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Apple Is 0.5% Of US GDP, 0.15% Of Global GDP

This article is more than 9 years old.

As we digested the results from Apple's blowout quarter we got the usual series of comparisons of the numbers to the GDP of countries. As is also now traditional I pointed out that you cannot compare the turnover of a company to the GDP of a country. One is the value added in that economy, the other is simply what it says on the tin, the turnover. If we want to compare the two things as economic units we've got to compare like with like: either turnover with turnover or value added with value added. Which is exactly what I did here.

OK, that's excellent. But someone over in The Guardian isn't having it. Apparently this is just grumbling and it's still useful to compare the numbers so there:

 This string of dollar signs doesn’t just mean that Apple is richer than most companies; it means that it’s richer than most countries. If Apple’s earnings continue apace its annual revenue will be almost $300bn; a figure comparable to the GDP of Israel, Greece, Denmark or Hong Kong.

It should be noted that GDP measures the value of goods and services produced in a country and is not identical to a company’s revenue. “Apple Is Not As Big As Israel, Greece, Denmark Or Hong Kong, Please, Get A Grip,” grumbled Forbes. But just because GDP is different doesn’t mean the comparison isn’t useful; indeed it highlights an important shift in the power balance between countries and corporations.

Well, that tells me, doesn't it? Even though it's innaccurate, not comparing like with like, it's still useful because, well, politics basically. Yet in the same piece we get told this:

While all this may seem depressing, take heart in the fact that no matter how omnipotent they may seem, all corporate empires eventually fall. Take Nokia , for example, which accounted for a 4% of the Finnish GDP in 2000 and had 41% of the mobile phone market worldwide in 2006. Know anyone with a Nokia now? Exactly.

But that shows us exactly why the comparison doesn't work. Finnish GDP in 2000 (I know we've different years here but these are the figures that are being used) was of the order of $120 billion. Nokia's turnover in 2006 was €51 billion, or close enough to $60 billion given my memory of exchange rates at that time. So using the turnover is equal to GDP idea we think that Nokia was 50% of the Finnish economy. But measuring it properly it was (again, different year but these are his figures, not mine) we find that Nokia is 4% of Finnish GDP. And being out by more than one order of magnitude really isn't accurate as a comparison of anything, is it? Not even for political reasons.

As to what Apple really is in size as an economic unit the best (better than mine linked above as I made some very simplistic assumptions) is probably this from FT Alphaville:

To be precise, we estimate that Apple’s economic output in 2014 was worth about $87 billion. According to the IMF , the next biggest economies were Ecuador and Slovakia, which each produced about $100 billion. Just below Apple were Oman at $81 billion, Azerbaijan at $78 billion, and Belarus at $77 billion.

If we say that the US economy is $17 trillion (inaccurate but close enough) then Apple is equal in size to 0.5%, half a percent, of the US economy. And if the global economy is $60 trillion (again, innaccurate but close enough) then Apple is 0.15% of that global economy. And given that Apple operates globally that's probably the right comparison to make.

Except, of course, if you're trying to play politics with these numbers as it's usually quite difficult to get people marching in the streets over 0.15% of anything.

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