Uses of PPPs for National and International Policy Making
Though the ICP has been in existence for nearly 50 years, there has never been any concerted effort to prepare a document outlining the uses of ICP results and demonstrate their relevance and usefulness for policy making at the national level and show how policy makers can gain better understanding of their respective economies from a global perspective. The paper by Ward (2009) is one of very few papers on this subject. The paper articulates uses of PPPs for policy making at the national level but it does not provide illustrations of how published ICP results can be linked to the uses described in the paper. The ICP Book (World Bank, 2013) includes papers by Chen and Ravallion; Deaton and Dupriez; Thomas et al., Silver; and Inklaar and Timmer that demonstrate the use of ICP results at the international level.
The need for a strong advocacy document was recognized in the FOC report.
“It is recommended that the Statistical Commission authorize the Governing Board to reach out and demonstrate the value of ICP data to policymakers and other important users and donors, in particular showcasing to donors that ICP generally responds to user needs and strives for further openness with regard to access to data and metadata. ICP stakeholders should be invited to accelerate, combine and coordinate outreach efforts at the global, regional and national levels.” Paragraph 70, E/CN.3/2016/9, UN, 2016)
The Global ICP Unit recognizes this immediate need and hopes to have such an advocacy document ready for release coinciding with the release of the 2017 ICP results. The document may cover the following aspects but not necessarily be limited to:
- A primer on the basic concepts of PPPs, price levels and real expenditures;
- Major uses at the international level: real size of the world economy and its distribution across regions, inequality, poverty, growth, competitiveness, spatial price level analysis, and other uses;
- Policy-making uses at the national level: real size and structure of GDP, the size of government, relative national competitiveness, price and consumption relationships, and other uses; and
- Other uses: price structures and globalization, price distortions and market structures, the real value of aid, energy efficiency and energy intensity.