Purchase Power Parity

For anyone who has traveled it’s evident that things do not cost the same in different places, lunch is more expensive in New York than in Bangkok. Therefore it is very different the lifestyle of a person earning $ 1000 a month in Thailand compared to someone who earns the same in the United States. To compensate for these differences when looking at data, economists apply something called conversion factor of Purchasing Power Parity (PPP).

ppp
The same amount of money buys different amounts of products in different places.

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Which are the biggest economies in the world?

In the previous article, we learned that the gross domestic product represents the monetary value of goods and services produced in a country, and saw the variables that make up this value. Now we will see which are the countries with the highest GDP and that, therefore, are the big players in the global economy.

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