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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (485)	1/6/1998 12:26:00 AM
From: Rational	Read Replies (2) \| Respond to of 9980

Stitch: << in Malaysia the price of fish, rice, and chili padi will have a much larger impact on buying power while in the states I guess it must be white bread and hamburger helper? How is this accounted for?>> The IMF/WB/IFC do not take the per-capita income literally. They have a multiplier, which for India is ~10 which should be multiplied with the per-capita income to get the purchase power. Ordinarily, the exchange rates are biased downward (US$ is higher than it should be) for countries that depend on high-margin imports (aircraft, defense equiment). This bias has gotten seriously accentuated due to the panic-driven currency runs. China and India are not getting affected as much because they have virtually self-sufficient local economies and can run (albeit inefficiently), keeping the imports restricted. Sankar

To: Stitch who wrote (485)	1/6/1998 12:29:00 PM
From: Geoff Nunn	Respond to of 9980

For example, here in Malaysia the price of fish, rice, and chili padi will have a much larger impact on buying power while in the states I guess it must be white bread and hamburger helper? Stitch, International comparisons of income are of dubious value when consumer tastes and preferences in the compared countries are dissimilar. Ideally, in the ppp method of conversion consumers in one country would place the same relative value on each good, and would consume it in the same proportion as consumers do in the other country. In practice, this means that income comparisons between Canada and the U.S. are probably more meaningful than comparisions between China and the U.S., which should be taken with a grain of salt. Thanks for all your nice posts here. Regards, GN