Since China's transition to a market-based economy through controlled privatisation and deregulation, the country has seen its ranking increase from ninth, in 1978, to second, in 2016. Īlthough the rankings of national economies have changed considerably over time, the United States has maintained its top position since the Gilded Age, a time period in which its economy saw rapid expansion, surpassing the British Empire and Qing dynasty in aggregate output.
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On the whole, PPP per capita figures are less spread than nominal GDP per capita figures. PPP largely removes the exchange rate problem, but has its own drawbacks it does not reflect the value of economic output in international trade, does not take into account the differences of quality of goods and services among countries, and it also requires more estimation than nominal GDP. Ĭomparisons of national wealth are also frequently made on the basis of purchasing power parity (PPP), to adjust for differences in the cost of living in different countries. Such fluctuations may change a country's ranking from one year to the next, even though they often make little or no difference in the standard of living of its population. Nominal GDP does not take into account differences in the cost of living in different countries, and the results can vary greatly from one year to another based on fluctuations in the exchange rates of the country's currency.
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Countries are sorted by nominal GDP estimates from financial and statistical institutions, which are calculated at market or government official exchange rates. Gross domestic product (GDP) is the market value of all final goods and services from a nation in a given year.