Louis had expressed some belief that official statistics may have biases and there has been an ongoing discussion of the Human Development Index. So, I thought I should look up the numbers for the impact of the "PPP" effect alone.
For the 130 or so countries listed as "Low and Middle Income" the World Bank calculates a Gross National Income (GNI, formerly called Gross National Product, GNP) of $6.1 trillion in 2002. This is using the Bank's own version of the standard National Accounts technique, similar to the U.S. government, and uses a 3 year average of exchange rates adjusted for inflation using the country's GDP deflator to convert to the US Dollar.
BUT, using the PPP technique I described in earlier posts, the World Bank also calculates an imputed (imaginary) GNI. For the same group of countries this calculation boosts their Gross National Income from $6.1 to $20.5 trillion! This is a 320% increase - but just on paper and of course to buy imports, pay debts, etc nothing has improved, although the World Bank calls its international PPP conversion factor the "International Dollar". [see http://www.worldbank.org/data/wdi2004/tables/table1-1.pdf for the data].
This PPP version doesn't just inflate National Income it also has statistical "biases" that show economic progress over time (even if there had been none) and show neo-liberal policies as successful (even they have produced no improvement). Only 6 years earlier the standard version of GNI showed the "Low and Middle Income" as having almost the same GNI - $5.7 trillion. The PPP version for that year showed a GNI of $15.1 So, in just 6 years the PPP conversion has gone from increasing stated output by 260% to increasing stated output by 320%. [See the World Bank World Development Indicators 1998 for the comparison]
The PPP conversion factor does not seriously inflate the GNI within the "High Income" group (in fact many years it shrinks the GNI of Europeans and Japanese vis-a-vis the US) so, using the PPP "version" of National Income purports to show great progress in 'closing the gap' between rich and poor countries. Combined with the PPP-linked World Bank poverty measurement, great progress is shown to have been made in reducing the absolute numbers of the poor [http://www.worldbank.org/data/wdi2004/Section1-intro.pdf].
Indeed, it has been a little noticed trend that today most of the World Bank's 'public relations' type documents, most human development related documents, and most documents arguing for the success of the neo-liberal project use PPP *and only* PPP. Even where there findings would be utterly reversed by the once standard method. Even the introductory chapter to the World Bank's flagship statistical publication (cited above) uses ONLY the more favorable (and yet artificially constructed) version. Even the Human Development Index we have been discussing presents ONLY one version - and this radically changes many stated conclusions. It is not, as if the "actual" National Income Accounts are not used in other environments where that method would be more favorable to the Bank or the IMF's policy objectives. Indeed in some cases - such as those involving debt negotiations, foreign investment, or sectoral policies promoting the private sector, it appears (by purely casual observation) that *only* the non-PPP version appears.
Paul
