Why is it important to express per capita GNI in Purchasing Power Parity (PPP) US$?
The HDI attempts to make an assessment of 169 diverse countries and areas, with very different price levels. To compare economic statistics across countries, the data must first be converted into a common currency. Unlike market exchange rates, PPP (Purchasing Power Parity) rates of exchange allow this conversion to take account of price differences between countries. In that way GNI per capita (PPP US$) better reflects people’s living standards. In theory, 1 PPP dollar (or international dollar) has the same purchasing power in the domestic economy of a country as US$1 has in the United States economy. The new PPP values have been used since 2008. The latest International Comparison Survey ICP, from which the PPPs are calculated, was done in 2005; 146 countries took part in the survey, which were 26 more than in the previous one. For further discussion on the PPP, see Human Development Indices – A statistical update 2008 (Section 2).
