About

Resources and data sources used to understand world economies and the Purchasing Power Parity metric

Resources

Appendix J (Classification of the World’s Economies) of the 2017 International Comparison Program report released May 2020 (link 5 below) includes a classification of the world’s economies into four categories: low income, lower middle income, higher middle income, and high income.

From least technical to most technical, these resources talk about Purchasing Power Parity (PPP) as a metric important to consider when assessing a nation’s ability to purchase goods and services:

  1. Make Your Prices Fair and Scalable, Globally (2015) by Jurgen Appelo at Entrepreneur – blog post in layperson terms

  2. How to Calculate and Use Purchasing Power Parity – PPP (2020) by Kimberly Amadeo at The Balance – blog post in layperson terms with some technical language

  3. The Big Mac index (2020) from The Economist – interactive currency comparison tool

  4. New results from the International Comparison Program shed light on the size of the global economy (2020) from the International Comparison Program (ICP) at World Bank Group – detailed blog post with technical language

  5. Purchasing Power Parities and the Size of World Economies: Results from the 2017 International Comparison Program (2020) from the ICP at World Bank Group – in depth report with technical language

Data provenance

World Bank Country and Lending Groups

Purchasing Power Parity

Data visualization

Box plot showing world economy Gross Domestic Product (GDP) per capita adjusted by Purchasing Power Parity and categorized into four income groups. The y axis has the income groups of high income, upper middle income, lower middle income, and low income. The x axis has the PPP-adjusted GPD per capita ranging from approximately 0 US$ to 130,000 US$. The high income group has a median around 40,000 US$, the middle upper income group has a median around 15,000 US$, the lower income group around 5,000 US$, and the lower income group around 2,000 US$. The spread of GDP per capita is widest for the upper income group and progressively narrows in the direction of the lower income group.

Figure 1: Gross Domestic Product per capita after adjusting for Purchasing Power Parity, categorized by income group

Scatterplot showing an alternate grouping of world economies relative to figure 1. The y axis has the log base 10 of the Purchasing Power Parity ranging from -0.5 to 4. The x axis is the same. It has the PPP-adjusted GPD per capita ranging from approximately 0 US$ to 130,000 US$. This representation of the data shows all income groups except the high income group narrowly spread out between 0 US$ and 30,000 US$. The data points for the high income group are spread out over a much wider band from 20,000 US$ to 130,000 US$

Figure 2: Purchasing Power Parity against PPP-adjusted Gross Domestic Product per capita, and color-coded by income group

Corrections

If you see mistakes or want to suggest changes, please create an issue on the source repository.

Reuse

Text and figures are licensed under Creative Commons Attribution CC BY-SA 4.0. Source code is available at https://github.com/spcanelon/useR2021-cost-conversion-tool, unless otherwise noted. The figures that have been reused from other sources don't fall under this license and can be recognized by a note in their caption: "Figure from ...".

© Copyright 2021 Silvia Canelón and useR!2021.

Software licensed under the Creative Commons CC BY-SA License, 4.0.