Europe is the world's second-smallest continent, with an area of 10,180,000km² (3,930,000 square miles). Europe is located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere.
The United Nations recognizes 50 countries in Europe. However, many lists of European countries take the liberty of including territories that could be countries, but which the U.N. does not recognize as such. For example, Kosovo is a territory that many consider independent, but others consider to be part of Serbia. Other country-sized non-countries include the massive island territory of Greenland, which is an autonomous dependent territory of Denmark, and the FaroeIslands, a self-governing overseas administrative division of the kingdom of Denmark.
The European Union's collective economy ranks as one of the top three in the world alongside the United States and China (the exact order switches depending upon the specific statistic being compared). Several European countries are individually very wealthy and are among some of the wealthiest globally. For example, Germany has the fourth-largest economy in the world. However, economic prosperity in Europe varies significantly between countries. Eastern European countries, particularly those that were significantly affected by the Soviet Union's downfall, tend to be the poorest today.
How to measure the wealth of a nation
Gross Domestic Product (GDP) is one of the most important metrics used to measure the economic wealth of an entire nation. It is often complemented by Gross National Income (GNI) per capita, which gives a better indication of how that nation's individual citizens are faring.
Top 10 Poorest Countries in Europe (by 2020 GNI per capita, Atlas method, current US$)*
- Ukraine - $3,540
- Georgia - $4,290
- Kosovo (partially recognized) - $4,440
- Moldova - $4,570
- Albania - $5,210
- North Macedonia - $5,720
- Bosnia And Herzegovina - $6,090
- Belarus - $6,330
- Serbia - $7,400
- Montenegro - $7,900
Top 10 Poorest Countries in Europe (by 2020 GDP per capita, Atlas method, current US$)**
- Ukraine - $3,727
- Georgia - $4,279
- Kosovo (partially recognized) - $4,287
- Moldova - $4,551
- Albania - $5,215
- North Macedonia - $5,888
- Bosnia And Herzegovina - $6,032
- Belarus - $6,411
- Serbia - $7,666
- Montenegro - $7,686
**If counted as European countries rather than Asian countries, the transcontinental countries Azerbaijan ($4,214) and Armenia ($4,268) would also appear on the above list.
With a per capita GNI of $3,540, Ukraine is the poorest country in Europe as of 2020. Ukraine once had the second-largest economy in the USSR. However, when the USSR collapsed, Ukraine had difficulty transitioning into a market economy, which sent much of the population into poverty. Some of Ukraine's continuing issues contributing to its poverty are government corruption, Russian aggression (specifically Russia's illegal seizure of Crimea in 2014), and weak infrastructure.
Georgia posted a GNI per capita of $4,290 in 2020, lower than any European country except Ukraine. Geographically situated between Russia, Turkey, Armenia, and the Black Sea, this former member of the USSR is enduring some difficult times. However, its future looks bright. Thanks to improvements including substantial banking reforms, a reduction in corruption, and heavy governmental investment in education, Georgia's economy and its score on the Human Development Index (HDI) are both on the rise.
Assuming for the sake of conversation that it is a sovereign country and not an independent Serbian territory, Kosovo had a per capita GNI of $4,440 in 2020, making it the third-poorest country in Europe. Kosovo is a partially recognized state that declared itself independent from Serbia in 2008. About 30% of Kosovo's population earns an income that falls below the poverty line, meaning that about 550,000 people live in poverty. Additionally, Kosovo has an extremely high unemployment rate of 34.8% as of 2016, with a majority of families earning less than 500 Euros per month.
Moldova is one of the poorest countries in Europe, with a GNI per capita of $4,570 in 2020. Formerly part of the USSR, Moldova faced political instability, economic decline, trade obstacles, and other hardships following the Soviet Union's collapse in 1991. Factors contributing to poverty in the country include lack of large-scale industrialization, food insecurity, economic collapse during the transition into a market economy, and errors in social policy, among other things. Despite its recent struggles, Moldova is making progress, with the percentage of the population living below the national poverty line decreasing from 30.2% to 9.6% between 2006 and 2015.
Albania has a GNI per capita of $5,210. After the USSR's disintegration in the 1990s, Albania shifted from a socialist economy to a capitalist market economy. Although it is the fifth-poorest country in Europe, its economy is continually improving. This is due largely to Albania's rich natural resources, such as oil, natural gas, and minerals including iron, coal, and limestone.
6. North Macedonia
North Macedonia is the sixth-poorest country in Europe. After gaining its independence in 1991, North Macedonia underwent dramatic economic change and has gradually improved its economy. Trade accounts for about 90% of the country's GDP. Despite the policies successfully implemented by the government, North Macedonia still has a high unemployment rate of about 16.6%. At its highest, the unemployment rate was 38.7%. North Macedonia's per capita GNI was $5,720 in 2020.
Bosnia and Herzegovina had a 2020 GNI per capita of $6,090. The country is still struggling to rebuild from its own war for independence from Yugoslavia, which began in early 1992 and lasted until December 1995. The war and its accompanying ethnic cleansing wreaked havoc on the country's people, infrastructure, and economy. When the fighting ceased, the casualties were so great that one in four households had come to be headed by women. This put many families at a disadvantage, as women make up a smaller percentage of the workforce in Bosnia and Herzegovina and often get paid less than men. As a result, many families fell into poverty.
Like other former Soviet republics, Belarus faced economic trouble following the disintegration of the USSR. In the years before, Belarus had a strong economy and one of the highest living standards among Soviet republics. During the following years, Belarus faced economic hardship until 1996, when the economy began to recover. Between 2006 and 2011, when many countries in Europe felt the effects of the recession, Belarus's expenditures among its bottom 40% of people increased. The country's 2020 per capita GNI is $6,330.
Serbia's per capita GNI for 2020 is $7,400. At the beginning of the 2000s, Serbia experienced eight years of economic growth until the global recession in 2008. Serbia's economy entered a recession in 2009, causing a negative growth rate of -3% in 2009 and -1.5% in 2012 that caused the country's public debt to double to 63.8% of its GDP. About 25% of Serbians are impoverished. However, industries such as food and energy production are strong, and Serbia's economic situation continues to improve.
Montenegro's per capita GNI is $7,900. Montenegro's economy is small and relies heavily upon energy industries. Urban expansion and deforestation have eroded the country's natural resources, making it vulnerable to resource depletion. Additionally, gender and age discrimination cause large gaps in income, particularly for women. Internally displaced persons and refugees comprise about 50,000 of the population. They are among the poorest in the country, with a poverty rate that is roughly six times higher than the average national poverty rate of 8.6%.
How Europe's economies recovered from World War I & II
World War I and World War II damaged most European economies. During the Cold War after WWII, two different coalitions were formed to reconstruct Europe and bolster its economic health. Several central and eastern European states came together under the Soviet Union's control, forming COMECON (Council for Mutual Economic Assistance). Meanwhile, countries in western Europe accepted United States aid in the form of the European Recovery Program (ERP), also called the Marshall Plan, and linked their economies together through various trade and economic alliances.
These alliances included the 1948 Organisation for European Economic Co-operation (OEEC), which would evolve into today's Organisation for Economic Co-operation and Development (OECD), and the European Coal and Steel Community (ECSC), one of the ancestors of today's European Union (EU). These alliances helped western European countries to rapidly improve their economies, while many COMECON countries still struggled.
After the collapse of the Soviet Union, many former COMECON countries gradually joined the European Union (though several are still struggling with high levels of poverty):