World GDP per Labor capita

I have blogged about the comparison of economic potential of India and China before. One of the key issues I have raised is the underutilization of labor in India.

But I didn't have data to do real comparison 3 years ago. I made some very rough estimates that the relative labor utilization ('relative' because age profile was not counted, i.e., the factors of child labor and retirement age was ignored) that the relative labor utilization between China and India is 85:65=1.31.

Recently I came across the new CIA World Factbook (the major error in PPP was corrected after Zoellick went to World Bank, though many data still needs to be read with a grain of salt, e.g. the military spending ranking where China's number was manipulated to be above that of US, by (1) converting the hard currency paid for Russian import into PPP, hence inconsistency in numerator and denominator (2) used per capita so that US does not rank at the top, etc.) and I found it had a handy compilation of Labor force statistics.

The labor utilization rate (base on this CIA Factbook) for China is 60.4%, vs 45% for India. The relative ratio is 1.342. My estimate was actually VERY close !!!

Then, I did a very simple calculation to the CIA data: I calculated GDP/labor capita. (i.e. instead of the whole population, I divided GDP by the total workforce number) This ignored the fact that the non-working population may also contribute to the economy (eg by freeing up the time for the working person in the family, etc). But the results are still very interesting, despite its various faults (on top of the problem with PPP).

I have made a correction on CIA data for Niger (CIA's 70k labor is obviously wrong for the 13M strong Niger( the non-wage earning labor are also labors and they produce GDP). It basically ignored everyone who works in subsistence farming). There are other errors in CIA data that I did not bother to fix (all for small countries, e.g. Kiribati; and the mistake for Malta from IMF)

A few interesting facts

  • The gap between China and India narrows significantly if measured by GDP/labor (8775 vs 6002). With GDP/cap it is 5300 vs 2700.
  • China and Pakistan (which has even lower labor rate due to unemployment and the Islam restriction on women labor) comparison is even more striking. Pakistan's GDP/labor ranks just above that of China, at 8869. i.e. If Pakistan free up its women labor, and provided that they can find a job at similar pay as others today, Pakistan's GDP/cap will be the same as that of China (and higher than India's)! Mongolia is another surprise, just above Pakistan!
  • I speculated about Islam factor, which is demonstrated by the low labor rate for countries such as Indonesia (46.3%), Bengladesh (45.2%), Egypt (27%), Turkey (32.7%) and Pakistan (29.3%). But it would be wrong to simplify matters as such. Because one cannot then explain the fact that Pakistan/Eqwgypt have much lower rate than other Islamic countries. And Kazakhstan's 53.6% cannot be explained at all. (OTOH the gulf states rich in oil have higher labor rate merely because of the foreign labors)
  • DPRK (North Korea) has the highest labor rate. I know it is probably because its full employment due to socialism (and short life span so that there is no retiree?) but I am a bit skeptical of the numbers. Anyway, the productivity is very low because as many as 100k people would be practicing Mass Game for a few month in the years before this year (apparently they stopped the function this year! when I wanted to visit). Liechtenstein's high labor rate is probably a result of foreign workers (in its financial industry) as well. Same for Monaco.
  • Japan has higher (PPP_measured) GDP/cap than Taiwan only because more Japanese worked! This is another major surprise.
  • The gap between HK and Singapore has widened, with Singapore leading by almost 20% in GDP/cap. However, in terms of per labor they are next to each other again.
  • Bostwana, the star of Africa, ranked number 6 in the world, just behind financial/tax havens Luxembourg/Bermuda, and oil states Qatar/Brunei -- But I am not sure if the CIA labor rate of 15.7% is right. However, even if not, Bostwana's GDP performance is still very impressive.


Anonymous said...

Obviously looking at it in a linear way is not going to be accurate. Shifting the supply curve to the right is going to depress prices (wages).

But interesting nevertheless. Much better than your political posts.

Jun Okumura said...

Botswana: 288,400 formal sector employees