This report highlights key metrics by major domestic spending category for the top 25 richest countries. Those top-level categories are consumer spending, government outlays and capital investment for each nation.
Domestic spending is distinct from what are technically considered a country’s expenditures. The latter terminology refers to a country’s consumer and government spending but including foreign spending on that nation’s exports, plus investment, minus imports which represents a country’s spending abroad. Expenditures are typically tied to an economy’s Gross Domestic Product (GDP).
To define how domestic spending components are defined, it is important to understand that consumer spending represents personal buying of goods and services mainly by households. The level of government spending reflects the role of the state. According to The Economist, it is higher in countries like Germany and Canada where government provides many services.
The third component of domestic spending is investment since it provides the framework for future production. For this report, investment means capital spending on such assets as factories, machinery, equipment as well as inventory levels of raw materials.
Richest Countries’ Domestic Spending Percentages Compared
The table below shows the domestic spending components for each of the world’s 25 wealthiest nations. Data shown is generally for 2018, although only 2017 figures were available for China, Japan and Iran.
You can change the presentation order by clicking the triangle icons at the top of each column. Starting with the largest economy, the Rank column refers to the relative size of each country in terms of Gross Domestic Product (GDP) on a Purchasing Power Parity basis. You can also re-order the data by percentages for consumer spending, government spending and capital investment in descending or ascending order.
The averages for these 25 richest countries by domestic spending component is consumer spending at 58.3%, government spending at 31.7% then capital investment at 23.6%.
Economies with the highest comparative percentages of consumer spending are Nigeria (74.9%), Pakistan (68.3%), Egypt (64.6%), Taiwan (57.8%) and Mexico (57%).
Those countries that lead in the percentage size of government spending are Germany (38.4%), Italy (38.2%), Iran (36.4%), Poland (34.5%), Spain (34.2%) then Canada (33.3%).
As for the third component namely capital investment, China historically has had the strongest percentage and again does in the latest available statistics at 37.5%. In second place is Saudi Arabia at 32.9% trailed by Indonesia (31.9%), South Korea (30.4%) and India (26.7%).
Myths, Anomalies and Estimates
Although we carefully vetted the statistics used to create the above table, they should not be viewed as scientific or actuarially credible.
There are several realities to bear in mind when perusing metrics including those listed under Research Reference Materials.
Many of the statistics are estimates and even so-called final numbers are subject to ongoing revisions by the publishing authorities.
More specifically, the consumption component tends to be overstated and investment under-recorded. The Economist, cites some examples of this including:
- Government spending on roads, defense, education is generally accounted for as consumption rather than investment.
- Capital goods bought by a financial institution and leased to an industrial company are also typically classified as consumption.
- Comparing 2 or more countries involves different calculation methodologies, reporting delays and comparatively less stringent accounting standards.
- Conflicting content categorization rules often results in country-versus-country inconsistencies.
Research Reference Materials:
International Monetary Fund, General government total expenditure (% of GDP). Accessed on November 28, 2019
Organisation for Economic Co-operation and Development, Household Spending. Accessed on November 28, 2019
The Economist, Guide to Economic Indicators: Making Sense of Economics (7th Edition). Accessed on November 28, 2019
The Global Economy, Business and economic data for 200 countries. Accessed on November 28, 2019
Trading Economics, Economic Indicators by Category. Accessed on November 28, 2019
Wikipedia, List of countries by government spending as a percentage of GDP. Accessed on November 28, 2019
World Bank, Financial consumption expenditure (% of GDP). Accessed on November 28, 2019
World Bank, General government final consumption expenditure (% of GDP). Accessed on November 28, 2019
World Bank, Total investment (% of GDP). Accessed on November 28, 2019