Global Purchasing Power Parities and Real Expenditures - Afristat

More documents

Recommendations

Info

Appendix AHistory of The ICPEconomic statisticians have long recognized that usingexchange rates to compare the levels of economic activitybetween economies can lead to quite misleading results.Several projects were initiated in the 1950s and 1960s toexamine the alternatives to exchange rates for making suchcomparisons. In the early 1950s, the Organisation for EuropeanEconomic Co-operation (OEEC) produced purchasingpower parities (PPPs) for France, the Federal Republicof Germany, Italy, the United Kingdom, and the UnitedStates. In the early 1960s, PPP comparisons were carriedout in Latin America. Around the mid-1960s, the Conferenceof European Statisticians set up a project to makePPP-based comparisons between some market economiesand some centrally planned economies. Comparisons werealso made in the second half of the 1960s between severalEastern European economies by the Council for MutualEconomic Assistance (COMECON). Economic statisticiansfrom Hungary and Poland were heavily involved inthis work. A key initiative was to extend the concept ofconsumption expenditure for the ICP to include individualconsumption expenditure by government along with privatefinal consumption expenditure to form an aggregate oftotal individual consumption called “consumption expenditureof the population (CEP).” The aim of measuringCEP was to minimize the effect on the volume comparisonsof differences in institutional arrangements, particularlyregarding the extent to which the government andprivate sectors provided health and education services indifferent economies. In this respect, the ICP was more thantwo decades ahead of the System of National Accounts, 1993(SNA93), which set out the concept of “actual final consumptionexpenditure” (defined almost identically to CEP)as an official national accounts measure.In 1965, the United Nations Statistical Commission(UNSC) discussed in some detail the problems inherentin exchange rate comparisons and agreed that the UnitedNations Statistical Office (UNSO) should develop a moresuitable methodology for making international comparisonsof activity levels. In 1968, the UNSC considereda report that outlined a project (to be run from 1968 to1971) aimed at developing PPP-based comparisons for asmall group of economies. It agreed that a project shouldgo ahead to develop, test, and document techniques thatwould lead to more robust international comparisons. TheUNSO had only limited resources available; therefore, theUNSC requested that other international organizations andUN member economies assist in this project. At this stage,the proposal endorsed by the UNSC was to cover GDPmeasured from both the expenditure and production (oroutput) sides of the national accounts. The work in PhaseI concentrated on the expenditure side of the accountsbecause it was less difficult to implement in practice, given167
168 Global Purchasing Power Parities and Real Expendituresthat a single set of expenditures was involved, rather thanboth outputs and inputs, which gave rise to the added complexityof double deflation.Later in 1968, the UN International Comparison Project(ICP) was developed as a joint undertaking betweenthe UNSO and the University of Pennsylvania, whichestablished a special unit funded by a grant from the FordFoundation. The World Bank became involved, providingfinancial assistance directly and also through a grant fromthe Scandinavian economies, which was channeled throughthe World Bank. The United States Agency for InternationalDevelopment and the United States Social ScienceResearch Council assisted with monetary contributions.The United Kingdom offered in-kind statistical support forparticipating economies. The director of the UNSO wasresponsible for supervising the project. An advisory board,which had been set up to provide technical advice, considereddetailed proposals for the project at a meeting held inOctober 1969.Phase I of the ICP was run in two stages. The first was apilot project based on data collected for 1967 for six economies(Hungary, India, Japan, Kenya, the United Kingdom,and the United States). The second stage was benchmarkedto 1970. Another four economies (Colombia, France, theFederal Republic of Germany, and Italy), which had notbeen able to report the necessary data for 1967, wereincluded in this stage. The output consisted of a numberof different sets of estimates, including multilateral comparisonsbetween all 10 economies for GDP and a rangeof its components for 1970. The results of Phase I werereleased in A System of International Comparisons of GrossProduct and Purchasing Power (Kravis and others 1975).Details presented in this publication include the overallresults of the multilateral comparison for 1970, a variety ofbilateral comparisons for both 1967 and 1970, and the outcomesfrom various experiments on important issues (suchas rents, motor vehicle prices, and the consistency of somedifferent quantity comparisons).Phase II involved a further six economies, initially for abroader comparison for 1970, but with the main aim beingto update the PPPs and associated statistics to 1973. Thesix extra economies included in Phase II of the ICP wereBelgium, Iran, Korea, Malaysia, the Netherlands, and thePhilippines. Detailed results for the 16 economies werepublished in 1978 in International Comparisons of RealProduct and Purchasing Power (Kravis, Heston, and Summers1978).For Phase III, ICP product lists were modified in consultationwith a number of economies, including India andthe COMECON group, to make the ICP product specificationsmore generally applicable (for example, by removingcharacteristics such as brand names that were specific tothe United States). The greater diversity of economies inPhase III meant that the range of products to be priced hadto be expanded further so that all participating economiescould price a sufficient number of products that were representativeof their expenditures. At this time, the projectleaders considered the pros and cons of continuing with asingle global comparison or moving to regional comparisonsthat would be linked to produce worldwide results.The trade-off involved was that regionalizing the projectshould lead to improved comparisons between economieswithin a region, but at the expense of the comparisonsbetween economies in different regions because of the difficultiesinherent in linking results between regions. In theevent, Phase III went ahead as a single global comparison,although some regional results were presented, having beencalculated for the relevant economies from the globallybased results. Details were released in 1982 in World Productand Income: International Comparisons of Real GrossProduct (Kravis, Heston, and Summers 1982).There was a large increase—from 30 to 60—in thenumber of economies participating in Phase IV of the ICP,benchmarked to 1980. Some major changes also occurredin this round. The University of Pennsylvania ended itsinvolvement in the benchmark comparisons and handedover responsibility to the UNSO. Another significantchange was the regionalization of the ICP for the first time.The large number of economies involved from all aroundthe world was partly behind the regionalization. Anotherimportant factor was the decision by the OECD to set upa PPP program for its member economies in conjunctionwith the PPP program being run by Eurostat for economiesin what is now the European Union. Apart from theEurostat-OECD “region,” the other regions involved inPhase IV were Africa, Asia and the Pacific (Asia-Pacific),and Latin America. Regions were linked using a “core country”(sometimes called a “bridge country”) approach, in
Page 2:
Global Purchasing PowerParities and
Page 5 and 6:
© 2008 by the International Bank f
Page 7 and 8:
viContentsPart II: Technical Notes
Page 10 and 11:
Acronyms and AbbreviationsADBAfDBBO
Page 12 and 13:
PrefaceThis publication presents th
Page 14 and 15:
AcknowledgmentsThe ICP shares a com
Page 16:
Part IPurchasing Power Paritiesand
Page 19 and 20:
Global Purchasing Power Parities an
Page 21 and 22:
Global Purchasing Power Parities an
Page 24 and 25:
2005 ICP:Results and Major Findings
Page 26 and 27:
2005 ICP: Results and Major Finding
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34 and 35:
Page 36:
Tables of Results21
Page 39 and 40:
24 Global Purchasing Power Parities
Page 41 and 42:
Page 43 and 44:
Page 45 and 46:
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56:
Page 57 and 58:
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
100 Global Purchasing Power Paritie
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132: 116 Global Purchasing Power Paritie
Page 154: Part IITechnical Notes of the 2005
Page 162 and 163: Comparison-Resistant AreasSome comp
Page 164 and 165: Comparison-Resistant Areas 149mmmHo
Page 166 and 167: Data ValidationData validation was
Page 168: Data Validation 153determines the l
Page 184: Appendix A 169which selected econom
Page 216 and 217: GlossaryActual individual consumpti
Page 218 and 219: Glossary 203tice, general administr
Page 220 and 221: Glossary 205in nonmarket production
Page 222 and 223: Glossary 207Multilateral comparison
Page 224: Glossary 209able as a result of the
show all

Global Purchasing Power Parities and Real Expenditures - Afristat

Create successful ePaper yourself

Delete template?

Save as template?