP is slightly higher at $2.91 trillion while its GDP (PPP) per capita is $44,001. The economy of the UK is primarily driven by services, as the sector contributes more than 75% of the GDP. With agriculture contributing a minimal 1%, manufacturing is the second most important contributor to GDP. Although agriculture is not a major contributor to GDP, 60% of the U.K.’s food needs is produced domestically, even though less than 2% of its labor force is employed in the sector.

After the referendum in June 2016 when voters decided to leave the European Union, economic prospects for the UK are highly uncertain, and the UK and France may swap places. The country will operate under EU regulations and trade agreements for two years after the formal announcement of an exit to the European Council, in which time officials will work on a new trade agreement. Economists have estimated that Brexit could result in a loss of anywhere from 2.2-9.5% of GDP long term, depending on the trade agreements replacing the current single market structure. The IMF, however, projects growth to stay between 1.5-1.9% in the next five years.

6. India

India is the sixth largest economy in the world with a nominal GDP of $2.45 trillion. The country ranks third in GDP in terms of purchasing power parity at $9.49 trillion. The country’s high population drags its nominal GDP per capita down to $1,850. India’s GDP is still highly dependent on agriculture (17%), compared to western countries. However, the services sector has picked up in recent years and now accounts for 57% of the GDP, while industry contributes 26%. The economy’s strength lies in a limited dependence on exports, high saving rates, favorable demographics, and a rising middle class. India recently overtook China as the fastest growing large economy and is expected to jump up to rank fourth on the list by 2022.

7. France

France, the most visited country in the world, is now the seventh largest economies with a nominal GDP of $2.42 trillion. Its GDP in terms of purchasing power parity is around $2.83 trillion. France has a low poverty rate and high standard of living, which is reflected in its GDP (PPP) per capita of $43,652. The country is among the top exporters and importers in the world. France has experienced a slowdown over the past few years and the government is under immense pressure to rekindle the economy, as well as combat high unemployment which stood at 9.6% in Q12017 (a slight drop from 10% in Q42016). According to IMF forecasts the country’s GDP growth rate is expected to rise over the next five years, and unemployment is expected to continue to go down.

8. Brazil

With its $2.14 trillion economy, Brazil now ranks as the eight largest economy by nominal GDP. The Brazilian economy has developed services, manufacturing, and agricultural sectors, with each sector contributing around 68%, 26%, and 6% respectively. Brazil is one of the BRIC countries, and was projected to continue to be one of the fastest growing economies in the world. However, the recession in 2015 caused Brazil to go from seventh to ninth place in the world economies ranking, with a negative growth rate of 3.6% (2016). The IMF expects the economy to grow at 0.2% during 2017, further recovering to 1.7% in 2018 and then to 2% during the next four years. The Brazilian GDP measured in purchasing power parity is $3.22 trillion, while its GDP (PPP) per capita is $15,485.

9. Italy

Italy’s $1.81 trillion economy is the world’s ninth largest in terms of nominal GDP. Italy is among the prominent economies of the Eurozone, but it has been impacted by the debt crisis in the region. The economy suffers from a huge public debt estimated to be about 133% of GDP, and its banking system is close to a collapse and in need of a bailout/bail-in. The economy is also facing high unemployment, but saw a positive economic growth in 2014 (0.1%) for the first time since 2011, which is projected to continue. The government is working on various measures to boost the economy that has contracted in recent years. The GDP measured in purchasing power parity for the economy is estimated at $2.3 trillion, while its per capita GDP (PPP) is $37,905. (See also: The European Banking Crisis Explained (DB))

10. Canada

Canada took over Russia to feature as the tenth largest economy in 2015. It’s $1.6 trillion is expected to touch $1.9 trillion by 2022, maintaining its lead over Russia. Canada has a highly service-oriented economy, and has had solid growth in manufacturing as well as in the oil and petroleum sector since the Second World War. However, the country is very exposed to commodity prices, and the decline in oil prices kept the economic growth under 1% in 2015 (down from 2.6% in 2014). The economy is expected to grow in the range of 1.8-2.0% during 2017-22. The GDP measured in purchasing-power parity is $1.75 trillion, and the GDP per capita (PPP) is $47,771.

The nominal GDP of the top 10 economies adds up to over 68% of the world’s economy, and the top 15 economies add up to about 76%. The remaining 172 countries constitute less than a quarter of the world’s economy.

Will It Even Matter?

Only for bragging rights! With a population less than one-fourth that of China, the U.S. is still projected to remain one of the world’s most prosperous economies in terms of per capita GDP, which reflects living standards and quality of life for a nation’s residents. Even so, it throws an interesting light on the whole subject of GDP and global economies. But the U.S. is far from the top in terms of GDP per capita (PPP), where it claims 13th place. That’s after oil rich nations such as Qatar, Kuwait and Norway, as well as Luxemburg, Switzerland and Singapore.

  • Qatar — $129,112
  • Luxembourg — $107,737
  • Macao SAR — $98,323
  • Singapore — $90,724
  • Brunei — $76,568
  • Ireland — $72,529
  • Kuwait — 71,307
  • Norway — $70,666
  • United Arab Emirates — $68,425
  • Switzerland — $61,014

However, the U.S. ranks eighth in terms of GDP per capita when compared in nominal terms, after Luxembourg, Switzerland, Norway, Macau SAR, Iceland, Qatar and Ireland. Australia and Denmark take the ninth and tenth spots.

And Looking Forward …

Some other economies that are a part of the “trillion-dollar” club and have the potential to make it to the top 10 going ahead are Russia ($1.56 trillion), South Korea ($1.5 trillion), Australia ($1.36 trillion), Spain ($1.23 trillion), Indonesia ($1.02 trillion) and Mexico ($1 trillion). By 2020, Turkey is expected to join the “trillion-dollar” club.

The Top Economies of 2022

The rising importance of emerging market economies in 2022 will have broad implications for the world’s allocation of consumption, investments and environmental resources. Vast consumer markets in the primary emerging market economies will provide domestic and international businesses with many opportunities. Although income per capita will remain the highest in the world’s developed economies, the growth rate in per capita income will be much higher in major emerging market nations such as China and India.

According to projected nominal GDP, the top economies in 2022 will be the U.S., China, Japan, India, Germany, the U.K., France, Brazil, Italy and Canada respectively.

One of the major reasons for the growth of emerging economies is that advanced economies are mature markets that are slowing. Since the 1990s, the economies of advanced countries have experienced far slower growth in comparison to the rapid growth of emerging economies such as India and China. The worldwide financial crisis from 2008 to 2009 fueled the trend of decline among the advanced economies.

For example, in 2000 the U.S., the number one economy in the world, accounted for 24% of the world’s total GDP. This declined to just over 20% in 2010. The financial crisis and a faster-paced growth by emerging economies were key factors in the decline of the U.S. economy in relation to China. In the mid-2000s, Japan’s economy saw a slight recovery after a lengthy period of inactivity that was due, at least in part, to inefficient investments and to the burst of the asset price bubbles. The global economic downturn has had a significant impact on the country because of prolonged deflation and the country’s heavy dependence on trade.

The economies of countries in the European Union, which include France, Italy and Germany, account for just over 20% of the world’s total GDP. This is a relatively large decrease from the year 2000, when these countries collectively held over 25% of the world’s GDP. The increase in average population age and rising unemployment rates is contributing to this slowdown.

Before the Brexit vote in late June 2016, the IMF issued a report warning the UK of the economical consequences of leaving the EU. Brexit aside, the IMF predicts advanced economies will experience a growth of less than 3% in 2020. Advanced economies are also facing challenges in terms of public debt reduction and government budget deficits. The IMF also forecasts that growth of Asian economies will be significantly higher, at approximately 9.5%, and it is one of the factors driving the worldwide economic recovery.

The Advance of Emerging Countries

Emerging economies are catching up with the progress of the advanced world and are predicted to overtake many of them by 2020. This will cause a substantial shift in the global balance of economic power. China’s share of the world’s total GDP increased more than 6% from 2000 to 2010. As already noted, by some calculations, China is already ranked as the largest economy in the world.

Many analysts foresee India surging in growth and taking over Japan’s place as the third largest economy in the world by 2020. Some believe India may grow even more rapidly and push the U.S. into third place. Analysts point out India’s young and faster-growing population as key factors in the rate of growth for this country’s economy.

Russian and Brazilian growth potential is great, as both countries are two of the world’s largest exporters of natural resources and energy. However, in the future, the lack of economic diversification in Russia may be likely to cause the country some difficulty with continued growth.

Mexico will remain the 11th largest economy by GDP measured at PPP terms. The country’s proximity to the U.S., growing business and trade deals with the U.S. and a growing population will aid its economic development.

Implications of the Economic Shift

As household incomes rise and populations expand, the service and consumer goods markets will present exponential opportunities in emerging markets. More specifically, luxury goods will have opportunities in these markets as more families reach the middle class.

One of the biggest implications is the importance placed on younger consumers. Though in some emerging countries, including China, the population is aging, the populations of emerging markets are overall significantly younger than those of people in advanced economies. Young consumers also represent substantial power over purchases, particularly large items such as cars and homes, as well as the items needed to furnish homes.

Emerging countries are likely to become important foreign investors. The foreign investments they are responsible for making only serve to enhance their influence in the global economy. Investments from foreign countries, including those from advanced nations, will also flow more readily into these developing nations, further driving their economies toward future growth.

Why Is GDP Important?

The GDP of a country provides a measure of the total monetary value of all the goods and services it produces during a certain time period, most commonly a year. This is an important statistic that indicates whether an economy is growing or contracting. In the United States, the government releases an annualized GDP estimate for each quarter and also for an entire year; it makes a preliminary estimate, based on the initial information it has, and then makes a second estimate and a final one as more information flows in.

A country’s GDP is essentially a measure of the health and size of its economy. Countries with healthy economies tend to produce more goods and have higher GDPs, and could therefore be said to be the most productive. A growing GDP represents expansion within a country’s economy, signaling that it is in the process of becoming more productive.

Providing a quantitative figure for GDP helps a government make decisions such as whether to stimulate the economy by pumping money into it, in case the economy is not growing and needs such stimulus. And in case the economy is getting heated, a government could also act to prevent it from getting overheated.

Businesses can also use GDP as a guide to decide how best to expand or contract their production and other business activities. And investors also watch GDP since it provides a framework for investment decision-making.

Types of GDP

There are different ways to calculate GDP. Nominal GDP is the total value of all the finished goods and services produced within a country’s borders in a specific time period, evaluated at current market prices in its local currency. But GDP can also be calculated based on purchasing power parity (PPP), which is essentially the implied exchange rate at which the currency of one country would have to be converted into that of another country to buy an identical basket of goods and services in each. One of the best-known examples of PPP is the “Big Mac” index, published by The Economist magazine, which calculates simplified PPP exchange rates based on the popular McDonald’s sandwich. The biggest advantages of PPP exchange rates is that they have greater stability over time as compared to more volatile market exchange rates, and they provide a better estimate of consumers’ purchasing power in developing nations.

As a general rule, developed countries have a smaller gap between their nominal GDP (i.e., current prices) and GDP based on PPP. The difference is greater in developing countries, which tend to have a higher GDP when valued on purchasing power parity basis.

Another method of analyzing a country’s productivity is by calculating its GDP per capita, which is accomplished by simply dividing its GDP by its population. This gives an indication of how productive, on average, each citizen is.

Source: Investopedia

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MICROSOFT HAS KILLED MINECRAFT FOR APPLE TV

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Microsoft is no longer supporting the Apple TV version of Minecraft. The app has has been pulled from the App Store, and an in-game message notes that it won’t receive any further updates, though it’ll continue to be playable. Refunds will be issued for any purchases made up to 90 days before the announcement comes into effect. And it actually went into effect on September 24th, so it’s even more of an indictment of the state of Apple TV gaming that no-one really seemed to notice until this week.

Minecraft is one of the biggest games in history and has managed to find an audience on virtually every console, phone, and computer out there — including the iPhone, from which the Apple TV version was derived. But the Apple TV has been hampered as a games platform ever since Apple bungled the launch by unexpectedly requiring developers to support the Siri Remote. The company backtracked the following year, but the damage was done.

Apple hasn’t entirely given up on Apple TV gaming. Last year’s iPhone keynote saw Sky, the next game from Journey and Flower studio Thatgamecompany, shown off for the first time on the Apple TV 4K. But even that game is yet to see release, and it’s clear that Apple’s focus is elsewhere.

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UBER’S NEXT CONQUEST: YOUR DATA

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After replacing Travis Kalanick in August 2017, Uber CEO Dara Khosrowshahi is shifting the company’s focus. Though the company has always sought to become a world-class transportation platform, it has recently begun to describe itself as “Amazon for transportation” — an ambition which indicates the company is making a monopolistic data play.

Amazon has always been an inspiration for Uber’s leadership, but the form of that inspiration has shifted over the course of the company’s growth. Kalanick wanted to emulate Amazon’s strategy of pursuing market share and growth at the expense of profits — or, more accurately, with massive losses before using scale to reduce the marginal cost of expansion to turn a profit. Unfortunately for Kalanick, that strategy didn’t translate to Uber’s ride-hailing business.

Scale economies work for companies like Google, Facebook, and Amazon because the digital nature of their operations allows growth at little marginal cost in many aspects of their businesses. This is why many of these digital companies have so few employees compared to traditional auto companies. However, as transportation expert Hubert Horan explained: “Drivers, vehicles and fuel account for 85% of urban car service costs,” making scale economies very difficult for Uber’s ride-hailing service to achieve even as it outsources the ownership and maintenance of vehicles to its drivers.

Uber’s leadership is inspired by Amazon’s platform and the power and dominance that has come with it.

Uber’s margin improvements have typically come from cutting driver pay, not scale economies, and Kalanick’s plan to reach profitability relied on further reducing the share of revenue going to drivers. In the last few years that Kalanick served as CEO, the company became focused not just on developing autonomous vehicles, but on winning the self-driving race. We now know that autonomous vehicles will not be able to replace drivers nearly to the degree Kalanick had hoped, nor on the accelerated timeline he was relying on. This necessitates a new plan for the company’s future.

We don’t know whether Kalanick was in the process of formulating a new strategy, but over the past few months Khosrowshahi’s vision has become increasingly clear. He wants to make Uber into the “Amazon for transportation.” This time, instead of taking the wrong lessons from Amazon on scale economies, Uber’s leadership is inspired by Amazon’s platform and the power and dominance that has come with it.

From Ride-Hailing to Transportation Platform

Though Uber’s ride-hailing service has always been the center of its business, Khosrowshahi’s plan shifts the focus to its app — or, rather, its platform. He’s no longer just talking about the ride-hailing business, but about existing food delivery and freight services along with it, new scooters and bike offerings from Lime, car rentals from Getaround, public transit ticketing through Masabi, and the prospect of flying cars. Basically, the more services available, the more people the platform can serve.

Uber’s approach to autonomous vehicles has also shifted. Rather than trying to win the race to develop self-driving tech, Khosrowshahi has said his ultimate goal is to have “access” to the technology. He opened the door for Google’s Waymo and GM’s Cruise to offer their autonomous vehicle services on Uber’s platform, and Ford AV CEO Sherif Marakby recently told the Vergecast that they’d be open to offering their autonomous service on the platform as well.

Khosrowshahi predicts the traditional ride-hailing service to be only 50 percent of its future business, as scooters and bikes cannibalize the short trips currently made in vehicles. It’s hard to imagine Kalanick making a similar statement, but that doesn’t mean Khosrowshahi’s ultimate goal is any less inspired by monopolistic ideals.

Uber Wants to Control Urban Transportation Data

Uber is a private company with plans to go public in 2019. It has yet to turn a profit. Khosrowshahi has encouraged investors to commit for the long haul, as his plans to diversifying the company’s transportation options will not deliver short-term profits. At the same time, his value proposition to investors has changed: Now, they have access to Amazon-like power exerted on urban transportation networks.

In his book on these new digital monopolies, Platform Capitalism, Nick Srnicek identifies the importance of network effects in increasing a platform’s value. For platforms, data is raw material that can “be extracted, refined, and used in a variety of ways. The more data one has, the more uses one can make of them.”

Uber will not only use data on its own services, but data from every third-party service offered through its platform.

Uber already has a large, global user base (and dataset). The expansion of transportation options on its platform — both its own and those of other companies — adds value for existing users while attracting new ones interested in getting around by anything other than a car. New modes of transport and a growing user base will produce more data, showing the company where more people are going and how additional transport modes are used. Uber will not only use data on its own services, but data from every third-party service offered through its platform. All of this data feeds a flywheel that will improve Uber’s service exponentially over time.

In a recent interview with TechCrunch, Khosrowshahi was asked why he was allowing other services onto Uber’s platform. He likened it to Amazon offering branded products while letting other businesses sell their products through the Amazon marketplace. He left out how Amazon uses its sales data to see which third-party products are selling well and make cheaper versions of its own, undercutting the original product and leaving its seller with no means of challenging Amazon. Will Uber eventually do the same to Lime’s scooters or Getaround’s car rentals? It’s not impossible to imagine.

Cities Need to Act Now

City governments around the globe have struggled to effectively regulate ride-hailing apps, but there’s been some recent progress. In August, New York City passed new regulations limiting the number of ride-hailing vehicles, at least for a 12-month period as it further studies the issue. It will also ensure that drivers are paid the minimum wage of $15 per hour with a bit extra to cover vehicle costs.

Another regulatory bright spot: bikes and scooters. Having learned their lesson from letting ride-hailing companies evade regulation, city governments were quick to develop policies for new micromobility services. Mayors make it known that they, not tech companies, had ultimate authority over what happened on city streets.

As Uber sets out to capture a significant chunk of urban transportation data with its new Amazon-inspired platform model, city governments need to make clear that data from activities occurring on the street is not proprietary information. This data belongs to the people as represented by their government. Uber should not have a better idea of how different transportation data modes are operating than governments themselves.

Under Khosrowshahi’s leadership, Uber’s tone has undoubtedly changed — probably for the better. Bikes and scooters will likely capture a significant portion of the ride-hailing service’s current users. However, Uber’s push to become the world’s dominant transportation platform is cause for concern. City officials must establish their right to transportation data. At the very least, they should build publicly owned alternatives that serve the interests of residents — not multinational companies.

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JEFF BEZOS UNSEATS BILL GATES ON FORBES LIST OF RICHEST AMERICANS

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For the first time in 24 years, Bill Gates is no longer the richest American on the Forbes 400 list.

Gates lost his standing this year to Amazon CEO Jeff Bezos, whose net worth is $160 billion, compared with Gates’ $97 billion. That makes the Microsoft founder the second richest American.

Watch this: Amazon boosts its minimum wage to $15 an hour
1:06 

The shakeup isn’t an overnight surprise. In July 2017, Bezos became the richest person in the world, briefly, when his net worth hit just north of $90 billion. It happened again in October 2017 when his net worth clocked in at $93.8 billion compared with Gates’ $88.7 billion. In July 2018, Bloomberg reported that Bezos overtook Gates on its Bloomberg Billionaires Index, which pinned his net worth at $150 billion.

Bezos didn’t immediately respond to a request for comment.

Other tech figures on the list include Facebook’s Mark Zuckerberg coming in at No. 4, Oracle’s Larry Ellison at No. 5, and Google’s Larry Page and Sergey Brin at No. 6 and No. 9, respectively.

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