Measure of country power

Measure of country power

October 20, 2023

Israel vs Palestinian #

Israel seems to occupy small region relative to all the palestinian allies around the region.
How is Israel holding up against them?

relative strength of two sides #

Brings up the notions

nominal GDP, real GDP #

  • Nominal GDP: GDP at current price
  • Real GDP: GDP at inflation adjusted price

GDP at PPP #

GDP at purchase power adjusted price
This is different from currency rate adjusted price.

For example, 1300 W = 1$ would not mean
we can assume that 1300 W can buy a big-mac implies 1$ can buy a big-mac.

Nominal exchange rate != PPP #

Why is it?

  • There are barriers (delays)
  • There are other forces that make those differ. Such as capital flows and goverment interventions

GDP at PPP #

Israel #

has $340 (billion)

surrounding nations #

  • Egypt: $1300
  • Jordan: $90
  • Syria: $110
  • Lebanon: $90
  • Palestinian: $30

GDP per capita #

Does GDP capture the relative strength well?
ie, having 100 members of 1000$ income would be equally powerful as 10 members of 10000$ income?

So we can use GDP per capita

In essense, GDP per capita captures Human / Technological / Soft superiority

Distribution of wealth #

But GDP per capita also has a problem where it can’t capture the difference of the wealth distribution.

One county with wealth constrained in few people vs another country with wealth spread among people might exibit different relative country strength (eg, their technological capital would be different)

measurement of distribution of wealth #

There are many measurements.

  • Gini Coefficient \[ G = \frac{1}{2} \int_{0}^{1} |F(y) - y| dy \]
  • Theil Index \[ T = \sum_{i=1}^{n} p_i \ln\left(\frac{p_i}{q_i}\right) \]
  • Palma ratio, Atkinson Index, Wealth Concentration ..

Further explores mathematical aspect of these two measurements. Mathematical definition of distribution of wealth