If gross domestic product is converted into a common unit using exchange rates, income per person in Japan, Norway and Switzerland in 1999 appears higher than in the United States. But this is because price levels are higher in Japan, Norway and Switzerland. If PPPs are used, showing the ratio of the prices of the same goods or services in different countries in national currency terms, the United States comes out at the head of the list. What this effectively means is that $100 buys more in the United States than it does in Japan or Norway – it has more purchasing power. The PPP calculation also shows that the volume of goods and services purchased in the United States is higher than in the other countries. The latest PPP benchmarks include all 30 OECD countries, and 13 non-OECD ones – EU candidate countries Bulgaria, Cyprus, Estonia, Malta, Latvia, Lithuania, Romania and Slovenia, plus Croatia, Israel, Macedonia, the Russian Federation and Ukraine. The 10 largest economies among the 43 considered in the latest PPP calculations are the United States, Japan, Germany, France, Italy, United Kingdom, the Russian Federation, Mexico, Canada and Spain. The 15 EU economies are virtually the same economic size as the United States.
• Purchasing Power Parities and Real Expenditures: 1999 Benchmark Year, OECD, 2002.
©OECD Observer No 231/232, May 2002
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