Does a country’s economic size have anything to do with its military might? When it comes to the top national economies globally, although the order may shift around slightly from one year to the next, the key players are usually the same. At the top of the list is the United States of America, which according to Investopedia, has been at the head of the table going all the way back to 1871. However, as has been the case for a good few years now, China is gaining on the U.S., with some even claiming that China has already overtaken the U.S. as the world’s Number 1 economy. Nonetheless, going by nominal GDP measured in U.S. dollars alone, the U.S. maintains its spot followed by China and Japan. We will just look at the top two economic powers here.
Despite facing challenges at the domestic level along with a rapidly transforming global landscape, the U.S. economy is still the largest in the world with a nominal GDP forecast to exceed USD 20 trillion in 2018. The U.S. economy represents about 20% of total global output and is still larger than that of China. It features a highly developed and technologically advanced services sector, which accounts for about 80% of its output, in areas such as technology, financial services, healthcare and retail. Large U.S. corporations also play a major role on the global stage, with more than a fifth of companies on the Fortune Global 500 coming from the United States. The U.S. economy is projected to grow 2.4% in 2018 and 2.0% in 2019.
The Chinese economy experienced astonishing growth in the last few decades that catapulted the country to become the world’s second-largest economy. In 1978—when China started the program of economic reforms—the country ranked ninth in the nominal gross domestic product (GDP) with USD 214 billion; 35 years later it jumped up to second place with a nominal GDP of USD 9.2 trillion. China has become the world’s manufacturing hub, where the secondary sector (comprising industry and construction) represented the largest share of GDP. However, in recent years, China’s modernization propelled the tertiary sector, and in 2013, it became the largest category of GDP with a share of 46.1%, while the secondary sector still accounted for a sizeable 45.0% of the country’s total output. Meanwhile, the primary sector’s weight in GDP has shrunk dramatically since the country opened to the world. The economy is projected to grow 6.4% in 2018, which is nothing to sniff at but is a far cry from the over 10% annual growth seen no too long ago. Credit: Focus Economics.
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