ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.
Established in 1966, it is owned by 68 members—49 from the region.
ORGANIZATION
ACCOUNTABILITY
ADB supports projects in developing member countries that create economic and development impact, delivered through both public and private sector operations, advisory services, and knowledge support.
Data and Statistics
Data and statistical analysis in the Asia and Pacific region contribute to knowledge generation in ADB, helping strengthen its institutional priorities and operational effectiveness in its developing member economies.
International Comparison Program (ICP) for Asia and the Pacific
The International Comparison Program (ICP) is the largest global statistical initiative established for providing comparable price and volume measures of national accounts aggregates across economies of the world.
The ICP entails estimating purchasing power parities (PPPs) and related macro-economic aggregates of economies for comparison. The World Bank coordinates global-level ICP, while ADB covers the program’s Asia-Pacific component where twenty-two economies participated in the 2017 ICP.
Basic Concepts
Purchasing Power Parity (PPP)
The amount of currency units required to purchase a common basket of goods and services that can be purchased with one unit of the reference economy's currency.
Price Level Index (PLI)
The ratio of PPPs to exchange rates with respect to a common currency. PLI expresses the general price level in an economy as percentage of reference economy's price level.
Real Expenditure
Expenditure that has been converted to common currency by PPP, and hence, valued at a uniform price level across economies.
Nominal Expenditure
Expenditure that has been converted to common currency by Exchange Rate without adjusting for the differences in prices of goods and services across economies.
Per Capita Expenditure
Total expenditure divided by total population of a given economy. Per capita expenditure measures standard of living in an economy. This can be expressed either in real or nominal terms.
Transitivity
An important property of PPP whereby the direct PPP between any two economies yields the same result as an indirect comparison via any other economy.
Base Country Invariance
The relativities between the PPPs, Price Level Indexes, and volume indexes of economies are not affected by either the choice of reference economy or currency.
Gross Domestic Product (GDP)
When estimated from expenditure side, GDP is the total value of the final consumption of households, non-profit institutions serving households, and general government, gross capital formation plus balance of exports and imports.
Uses of Purchasing Power Parities
The PPPs obtained through the ICP are used for direct comparisons of well-being indicators such as per capita Gross Domestic Product (GDP) or expenditures, per capita on health, education, and housing, among others, allowing real comparisons of price levels and standards of living and well-being across economies.
Among its major uses is in estimating the international poverty line and extreme poverty incidence* for measuring progress on the Sustainable Development Goals' (SDG) 'No Poverty' goal. Other PPP-based indicators in the SDG framework help monitor targets across several SDG goals. Some international organizations and economies adopt ICP principles and methods to compare standards of living across and/or within the economy.
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No Poverty
Indicator 1.1.1: International poverty threshold of $1.90/day is measured in 2011 PPP terms to ensure that it represents approximately same amount of necessities across countries.
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Zero Hunger
Indicator 2.3.1: Productivity of small-scale food producers measured in agricultural output per labor-day is in 2011 PPP terms.
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Good Health and Well-Being
Indicator 3.1.1: Maternal Mortality Rate (MMR) may not be available in some countries. The MMR for these countries are estimated based on the regression of several health-related variables and GDP in PPP terms.
Indicator 3.8.2: This goal includes an indicator of the proportion of population with large household expenditures on health (greater than 10% or 25%) as a share of total household expenditure or income. The total per capita consumption is expressed on a monthly basis in 2011 PPP terms.
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Quality Education
Indicator 4.5.4: Education expenditure per student by level of education and source of funding is in 2015 PPP terms for 2017.
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Affordable and Clean Energy
Indicator 7.3.1: Energy intensity is defined as the energy supplied to the economy per economic value output measured in GDP in PPP terms.
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Decent work and Economic Growth
Indicator 8.2.1: Although the annual growth rate of real GDP per employed person does not require conversion in PPP terms, the International Labour Organization (ILO) also publishes real (PPP-based) GDP per employed person which can be used for cross-economy comparisons.
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Industry, Innovation, and Infrastructure
Indicator 9.4.1: The amount of CO2 emissions per unit of GDP which is in PPP terms.
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Reduced Inequalities
Indicator 10.1.1: Growth rates of household expenditure or income per capita among the bottom 40 per cent of the population and the total population are available in 2011 PPP terms for cross country analyses.
Human Development Report
PPPs are used to calculate internationally comparable Gross National Income per capita as an input to the "Decent Standard Living" dimension for the following Indices:
- Human Development Index
- Inequality-adjusted Human Development Index
- Gender Development Index
Global Competitiveness Index
The Global Competitiveness Index’s Pillar 10 (Market Size) uses PPPs to convert Gross Domestic Product and value of Imports of goods/services to be internationally comparable.
Other Uses
The methods of ICP can be used as a framework for computation subnational Purchasing Power Parities. One application was done in the Philippines to come up with PPPs for the 16 regions.
Product class- or group-level price indices can be used to compare relative prices across economies and to check how these relative prices affect development outcomes. A study published in Journal of Nutrition came up with the measure Relative Caloric Prices (RCPs) and how are these RCPs related to measures of food consumption and other health outcomes such as under/overnutrition.
* currently set at US$1.90 a day (at 2011 PPP)
More on the International Comparison Program
Related Links
Publications
These reports present the methodologies and results of purchasing power parities (PPPs) across various ICP rounds in Asia and the Pacific; in addition to studies on poverty-specific PPPs, integrating ICP with the Consumer Price Index as a framework for subnational PPPs, and alternative approaches for estimating PPPs for non-benchmark years in the region.
2017 International Comparison Program for Asia and the Pacific: Purchasing Power Parities and Real Expenditures — Results and Methodology
The report provides a comprehensive account of the 2017 International Comparison Program (ICP) cycle for 22 economies in Asia and the Pacific.
2011 Purchasing Power Parities and Real Expenditures
This report presents the results of purchasing power parities (PPPs) in the 2011 International Comparison Program in Asia and the Pacific and background information on the concepts that underpin the results.