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PPPs for policy making: a visual guide to using data from the ICP - Chapter 3: Trade and competitiveness

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The World Economic Forum (WEF) uses PPPs and PPP-based indicators in two indexes measuring competitiveness.

First, the Global Competitiveness Index identifies twelve main drivers of productivity or pillars, and pillar 10 assesses market size (map 3.1). The inputs for this indicator include PPP-based GDP.

Second, the Travel and Tourism Competitiveness Index measures the set of factors and policies that enable the sustainable development of the travel and tourism sector which, in turn, contributes to the development and competitiveness of a country. Pillar 8 of the index covers price competitiveness and is composed of four indicators measuring how costly it is to travel or invest in a country. They include the ratio of a country’s PPP to the official market exchange rate alongside the index of the relative cost of access (ticket taxes and airport charges) to international air transport services, the hotel price index, and fuel price levels. The higher the index value, the more competitive the country is on price (map 3.2).

Furthermore, ICP price level data on restaurants and hotels in each of its participating economies can also add to the information available to policy makers looking to boost tourism to their country (map 3.3).