PPP-adjusted GDP per-capita gives an indication of the level of goods/services affordable by an individual citizen. Total GDP, unadjusted, is an indicator of a country's economic power. What does PPP-adjusted total GDP indicate?
( I live in New Orleans, 35% of kids don’t have enough calories per days to have a proper brain development. And New Orleans is fine compared to the rest or Louisiana )
To take a example that is currently of interest, Russia's ability to manufacture weapons is far greater than that if a country with the same nominal GDP but is closer to its PPP GDP (plus the effects of being more self sufficient than most countries other than the big two).
So that's where you look first.
That's why difference exists in the first place - because of power imbalance driven by different levels of technological progress.
I agree. As I commented recently here, we should also normalize by total hours worked. People in the US work much more than in many other countries.
I guess one use of total GDP adj. b. PPP would be when countries negotiate something. Then, China would have a strong argument for setting terms.
Depends on what you want to compare.
If you want to understand the "heft" of the country in terms of the sheer size of the economy (adjusted for exchange rates) then you do country GDP on PPP basis.
If you want to understand the size taking into account currency rates then you do plain GDP.
If you want to understand how well off a citizen is THEN you do per-capita GDP.
When countries play on the world stage for influence, their overall heft i.e. total GDP (whether on a PPP basis or not) is essentially the main determinant.
Even that holds only true if all other things are equal. But low PPP countries are strongly correlated with less industrialization, less educated workforce etc. That's why most (low-PPP) countries, even large ones, don't produce their own jets - it's cheaper to buy them.
> Most of that is in trade currency, so no PPP adjustment.
It's non-trivial to make that cut. I'd say things PPP for stuff like food doesn't count, but PPP for even rather basic industrial products already does.
The treemap shows how global total purchasing power is divided between countries.
A treemap of GDP PPP per capita would show the breakdown of purchasing power if you put one citizen of each country in a single room. I think a bar chart would be a better choice in that case.
If you plot in terms of PPP GDP, other counties suddenly appear much smoother.[1]
0. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?location...
1. https://data.worldbank.org/indicator/NY.GDP.MKTP.PP.CD?locat...
But eating out, getting education, child care costs and foremost real estate, are all deeply PPP corrected.
Assuming India as a Commonwealth country counts in Oceania, that leaves Indonesia as the largest "Disputed Territories" member on this graph...
I don't think anyone here believes China is ahead in terms of average standard of living. This graphic is just about the overall size of the economy.
In case of adverse currency move, EU, Russia and China may still produce as much stuff (taken together they produce all of the components, whose effective price unchanged), but their US competitors are all undercut on price. They'll consume a bit less for the duration, though.
It all depends on how it's produced in China and also what's the marketing and the price positioning. It probably can get away with higher price by positioning itself as an exotic brand.
You could ask the same for North Korea, is a Big Mac really the same product over there than in Alabama ?
I wonder how they come up with a common ground between Kuwait and Mexico, it feels incredibly easy to manipulate from the source.
