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Purchasing Power Parity is meant to capture elements like cheaper costs of construction. It gives a real sense of the gap between Indonesia (4th most populous c
by yanowitz 9y ago
Purchasing Power Parity is meant to capture elements like cheaper costs of construction. It gives a real sense of the gap between Indonesia (4th most populous country, with China and India neck-and-neck, followed quite a bit lower by the U.S.) and the Netherlands. Corruption may be a factor too, but you can’t squeeze blood from a stone.
- Someone 9y agoIs meant to, yes, but it doesn’t, because it isn’t possible to capture pricing differences in a single number. In general, cheap to transport durable goods (such as electronics) move easily between countries and, hence, are priced similarly (barring taxes and import tariffs). Less cheap to transport (e.g. bricks) or less durable (e.g. fruit) goods move less easily, and labor moves least easily. Consequently, it is way cheaper in poorer countries to have personnel, to pay people for repairing stuff, etc.