Luxembourg, oil-rich Norway, the U.S. and Ireland top the ranking for gross domestic product per person in 2005, according to a new tally by the Organization for Economic Development and Cooperation, the multilateral organization based in Paris, and other bean-counting agencies that used purchasing-power parity, a calculation that takes different countries' price levels into account...
The figures for purchasing-power parity compare economic and consumer activity in 30 OECD members and 25 other countries, including Russia and the Balkan states. They show, among other things, that since 2002, Mexico's GDP per person rose from 37% of the OECD average to 39% in 2005. Italy's GDP per head fell from a level 5% above the OECD average to 4% below. Switzerland's slipped from 30% to 20% above the OECD average over the same period. Meanwhile, the rising value of Norway's oil exports helped its GDP per head jump to 65% above the OECD average in 2005 from 45% in 2002...
PPP calculations are an alternative to relying on current exchange rates to compare countries, and the two techniques can give very different pictures. Based on exchange rates, for instance, Denmark's income per person exceeds that of the U.S., but when PPP calculations are made, its per capita GDP is lower. "This is because the price level is higher in Denmark than in the U.S. Exchange rates overstate the purchasing power of Danish consumers compared to consumers in the U.S. The PPP conversion corrects for this bias."
from the Wall Street Journal
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