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

To: peter michaelson who wrote (1815)	2/1/1998 10:00:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 9980

Peter & Sankar: PPP (Purchasing Power Parity) to the rescue. I think,Sankar's story highlights a philosphical aspect of one's outlook on life and acceptable norms of 'GDP', 'Standar of Living', 'Quality of life' etc become 'non-events' of little consequence. On the other hand speaking of things corporeal, measuring Per Capita Income of countires in dollar terms of a country is rather misleading and full of inconsistencies. In order to rectify this apparent flaw,I think World Bank (i think) started measuring GDP and Per Capita Income etc of countries using 'Purchasing Power Parity', which according to them is a better measurement of people's purchasing power in their own countries. The following is some information i found on this. [The PWT are an ambitious attempt to arrive at macro economic aggregates for long time series which are comparable across countries. The PWT estimates are better at showing differences in income after compensating for differences in purchasing power between countries. For example, in 1990-91, India's total GDP was Rs.5,308 bln. or Rs.6,327 per capita. Using the nominal exchange rate at that time of Rs.17.95 per dollar, this gives India's total GDP of $296 bln, or $352 per capita. This is an exceedingly misleading picture, because $352 would not be able to buy a standard of living in the USA which is comparable with what Rs.6,327 could purchase in India. This is because the nominal exchange rate reflects only the currency's relative purchasing power of traded goods, whereas GDP comparisons are effectively concerned with respect to all goods and services. The PWT estimates give us a much more meaningful method of making such comparisons across countries. The PWT estimates show India's per capita GDP in 1990 as being $1252 which is a correction factor of roughly three and half times to the figure of $352.] ------------------------------------------------------------------ The following is a table of countries listed according to the ranks based on the size of their GDP using Purchasing Power Parity.Amazing to see the difference.Funny China is No.2 right behind the U.S !!!! Gross Domestic Product ---------------------------------------------------------------------- GDP-1990 Rank 1970-90 (US$ bln.) (CARG %) ---------------------------------------------------------------------- At current prices from PWT USA 5,390 1 8.75 China 3,060 2 13.19 Japan 2,200 3 10.32 USSR 1,740 4 10.08 Germany 1,125 5 8.37 INDIA 1,064 6 10.41 France 940 7 8.32 UK 880 8 8.81 Italy 870 9 8.82 Brazil 690 10 10.82 ------------------------------------------------------------ Ps: I am sure you are aware of all this,but I thought I just put this up for those who are not familiar with it.

To: peter michaelson who wrote (1815)	2/1/1998 1:59:00 PM
From: Rational	Respond to of 9980

Peter: Thanks for sharing with the views on measurement of "prosperity." Many prominent economists have questioned the veracity of measuring prosperity by GNP, per-capita income, etc. But, it is difficult to find other measurable yard-sticks. About the boat-man being inconsiderate to the waiting customers, he perhaps was thinking of a free-market champion (like the waiting wealthy American) starting a motor-boat service; he was not prepared to sacrifice his regular nap and was oblivious of losing his livelihood! <VBG> Sankar