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International Comparison Program (ICP)

International Comparison Program (ICP)

The ICP is one of the largest statistical initiatives in the world.  It is managed by the World Bank under the auspices of the United Nations Statistical Commission, and relies on a partnership of international, regional, sub-regional, and national agencies working under a robust governance framework and following an established statistical methodology.

The main objectives of the ICP are to:

(i) produce purchasing power parities (PPPs) and comparable price level indexes (PLIs) for participating economies;

(ii) convert volume and per capita measures of gross domestic product (GDP) and its expenditure components into a common currency using PPPs.  

PPPs are calculated based on the price of a common basket of goods and services in each participating economy and are a measure of what an economy’s local currency can buy in another economy. Market exchange rate-based conversions reflect both price and volume differences in expenditures and are thus inappropriate for volume comparisons. PPP-based conversions of expenditures eliminate the effect of price level differences between economies and reflect only differences in the volume of economies.

The release of ICP 2017 Results

The International Comparison Program (ICP) released economic indicators and results for the reference year 2017 in May 2020. PPPs, PLIs and estimates of PPP-based GDP and its major expenditure components in aggregate and per capita terms were published for the 176 economies that participated in the program. Revised results for the preceding reference year 2011 and preliminary estimates of annual PPPs for 2012-2016 were also released.

  • ICP 2017 Report: 

Purchasing Power Parities and the Size of World Economies: Results from the 2017 International Comparison Program

Data

ICP 2017 cycle

Results from the International Comparison Program (ICP) 2017 cycle include data for the new reference year 2017, revised data for the previous reference year 2011, and annual purchasing power parities (PPPs) for 2012 to 2016.

2017 results are available for 176 participating economies and their aggregate regions. They cover 44 expenditure headings and provide several indicators for each heading, including PPPs, national accounts expenditures in PPP and nominal terms, and price level indices. Imputed results are available for an additional 12 economies that did not participate in the ICP 2017 cycle.

Revised 2011 results are available for 179 participating economies and cover 44 expenditure headings and several indicators, including PPPs, national accounts expenditures in PPP and nominal terms, and price level indices. Additionally, partial results are available for 20 Pacific islands, while imputed results are available for 15 economies that did not participate in the ICP 2011 cycle.

Annual PPPs are available for 2011 to 2017 and cover 6 major expenditure headings.

Previous ICP cycles

Original results from the ICP’s 2011 and 2005 cycles remain available to users. Note that the 2011 data were revised during the ICP 2017 cycle using updated expenditures, regional PPPs, population, and market exchange rate data and users should access these data through the ICP 2017 cycle links above.

 

Access and archiving policy

The ICP Data Access and Archiving Policy outlines the elements of ICP Data Access and Archiving Policy, as approved by the ICP Governing Board. These elements include the objectives, guiding principles, and procedures for data archiving and researcher access to underlying detailed PPPs, expenditure data and average prices.

Revision policy

The ICP Revision Policy summarizes and defines how ICP indicators will be revised, as approved by the ICP Governing Board. It describes the triggers and guidelines for revising ICP indicators, as well as the timing of revisions and the steps to be taken to communicate these revisions to users.

Quality Assurance Framework

The ICP Quality Assurance Framework (ICP-QAF) was developed under ICP 2011 to ensure the quality of ICP activities and results. The framework introduces rigor, structure, and a common language in the assessment of the quality of microeconomic data and aggregated results and the implementation of relevant processes.  It comprises principles that ICP procedures at the country, regional, and global levels should adhere to.

Uses and applications of ICP data

PPPs are primarily used to convert the national accounts data of economies, such as GDP and its expenditure components, into a common currency.  In doing so they eliminate the effect of price level differences between economies and reflect only differences in the volume or output of economies. PPPs are also used to derive price level indexes (PLIs) - the ratio of an economy’s PPP to its market exchange rate.  

ICP data encompass PPPs and PLIs, as well as PPP-adjusted expenditures in both aggregate and per capita form, for nearly 200 economies. These data are essential to cross-country comparisons of GDP, consumption and investment.  

As a global public good, ICP data are used for research and analysis, indicator compilation, policymaking, and administrative purposes at the national, bilateral, regional, and global level. Users of ICP data, and the cross-country comparisons that they enable, include policymakers, multilateral institutions, academia, the media and the private sector.  

The breadth and depth of the ICP dataset make it a valuable input to a wide range of themes under the economic, environmental, and social development umbrellas.  PPPs are used to establish the international poverty line and measures of global poverty and income inequality, which in turn are used by Sustainable Development Goals 1 and 10 to monitor progress.  Other SDGs focusing on agriculture, health, education, labor, and energy and emissions also draw on PPPs to track progress.  ICP data are also used in the UN’s Human Development Index and the World Economic Forum’s Global Competitiveness Index. Analyses of economic growth, productivity, trade, government expenditure, investment, health costs, migration, waste, welfare, prices, and the impact of violence are other examples. 

The list below highlights major outputs that rely on these data. A summary of the limitations and recommended uses of PPPs is also presented.

Major applications

Major applications by international organizations (Detailed list

  • Sustainable Development Goals (United Nations)
  • Twin goals of ending extreme poverty and promoting shared prosperity (World Bank)
  • Human Development Index (United Nations)
  • Global Competitiveness Index (World Economic Forum)
  • Goalkeepers Report (Bill & Melinda Gates Foundation)
  • Global Wage Report (International Labour Organization)
  • Poverty rates at international poverty line, size of the economy, and price levels in the World Development Indicators (World Bank)
  • Country group aggregates and growth rates in the World Economic Outlook (International Monetary Fund)
  • World and G20 output and growth rates in the Economic Outlook (OECD)
  • Allocation of the European structural and cohesion funds (European Union)
  • Shareholding and drawing rights (International Bank for Reconstruction and Development and International Monetary Fund)

Major applications by policymakers, academia and private sector (Detailed list

  • Analysis of national competitiveness (National policymakers)
  • Welfare measures, consumption patterns, trade, productivity and competitiveness, energy efficiency, health and education costs and other uses (Academic and research institutions)
  • Evaluation of investment costs across countries (Private sector)
Limitations and Recommended Uses of PPPs

Purchasing power parities are statistical estimates and are subject to sampling, measurement and classification errors. Hence, they should be treated as approximations to true values. This caveat should be kept in mind when using PPPs, and users should be cautious of drawing conclusions based on small differences in PPPs between economies. Due to the complexity of the process used to collect the data and calculate PPPs, it is not possible to directly estimate their margins of error.

Recommended uses

 1. To make spatial comparisons of

   - GDP: relative size of economies

   - GDP per hour worked: labor productivity

   - GDP per capita: income per capita

   - Actual individual consumption (AIC) per capita: a measure of average material well-being

 2. To make spatial comparisons of price levels

 3. To group economies by their

    - Volume index of GDP or AIC per capita

    - Price levels of GDP or AIC.

Recommended uses with limitations

  1. To analyze changes over time in relative GDP per capita and relative prices
  2. To analyze price convergence
  3. To make spatial comparisons of the cost of living
  4. To use PPPs calculated for GDP and its expenditure components as deflators for other values—for example, household income.

Uses not recommended

  1. As a precise measure to establish strict rankings of economies
  2. As a means of constructing national growth rates
  3. As a measure to generate output and productivity comparisons by industry
  4. As an indicator of the undervaluation or overvaluation of currencies
  5. As an equilibrium exchange rate.

The ICP was established in 1968 as a joint venture of the United Nations Statistical Division (UNSD) and the International Comparisons Unit of the University of Pennsylvania with financial contributions from the Ford Foundation and the World Bank. It started as a modest research project, but the ultimate goal was to set up a regular program of global PPP-based comparisons of GDP.

The initial intent was to cover GDP from both the expenditure and production side of national accounts. To date, comparisons have only been made from the expenditure side since they are less difficult to implement in practice. They involve only one set of final expenditures, whereas comparisons from the production side involve both outputs and inputs and have the added complexity of double deflation.

Comparisons of final expenditure on GDP have been completed for 1970, 1973, 1975, 1980, 1985, 1993, 2005, 2011, and 2017. Country participation consisted of 10, 16, 34, 60, 64, 115, 146, 199, and 176 economies, respectively.

After the 1975 comparison, the ICP discarded its research status and became a regular part of the UNSD work program and was regionalized. United Nations regional commissions organized regional comparisons which the UNSD oversaw and coordinated to ensure that they could be combined in a global comparison.

With regionalization came the emergence of the Eurostat-OECD PPP Programme in the early 1980s. In the beginning, the program followed the same five-year cycle as the ICP and covered only European Union (EU) member states and Organisation for Economic Co-operation and Development (OECD) member countries. Since 1990, the program has operated on a three-year survey cycle and coverage has been extended to European countries that are not members of either the EU or the OECD. Today, the Eurostat-OECD Programme publishes annual benchmark comparisons.

1993 was the first time that all regions of the world were covered, but no global comparison was made. As a result, the United Nations Statistical Commission (UNSC) reviewed the ICP. The World Bank proposed a new strategy to address limitations and improve the program.

At its 33rd session in 2002, the UNSC reviewed and endorsed a new strategic framework for the ICP, including an international governance arrangement and a broad implementation plan. The 2005 ICP produced estimates of the relative price levels of GDP and its principal aggregates for 146 economies, including approximately 40 more economies than the 1993 cycle. This was the first time for China to participate in the ICP and the first time since 1985 that India participated. This comparison included 48 African economies, which represented more participating countries than ever before. New methods were developed and used to overcome shortcomings of the previous data collection and estimation processes. 

Following its successful completion of the 2005 cycle, the UNSC in its 39th session in 2009 requested the World Bank to host the Global Office and take on the global program coordination of the 2011 cycle. The ICP 2011, with its considerably expanded coverage (from 146to 199 countries), brought a broader acceptance compared to earlier exercises. Following their improved availability, the use of PPPs around the world has increased. In addition, the applied methodology has significantly improved over that of the 2005 cycle. ICP 2011 placed ICP on a firm methodological basis by introducing several methodological innovations, including a new approach for combining regional results into a global set of results.

The 47th Session of the UNSC, held in March 2016, discussed the future of the ICP, in light of the recommendations of the Friends of the Chair group on the evaluation of ICP 2011. Based on this discussion, the UNSC decided to institute the ICP as a permanent element of the global statistical work program. Starting in 2017, the program is to be regularly conducted at more frequent intervals. Following the UNSC decision, the World Bank established the ICP Global Office as a permanent unit at the Development Data Group.

The ICP 2017 cycle was conducted for reference year 2017, with the participation of 176 economies, and published its results in May 2020. The next ICP comparison will be conducted for reference year 2021.

Please also refer to the Chronological Table on the evolution of the ICP.

 

 

 

The overall mandate of the ICP governance framework is to ensure that the global, regional, and national efforts to produce reliable purchasing power parity (PPP) estimates and related measures of real expenditures adhere to approved policies, protocols, methodologies, and quality assurance standards and that the estimates are produced efficiently, in keeping with available resources.

The ICP’s governance structure comprises the United Nations Statistical Commission (UNSC), the Governing Board, the Technical Advisory Group (TAG), and the Inter-Agency Coordination Group (IACG). Within this scheme, the global implementing agency, the regional implementing agencies, the Statistical Office of the European Union (Eurostat), the Organisation for Economic Co-operation and Development (OECD), and the national implementing agencies carry out the various activities to coordinate and implement the program.

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United Nations Statistical Commission (UNSC) is the ultimate stakeholder of the ICP, deciding the frequency and operational modality of the Program. The UNSC constitutes the ICP Governing Board, ensuring adequate representation of countries and multilateral organizations. 

SESSIONS

Governing Board (GB) is a strategic and policy-making body, which put forth the policies and protocols that govern the production of regional and global PPP estimates; approves the technical research agenda and methodology for producing PPPs; reaches out and demonstrates the value of the ICP to policy makers in order to ensure that the program is included in the regular national statistical work and to increase national funding for the ICP.

MEETINGS | MEMBERSHIP

Technical Advisory Group (TAG) is a technical body, which assures methodological soundness and overall quality of the PPP estimates; ensures transparency of the PPP estimation process; and supports the establishment of a permanent and more frequent ICP. The TAG, in collaboration with the IACG, sets forth a technical research agenda to inform future ICP comparisons, for the Governing Board’s review and approval. The TAG forms Task Forces on specific topics and invites recognized experts on the practical application of index numbers, PPPs, price statistics and national accounts to take part in them, as needed, to develop concrete proposals to address the various research agenda items. 

MEETINGS | MEMBERSHIP | TASK FORCES

Inter-Agency Coordination Group (IACG) is a coordinating body, which collaborates on establishing timetables and work plans; develops common standards and protocols; and prepares cooperatively operational guidelines and materials. The IACG comprises the World Bank, the regional implementing agencies, Eurostat, OECD, and the International Monetary Fund (IMF).

MEETINGS

Global Implementing Agency (GIA), the World Bank, is responsible for establishing the ICP Global Office, which supports the ICP governance framework and undertakes the global coordination and implementation of the ICP, including carrying out the day-to-day management of the global program, serving as the secretariat of the governance bodies, and producing and disseminating global ICP results.

Regional Implementing Agencies (RIAs) coordinate and implement the regional ICP comparisons, and produce and disseminate regional ICP results. Eurostat and OECD undertake their permanent PPP programme and produce and disseminate its results.

Information on organizations acting as RIAs is available under Regions.

National Implementing Agencies (NIAs) is responsible for planning and implementing national ICP activities, including carrying out the price surveys and compiling the national account expenditure data. 

Information on participating countries is available under Regions.

Donors financially support the implementation of the ICP. Current donors include the United Kingdom’s Department for International Development (UK DFID), the World Bank, the IMF, and the regional development banks and implementing agencies. Additionally, Eurostat and OECD fund their permanent PPP programme.

Historical Governance Structures

Information on the organizations acting as Regional Implementing Agencies and list of participating economies (ICP 2017 Cycle) 

ICP Africa

ICP Asia and the Pacific

ICP Commonwealth of Independent States (CIS)

ICP Latin America and the Caribbean (LAC)

ICP Western Asia

Eurostat-OECD PPP Program

The ICP estimates PPPs for the world’s economies, in order to provide comparable price and volume measures of GDP and its expenditure components. PPPs convert different currencies to a common currency and, in the process of conversion, equalize their purchasing power by controlling for differences in price levels between economies.

Overall, the ICP methodology has three major components. The first is the System of National Accounts (SNA) definition of final expenditures on GDP. The second is the basket of goods and services from which items are selected for pricing: these items should be comparable across economies and should represent an important part of each economy’s final purchases. The national annual average prices or related data collected for these goods and services must be consistent with the underlying values in the national accounts. The third component is the methodology used to compute PPPs, first within regions for the regional comparisons and then across regions for the global comparison.

Each ICP comparison has a reference year, such as 2005, 2011, and 2017. Each participating economy provides the following required data for the reference year: a set of national annual average prices for a selection of items chosen from a common basket of precisely defined goods and services; a detailed breakdown of the national accounts expenditures in local currency units according to a common classification; the economy’s market exchange rates; and its resident population.

The prices and expenditures are used to calculate PPPs and real expenditures (i.e. PPP-converted expenditures);the market exchange rates and PPPs are used to calculate price level indexes; and the population totals and real expenditures are used to calculate real expenditures per capita. Prices and expenditures are reported by participating economies in their local currencies. Both cover the whole range of final goods and services constituting the GDP.

Below sections outline the ICP methodology:

National Accounts Expenditure Data

Price Data

PPP Calculation and Estimation

The ICP is a complex international statistical exercise, and its methodology has evolved over several decades.

The 2011 cycle of the ICP introduced several major methodological innovations, including a new approach for combining regional results into a global set of results, a simplified approach for comparing the construction and civil engineering component of GDP, a wider application of productivity adjustment to government labor, and the implementation of enhanced data quality assurance and computation procedures. The 2017 cycle maintained the same methods and procedures applied in the 2011 cycle, further strengthened data quality assurance approaches using the latest technology, and introduced a fully documented and more transparent process for producing results.

A key objective of the ICP 2017 cycle was to avoid methodological changes in order to maintain comparability of the ICP results over time. However, to guide the future of the ICP, a research agenda was developed focusing on (i) building consistent annual purchasing power parity (PPP) series; (ii) improving PPP reliability and quality; (iii) addressing difficult to measure areas, such as housing; (iv) strengthening alignment between PPPs and national statistical programs; (v) advocating wider uses and applications of PPPs; and (vi) exploring innovations in technology and new sources.

The ICP Research Agenda consists of the following thirteen items:

The TAG establishes Task Forces to undertake research into specific technical issues listed above and support the computation of ICP results.

About the Program
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The ICP is a worldwide statistical initiative to collect comparative price data and estimate PPPs of the world’s economies. Its main objective is to provide comparable international price and volume measures of GDP and expenditure aggregates among countries.





CONTACT
ICP Global Office
Development Data Group (DECDG), The World Bank, 1818 H Street NW, Washington D.C. 20433, USA
Tel : +1 202 473 7824
icp@worldbank.org