When measuring the largest / best economies, there are different ways of ranking countries.
- Nominal GDP in $US. This is the simplest measure and shows the actual final market value of GDP produced in the economy. It is useful for comparing levels of international trade. It uses the official exchange rate.
- GDP in Purchasing Power Parity (PPP). This takes into account the different costs of living in countries. For example, a country like India will have a higher PPP GDP because although GDP is low, official exchange rates don’t reflect the lower living costs. You can see a comparison here GDP at PPP v GDP in nominal terms
- Real GDP per capita. This gives an impression of average incomes in a country. Clearly, the countries with the most people will have high GDP (e.g. India, China). But, GDP per capita will be relatively lower. It can involve Nominal GDP per capita or GDP per capita PPP.
- Human Development Index (HDI). The Human Development Index is different to GDP; it tries to take into account living standards by looking at levels of life expectancy, literacy, education, standards of living, and quality of life for countries worldwide.
Top 10 Economies by Nominal GDP