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2009 Report
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Why is GDP per capita (PPP US$) used over GDP per capita (US$) in the HDI?
The human development index (HDI) attempts to make an assessment of 182 very diverse countries and areas, with very different price levels. To compare economic statistics across countries, the data must first be converted into a common currency. Unlike conventional exchange rates, PPP (Purchasing Power Parity) rates of exchange allow this conversion to take account of price differences between countries. GDP per capita (PPP US$) accounts for price differences between countries and therefore better reflects people's living standards. In theory, at the PPP rate, 1 PPP dollar has the same purchasing power in the domestic economy of a country as 1 US dollar has in the US economy. The new PPP values have been used for the calculation of the HDI 2006 onwards. The latest International Comparison Survey (ICP) from which the PPPs are calculated was done in 2005. It is regarded as the most thorough and best conducted surveys of this kind. More countries than ever took part in it: a total of 146, which was 26 more than the previous survey. For further discussion on the PPP, see Human Development Indices – A statistical update 2008 – Section 2.
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