Parallel session 6a

1. The Methodological Innovations, Main Results
and Findings from the 2011 Round of the
International Comparison Program
Nada Mamadeh and Michel Mouyelo-Katoula
The World Bank
Presented by: Andrew Sharpe, Centre for the
Study of Living Standards and IARIW
Presentation to the 33rd IARIW General Conference, Session
6A
Rotterdam, The Netherlands
August 28, 2014
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2. Introduction
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International Comparison Program (ICP) is the largest
statistical operation in the world
The ICP is conducted every six years
Results for 2011 were released in April 2014
Purchasing power parity (PPP) estimates are now
available for 26 expenditure categories and 199
economies covering 97 per cent of the world
population and 99 per cent of world GDP
There are also 155 basic headings for final goods and
services
PPPs are used for gauging the relative importance of
economies, for poverty measurement, and for
administrative purposes

3. Introduction
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The key finding is that the world is becoming more
equal as measured GDP in poor countries has
increased relative to measured GDP in rich countries
ICP falls under the Charter of the UN Statistical
Commission and the project is led by a number of
chief statisticians
The Global Office of ICP 2011 is hosted by The World
Bank
The SNA 1993 guides the framework for the project
and there are specific guidelines for geographical
coverage, outlet selection, item selection, number of
items, price quotations, and frequency of collection
There is great emphasis on quality assurance and
transparency through a three-stage validation process
at the national, regional and global level for prices,
expenditure categories and PPPs

4. Major Methodological Improvements
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1) Global linking and aggregation: the global core list
of products enabled interregional linking to almost
all participating economies, an improvement over
the 2005 Ring list
2) Calculating basic headings PPPs: weighting country
product – dummy (CPD-W)
3) Dwellings: rental data for Africa, Latin America, and
West Asia; reference volume data for Asia and
Pacific; combination for OECD-Eurostat
4) Government: productivity adjustment for
government in 2011 for Africa, Asia, Pacific and
Latin America; no adjustment for OECD-Eurostat;
linking factors for all regions do make productivity
adjustments
5) Construction: new method which use prices of basic
materials, labour rates, and machinery costs

5. Results
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In 2011, world GDP based on PPPs from the 2011
round was US$90.6 trillion, 129 per cent of GDP
based on exchange rates (US$70.3 trillion)
In 2005, PPP-based GDP was 124 per cent of GDP
based on exchange rates
High income countries fell from 60.4 per cent of world
GDP to 50.3 per cent
India is now the third largest economy, up from 2.7
per cent of world GDP based on exchange rates to
6.4 per cent
Indonesia is now in the top 10, up from 1.2 per cent of
world GDP based on exchange rates to 2.3 per cent
In 2011 China’s GDP is now 87 per cent of the US
level up from 43 per cent in 2005

6. Results
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The highest GDP per capita is in Qatar at
US$146,521, followed by Macao at US$115,441
The most expensive economy, as expressed by the
Price Level Index or the ratio of the PPP to the
exchange rate is Switzerland, and the least expensive
Egypt
The world Gini coefficient dropped 14 per cent from
0.57 per cent in 2005 to 0.49 in 2011 with the new
results
With GDP per capita based on exchange rates, the fall
was only 10 per cent from 0.71 to 0.64
Comparisons with 2005 results are not
straightforward, due to economic changes, price
changes, and methodological changes

7. Conclusion
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It is conceptually impossible to maintain
consistency in PPPs simultaneously across time
and space
This means PPP extrapolations face challenges
ICP 2001 will be subject to an extensive
evaluation
A three-year rolling benchmarking approach may
be developed to minimize the burden on
participating economies

8. Comments
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Largest statistical project in the world, and it may
be the most important
Excellent primer of ICP 2011
Paper only 10 pages so does no provide a
detailed discussion
PPPs are very important and have serious
political implications, e.g. implications for poverty
measurement
Relationship to other PPP projects like World
Penn Tables

9. Questions
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What is the total cost of the exercise?
What about sub-national PPP estimates?
ICP estimate for Canada for 2011 of 1.240
relative to United States differs from OECD of
1.256. Why?
Do the 2011 ICP results correlate better with the
Big Mac Index than the 2005 ICP?
The authors talk about political constraints
compounding. Could they elaborate?