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PPPs for policy making: a visual guide to using data from the ICP - Introduction


The International Comparison Program (ICP) is a global initiative to collect comparative price and expenditure data in participating economies and to subsequently produce purchasing power parities (PPPs) and price level indexes (PLIs) for each economy. PPPs are used to convert volume and per capita measures of gross domestic product (GDP) and its expenditure components into a common currency. Main results from the most recent cycle, ICP 2017, were published in May 2020 in Purchasing Power Parities and the Size of World Economies.

As one of the world’s largest, and most enduring, data programs, the ICP is reliant upon a strong partnership of global, regional, and national implementing agencies from nearly 200 economies. Through this partnership, statistical standards and methods in price data collection and validation, and in national accounts expenditure data compilation, have been developed. The ICP Global Office at the World Bank  and the ICP regional implementing agencies work with the national agencies to ensure that the work carried out across all economies adheres to these standards and methods. The ICP is carried out under the auspices of the United Nations Statistical Commission and the ICP Governing Board has the ultimate oversight over the program, setting forth its strategies and policies.  An independent Technical Advisory Group assures the conceptual integrity and methodological soundness of the program. Under this robust governance framework, the extensive contributions of the ICP stakeholders at the national, regional and global levels ensure that the ICP provides its users with robust and relevant analytical data.

This investment in the ICP enables a host of PPP-based indicators across the socioeconomic spectrum from poverty and inequality, to health and education, to energy and climate, through to labor, productivity, trade, competitiveness, and infrastructure. Furthermore, data collected by the ICP, such as the prices of goods and services and the wages of public sector employees, inform research and analyses resulting in global datasets on food security and public sector compensation. The ICP also compiles detailed national accounts expenditure data, which have been used by researchers to analyze the effect of income on consumption patterns as well as the composition of typical food baskets around the world.

Thus, the efforts made by participating economies in conducting the ICP not only result in a global public good, but also inform their own programs and strategies including their commitments to the United Nations’ 2030 Agenda for Sustainable Development. The wide use of PPPs in many of the agenda’s Sustainable Development Goals (SDGs) reflects their importance and relevance to monitoring national progress and making spatial comparisons. PPPs are used for monitoring how far the world has come in achieving no poverty (SDG 1); zero hunger (SDG 2); good health and well-being (SDG 3); quality education (SDG 4); affordable and clean energy (SDG 7); decent work and economic growth (SDG 8); better industry, innovation, and infrastructure (SDG 9); and reduced inequalities (SDG 10). In addition, PPPs will be used in coming years to monitor progress towards SDG 11, which seeks to make cities and human settlements inclusive, safe, resilient, and sustainable.

Purchasing power parities for policy making: a visual guide to using data from the International Comparison Program provides an overview of how PPPs, price levels and other ICP results allow national governments, policy makers, and other users in analyses to measure the effectiveness of domestic policies, compare themselves with other economies, and track development and progress over time.

The seventy visualizations presented provide a snapshot of the data and indicators currently available.