Publication: Purchasing Power Parities for Policy Making: A Visual Guide to Using Data from the International Comparison Program
Loading...
Files in English
48,208 downloads
Date
2021-06-10
ISSN
Published
2021-06-10
Author(s)
Editor(s)
Abstract
The International Comparison Program (ICP) is a worldwide statistical initiative led by the World Bank under the auspices of the United Nations Statistical Commission. It produces comparable price and volume measures of gross domestic product (GDP) and its expenditure aggregates across economies. Through a partnership with international, regional, sub-regional and national agencies, the ICP collects price data and GDP expenditures to estimate purchasing power parities (PPPs) for the world’s economies. This guide provides an overview of how data and indicators based on these ICP outputs are used in a host of analyses, including monitoring progress towards the Sustainable Development Goals, to inform policy making across the socioeconomic spectrum at the national, regional, and international levels. Seventy charts and maps illustrating these uses are organised under eleven policy-focused chapters: the size of the economy and price levels; poverty and inequality; trade and competitiveness; labor costs, wages, and social safety nets; food and nutrition; health; education; energy and climate; infrastructure; human development; and administrative uses. The indicators are produced by the World Bank and other organizations including Eurostat, the Food and Agriculture Organization, the International Energy Agency, the International Labour Organization, the International Monetary Fund, the International Telecommunication Union, the Organisation for Economic Co-operation and Development, the United Nations Development Program, the United Nations Educational, Scientific and Cultural Organization, the World Economic Forum, and the World Health Organization. The guide also highlights notable uses of underlying ICP data on food prices and on public sector wages, as well as the wealth of data from the ICP database itself, such as price levels, real expenditures, and expenditure shares for aggregates below GDP for each economy. In addition, the guide includes a comprehensive chapter on the uses and limitations of PPPs and analyses for which they are appropriate, as well as a technical note outlining the concepts and definitions of terms used. A web-based version (https://www.worldbank.org/en/programs/icp/brief/PPPs-for-Policy ) is also available, and more information can be found on icp.worldbank.org.
Link to Data Set
Citation
“World Bank. 2021. Purchasing Power Parities for Policy Making: A Visual Guide to Using Data from the International Comparison Program. © World Bank. http://hdl.handle.net/10986/35736 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Preferences, Purchasing Power Parity, and Inequality(World Bank, Washington, DC, 2015-08)This paper makes analytical, methodological and empirical contributions to the literature on purchasing power parity. Purchasing power parities are required in a host of cross-country welfare comparisons, such as poverty rates and gross domestic product. The subject has recently generated much interest in the wake of the release of the final results of the 2011 International Comparison Program. This paper introduces a preference-based analytical framework that departs from the conventional Balassa-Samuelson framework in deriving empirically verifiable propositions on the link between purchasing power parity and exchange rates, and between purchasing power parity and inequality. The paper also provides an alternative methodology for calculating purchasing power parities that are benchmarked against the 2011 International Comparison Program purchasing power parities. As this study shows, the alternative methodology is capable of easy implementation on readily available data sets. The benchmarking exercise suggests that the 2011 International Comparison Program generally understates purchasing power parity and overstates gross domestic product, and that the purchasing power parities vary across expenditure percentiles. The study reports regional variation in the direction of the difference between the two purchasing power parities. The empirical evidence is supportive of the positive association between inequality and purchasing power parity derived in the paper.Publication Arab Republic of Egypt : Poverty Assessment Update, Volume 1. Main Report(Washington, DC, 2007-09-16)This report on the Poverty Assessment Update of Egypt is a contribution to the strategy of poverty alleviation pursued by the Government of Egypt. Using data from the two household surveys in 2000 and 2005, this report assesses the nature and dimensions of poverty in Egypt, and discusses the role of macroeconomic policies and labor markets in improving living standards. The report updates the findings of "Poverty Reduction in Egypt: Diagnosis and Strategy," published by the World Bank in 2002. Over the last two years Egypt has achieved remarkably high economic growth. Should this turnaround be sustained, there is hope that poverty can be dramatically reduced. Even though the report does not cover this most recent period, it is important to learn from the lessons of the recent past, and the report provides new information and insights that could be useful for policy-makers: 1) It identifies the overall scope and trends in poverty between 2000 and 2005, focusing on material aspects, but also assessing progress in non-income dimensions; 2) It isolates key correlates to poverty and economic vulnerability, providing detailed analysis of how inflation affected the poor in this period; 3) It links the labor market's developments with changes in living standards and poverty; and 4) It provides the analytical base for mapping poverty in Egypt, which can improve the targeting of social programs. The first chapter examines the evolution of living standards in Egypt during the period of analysis - 2000 to 2005. It also gives the details of the poverty map and where the poor live. Chapter 2 describes who the poor are and provides the poverty correlates: looking at the characteristics of the poor and the relation of these characteristics to education (and access to education), employment, gender, age, or asset characteristics. Chapter 3 continues by providing some background on economic developments between 2000 and 2005 and identifies possible areas of policy interventions in light of economic and social policies and developments after 2005. Chapter 4 offers in-depth analysis of the labor market to attempt to discern longer-term trends in living standards, and links employment with poverty levels. Finally, Chapter 5 looks at the capacity of the monitoring system, and lays the foundations for a future analytical program.Publication Purchasing Power Parities and Real Expenditures of World Economics : A Comprehensive Report of the 2011 International Comparison Program(Washington, DC, 2015)The International Comparison Program (ICP) is a large and highly complex worldwide statistical program conducted under the charter of the United Nations Statistical Commission (UNSC). The ICP is designed to provide globally comparable economic aggregates in national accounts that can be used by individual researchers, analysts, and policy makers at the national and international levels and by international organizations such as the European Union, International Monetary Fund, Organization for Economic Co-operation and Development (OECD), United Nations, and World Bank. Over its lifetime, the ICP has become the principal source of data on the purchasing power parities (PPPs) of currencies, measures of real per capita income, and measures of real gross domestic product (GDP) and its main components from the expenditure side, including private consumption, government expenditures, and gross fixed capital formation. Indeed, since its inception in 1970, successive rounds of the ICP have produced valuable data for international economic analyses of economic growth and the catch-up and convergence of incomes among nations; productivity levels and trends; analyses of systematic patterns in national price levels and trends; construction of the Human Development Index by the United Nations; measures of regional and global inequality in incomes and consumption; and estimates of the incidence of absolute poverty using World Bank developed yardsticks such as the US$1 a day and $2 a day poverty lines.Publication Turkey : Poverty and Coping after Crises, Volume 2. Background Papers(Washington, DC, 2003-07-28)Turkey experienced severe losses of life and infrastructure in 1999 caused by the August earthquake. The earthquake was followed by a period of economic and financial crisis, culminating in a major currency devaluation in February 2001. What has been the social impact of these crises? In order to answer that question, the World Bank and the Government of Japan co-financed a household survey during the summer of 2001, which consisted of surveying 4200 households on their consumption and income, and interviewing 120 respondents in depth for case studies. This study seeks to answer three main questions: how many are poor in Turkey in 2001; who are the poor and why are they poor?; and how do the poor cope with risk and poverty?. The major effect of the crises has been an increase in poverty in urban areas of Turkey from 1994 to 2001. Extreme poverty in all of Turkey has not changed, and remains at low levels, but inequality is also unchanged at quite high levels. A relatively large share (nearly one-fifth) of the urban population has consumption below a food standard, and qualitative evidence indicates that poverty has worsened in rural areas as well. The report concludes with the following policy recommendations:1) Macroeconomic management to resume broad-based growth, which should reverse the poverty trend since the vast majority of the newly poor are not extremely poor 2) Counter negative coping strategies of the poor by providing conditional cash transfers 3) Expand job opportunities for the newly poor through micro-projects and community development 4) Improve targeting and coverage of the extreme poor and outreach to them through institutional strengthening 5) Institute regular poverty monitoring through household surveys and the development of a poverty map.Publication Handbook on Poverty and Inequality(Washington, DC: World Bank, 2009)The handbook on poverty and inequality provides tools to measure, describe, monitor, evaluate, and analyze poverty. It provides background materials for designing poverty reduction strategies. This book is intended for researchers and policy analysts involved in poverty research and policy making. The handbook began as a series of notes to support training courses on poverty analysis and gradually grew into a sixteen, chapter book. Now the Handbook consists of explanatory text with numerous examples, interspersed with multiple-choice questions (to ensure active learning) and combined with extensive practical exercises using stata statistical software. The handbook has been thoroughly tested. The World Bank Institute has used most of the chapters in training workshops in countries throughout the world, including Afghanistan, Bangladesh, Botswana, Cambodia, India, Indonesia, Kenya, the Lao People's Democratic Republic, Malawi, Pakistan, the Philippines, Tanzania, and Thailand, as well as in distance courses with substantial numbers of participants from numerous countries in Asia (in 2002) and Africa (in 2003), and online asynchronous courses with more than 200 participants worldwide (in 2007 and 2008). The feedback from these courses has been very useful in helping us create a handbook that balances rigor with accessibility and practicality. The handbook has also been used in university courses related to poverty.
Users also downloaded
Showing related downloaded files
Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.