Germany, the UK, Japan, France, Italy, Canada and the United States make up the G7 Leading Economic nations. The membership criterion is, loosely, that these countries produce the most output by virtue of their population’s size and productivity. Donald Trump, the US President, has proposed inviting a broader range of countries to join the G7 on the basis that the existing members do not really represent the economic powerhouses in the modern world. He proposes adding Russia, South Korea, India and even Australia.
This raises the question: what should the G7 actually look like? The starting point for economic analysis is generally Per Capita GDP, that is the average output per citizen in an economy. When judged by per capita output, the economic leaders in the world look a whole lot different than the current membership of the G7. Stripping out the nations that attract wealthy citizenry seeking a taxation refuge (San Marino, Monaco, Cayman Islands and the like), the following is a list of the 10 wealthiest nations on a per capita GDP basis,
- Luxembourg – EU tax
- Switzerland – Banking
- Norway – Oil
- Ireland – EU tax
- Qatar – Gas
- Iceland – Fisheries
- United States – diversified
- Singapore – diversified, tax
- Denmark – diversified service focus
- Australia – natural resources, diversified
What a different role model the G7 would be if its membership were formed from those countries with upwardly mobile personal income generators instead of old-fashioned manufacturing based welfare states? The per capita GDP rich list has a majority of states that happen to be luckily endowed with valuable natural resources such as fisheries, minerals, oil and gas (Qatar, Iceland,Norway and Australia) or which operate a low corporate tax regime (Luxembourg, Ireland and Singapore).
The United States is the only country that deserves membership of the G7 by the per capita GDP metric. It is also by far the largest of any of the countries listed by population with 33omillion people. In fact, Australia is the second most populous rich nation on the list with 25million with the rest in single digits.