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purchasing power parity

The world is about as poor as we thought, and the fight to end poverty remains ambitious

Espen Beer Prydz's picture
World Bank estimates of global extreme poverty rely on many different data sources – among these are the price data that measure differences in the cost of purchasing a bundle of goods across countries. This measure of purchasing power parity (PPP) is used to ensure that the international poverty line reflects the same real standard of living across countries. Last year, the International Comparison Program (ICP) released PPP data from 2011, the first global update since the 2005 round.

PPPs and Global Poverty: July 9 Seminar at 12:30 PM, Join Online!

LTD Editors's picture

The Purchasing Power Parity (PPP) rates released in April 2014, based on the 2011 round of the International Comparison Program (ICP), entail some seemingly dramatic revisions to price levels and real incomes across the world. Looking back over the last three ICP rounds, back to 1993, it feels like we have been on an “ICP roller coaster” with falls in the estimated real incomes of many developing countries up to 2005 and then rises in 2011. The 2011 revisions have been taken to suggest substantially less poverty and inequality in the world than the 2005 round had implied. If we believe these new PPPs then the economic map of the world is quite different to what we thought. But can they be believed? A public debate has been generated by the new PPPs.

On July 9, 2014 Martin Ravallion (Department of Economics, Georgetown University) will shed more light on this ongoing debate at the Poverty and Applied Macro seminar hosted by the World Bank's research department.