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International Comparison Program

World Bank to publish Purchasing Power Parities in March 2014

Grant Cameron's picture

In June 2013 we announced the upcoming release of the results from the 2011 round of the International Comparison Program (ICP). The results will include ICP 2011 benchmark PPPs and related volume measures for 199 participating countries/economies.

World Bank to publish Purchasing Power Parities in December 2013

Frederic A. Vogel's picture

Given the complex nature of the ICP and the fact that it has become the largest worldwide statistical operation, the program decided that the December release will be postponed until March 2014, in an effort to produce the utmost quality results. Read more ...

The preliminary results from the 2011 round of the International Comparison Program (ICP) will be released in December 2013 followed by a more in-depth report in March 2014. The first release will provide Purchasing Power Parities (PPPs), price level indexes, and real expenditures for gross domestic product (GDP) and major aggregates for over 190 countries. Major economic indicators on the global economy produced by the World Bank are based on PPPs which are used to provide internationally comparable price and volume measures for GDP and its expenditure components. The same PPPs are used to determine comparable poverty levels across countries based on the $1.25 per day poverty line.

What Does Adam Smith’s Linen Shirt Have to do with Global Poverty?

Martin Ravallion's picture

In his Inquiry into the Nature And Causes of the Wealth of Nations Adam Smith pointed to the social-inclusion role of a linen shirt in 18th century Europe:

“A linen shirt … is, strictly speaking, not a necessary of life. Adam Smith. Photo: Istockphoto.comThe Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct.”

This passage has often been used to justify the view that poverty is not absolute but relative—that certain socially-specific expenditures are essential for social inclusion, on top of basic needs for nutrition and physical survival.

The way this idea is implemented in practice is to set a “relative poverty line” that is a constant proportion of average income for the country and date in question. That is how poverty is measured in most of Western Europe. By contrast, poverty measures in developing countries have almost invariably used absolute lines, which aim to have a fixed real value over time. The World Bank’s international “$1 a day” poverty lines also aim to be absolute lines across countries, using purchasing power parities from the International Comparison Program.