2005
International Comparison Program
Global
Purchasing Power Parities
and Real Expenditures
2008
by the International Bank for Reconstruction and Development/The World
Bank
The 2005 International Comparison Program has produced
estimates of the relative price levels of GDP and its principal
aggregates for 146 economies. These purchasing power
parities express the values of local currencies in relation to
a common currency. In this report, the common currency
is the U.S. dollar in 2005. When applied to the value of
GDP or any component of GDP, the resulting values reflect
the real value of consumption in each economy, corrected
for differences in price levels and unaffected by transitory
movements of exchange rates. This report provides PPPs
and related measures for GDP, actual individual consumption
by households, collective consumption of governments,
and gross fixed capital formation. Additional tables provide
the same data for several important components of the
GDP (such as food, clothing, and housing, to name a few).
The 146 economies account for more than 95 percent of
the world’s population and 98 percent of the world’s nominal
GDP. Table 8 lists the economies not included in the
2005 benchmark surveys along with estimates of their PPPbased
GDP per capita (computed as described in the section
“Estimation of PPPs for nonbenchmark economies”).
Contents
Acronyms and
Abbreviations
Preface
Acknowledgments
Part I: Purchasing Power Parities and 2005 ICP Results
Introduction
The International Comparison Program and
Purchasing Power Parities
The International Comparison Program (commonly known
as the “ICP”) is a worldwide statistical initiative to collect
comparative price data and estimate purchasing power parities
(PPPs) of the world’s economies. Using PPPs instead of
market exchange rates to convert currencies makes it possible
to compare the output of economies and the welfare
of their inhabitants in real terms (that is, controlling for
differences in price levels).
The System of National Accounts, 1993 (SNA93) provides
a common international framework for the measurement
of economic activity. Gross domestic product (GDP)
is the measure most often used to quantify economies’ economic
activity, and GDP and consumption per capita are
basic indicators of economic productivity and well-being.
But the conversion of output or expenditures, measured
in the local currency of one economy, to a common unit of
account for comparison or aggregation with that of other
economies is not a trivial problem. The standard method
has been to use market exchange rates. However, market
exchange rates are determined by the demand for, and supply
of, currencies used in international transactions. They
do not necessarily reflect differences in price levels and may
therefore under- or overstate the real value of an economy’s
output and the standard of living of its residents.
Purchasing Power Parities and 2005 ICP Results
The International Comparison Program
Purchasing Power Parity
Price Level Indexes
The Use of PPPs and Market Exchange Rates for
International Comparisons
Reliability of PPPs and GDP Volume Measures
2005 ICP: Results and Major Findings
Overview
About the Data
Description of the Tables
Tables of
Results
Part II: Technical Notes of the 2005 ICP
Data Requirements
National Accounts Data
Price Data: Household Consumption Expenditure
Representativity and Comparability
Price Data: Government Final Consumption Expenditure
Price Data: Gross Fixed Capital Formation
Changes in inventories
Balance of exports and imports
Reference PPPs
Comparison-Resistant Areas
Housing Rent
Government
Health
Construction
Machinery and Equipment
Data Validation
Data Validation: Prices
Data Validation: National Accounts
Data Issues and Accuracy
Methodology: Calculating PPPs
Overview
Annual National Average
Prices
Calculating PPPs at the Basic-Heading
Level
PPPs for GDP and its Major Aggregates within a
Region
Combining Regional Results with a Global Comparison: The
Ring Comparison
Estimation of PPPs for Nonbenchmark Economies
Appendices
A History of The ICP
B Governance of the ICP 2005
C The ICP Classification of Expenditure on GDP
D Productivity Adjustment in the Government Sector
E Estimating Average Prices for Household Consumption
Items of China
F Comparison of Methodology Used between ICP and
Eurostat-OECD Regions to Compute PPPs and Calibrate Them to the Global Level
G Comparisons of New 2005 PPPs with Those Estimated by
Extrapolating from Previous Benchmark Surveys.
H Estimation of Between-Region Linking Factors
I ICP Software
Glossary
Bibliography
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