The United States produces as much as 24.3% of world’s combined GDP while it is home to only about 4.3% of the world’s population.
Is there one factor or several stimuli that helped the United States achieve and maintain that distinctive position?
Generally speaking, the U.S. economic success may be attributed to innovation, higher education, manufacturing, abundance of natural resources, free market capitalism, influx of international talent and its being an island of stability that holds out rich prospects for realizing the American Dream.
But how can we explain that a population of 327 million, America scaled an unprecedented $20.5 trillion GDP level in 2018?
China is the second largest economy with more than $12 trillion but that size of the output comes from a population of 1.4 billion.
Focusing on the difference between workforce population and productivity, an expert has come up with a detailed analysis to explain the size of American economy, relative to other countries.
Mark J Perry, a scholar at the American Enterprise Institute, has been putting the national economy in international perspective by comparing the size of American States’ economies to the output of entire comparable countries.
Credit: AEI
With the help of a map that puts names of countries on the U.S. States having comparable sizes of economies, Perry illustrates how American states fare at par with GDPs of much larger populations.
The reveals one important advantage that distinguishes the U.S. economy and is common to the growth of all states – productivity. The U.S. States are way ahead in terms of efficient productivity.
For instance, California, the state with the largest economy, generated nearly $3 trillion of economic output in 2018, more than the United Kingdom’s GDP of $2.8 trillion during the same period. California has a larger economy than each Britain, France and India.
“California has a labor force of 19.6 million compared to the labor force in the UK of 34 million (World Bank data here). Amazingly, it required a labor force 75% larger (and 14.5 million more people) in the UK to produce the same economic output last year as California! That’s a testament to the superior, world-class productivity of the American worker,” Perry writes in a blog on AEI website.
Similarly, Texas, America’s second largest state economy with a $1.8 trillion in economic output in 2018, is slightly higher than Canada’s GDP. While Canada’s GDP comes from 20.1 million population, Texas has a work force of 13.9 million.
New York, America’s third largest state economy with a GDP in 2018 of $1.68 trillion outproduced South Korea ($1.65 trillion) in 2018. South Korea has workforce of 28 million, three times bigger than New York’s 9.7 million.
Florida with a nearly $1 trillion GDP, rivals production with Mexico ($1.19) trillion. Florida’s labor force is 10.2 million whereas Mexico has 59 million people.
Oil-rich Saudi Arabia’s $683 billion GDP is less than that of Pennsylvania ($793 billion) and Illinois ($863 billion).
Missouri, with a population of 6.16 million people had a $318 billion GDP I 2018, larger than $306 billion of Pakistan, which has a population of 200 million.
The huge economic success also brings the U.S. a huge influence in the world.
According to Perry, the U.S. owes its enormous economic success to world-class productivity, which is possible due to a mix of some key factors.
“This comparison is also a reminder that it was largely free markets, free trade, and capitalism that propelled the US from a minor British colony in the 1700s into a global economic superpower and the world’s largest economy, with individual US states producing the equivalent economic output of entire countries.”
