Global Purchasing Power Parities and Real Expenditures - Afristat

206 Global Purchasing Power Parities and Real Expendituresestablishing a regular program of worldwide PPP comparisonsof GDP. Comparisons were organized for 1970, 1973,1975, 1980, 1985, and 1993. They covered 10, 16, 34, 60,64, and 83 countries, respectively. Responsibility for thesecomparisons was shared by the United Nations StatisticsDivision and the University of Pennsylvania. The WorldBank is the current global coordinator of the ICP.Ikle method. An average-price method to compute PPPsand real final expenditures above the basic heading. Itentails valuing a matrix of quantities, using a vector ofinternational prices. The vector is obtained by averagingnational prices across participating countries after they havebeen converted to a common currency with PPPs. The Ikleweighting scheme is based on real expenditure structures.The PPPs are obtained by averaging within participatingcountries the ratios of national and international pricesweighted by expenditure. The international prices and thePPPs are defined by a system of interrelated linear equationsthat require solving simultaneously. The Ikle methodproduces PPPs that are transitive and real final expendituresthat are additive. Compared to the GK, the Ikle minimizesthe Gerschenkron effect. Ikle results are considered to bebetter suited to the analysis of price and volume structuresacross countries.Imports of goods and services. The value (c.i.f.) on importsof goods and services.Indirect comparison. A price or volume comparisonbetween two countries made through a third country.For example, in the case of countries A, B, and C, the PPPbetween A and C is obtained by dividing the PPP betweenA and B by the PPP between C and B as follows: PPPA/C= PPPA/B / PPPC/B.Individual consumption expenditure by government. Theactual and imputed final consumption expenditure incurredby general government on individual goods and services.Individual consumption expenditure by households.The actual and imputed final consumption expenditureincurred by households on individual goods and services;also includes expenditure on individual goods and servicessold at prices that are not economically significant.By definition, all final consumption expenditures of householdsare for the benefit of individual households and areindividual. Also referred to as “final consumption expenditureof households” and “household final consumptionexpenditure.”Individual consumption expenditure by NPISHs. Theactual and imputed final consumption expenditure incurredby nonprofit institutions serving households (NPISHs) onindividual goods and services. In practice, most final consumptionexpenditures of NPISHs are individual in nature,and so, for simplicity, all final consumption expendituresof NPISHs are treated by convention as individual. Alsoreferred to as “final consumption expenditure of NPISHs”and “social transfers in kind.”Intermediate consumption. The value of the goods and services,other than fixed assets, that are used or consumed asinputs by a process of production.International dollars. The purchasing power parities atthe global level for each economy are computed with theUnited States = 1.00, making it the numeraire currency.These PPP conversion factors transform GDP and aggregatesin national currency into a common world currencyreferred to as “real expenditures in the international dollar.”To remove the effect of the U.S. exchange rate, indexes ofreal expenditure per capita at the world = 100 reflect theratio of national real expenditures per capita to the worldaverage real expenditures per capita.Item. A good or service precisely defined for use in priceobservation. A good or service defined by an item specificationand included on an item list. Countries select the itemsthey price from among the items included on the item list.Also referred to as “product.”Machinery and equipment. Includes fabricated metal products,general purpose machinery, special purpose machinery,electrical and optical equipment, transport equipment,and other manufactured goods.Miscellaneous goods and services. Includes expenditureson personal care, personal effects, social protection, insurance,and financial and other services.