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Originally Posted by GGG
What is ICP GDP vs Raw GDP?
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Standard GDP figures don't reflect purchasing power variations between contexts. As a result, nations with higher prices buying and selling goods between each other will indicate much higher GDP than nations with lower prices buying and selling the same goods. This isn't a good measure of actual contribution to economic activity, so the International Comparison Program (ICP) factors in purchasing power differences between nations to standardize across contexts and provide a better basis for measuring/comparing actual contributions to economic activity.
From the ICP
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The International Comparison Program (ICP) is one of the largest, and most enduring, statistical initiatives in the world. It is managed by the World Bank under the auspices of the United Nations Statistical Commission (UNSC), and relies on a partnership of international, regional, sub-regional, and national agencies working under a robust governance framework and following an established statistical methodology. At its forty-seventh session, in March 2016, the UNSC instituted the ICP as a permanent element of the global statistical programme.
The main objectives of the ICP are:
(i) to produce purchasing power parities (PPPs) and comparable price level indexes (PLIs) for participating economies; and
(ii) to convert volume and per capita measures of gross domestic product (GDP) and its expenditure components into a common currency using PPPs.
PPPs convert different currencies to a common currency and, in the process of conversion, equalize their purchasing power by controlling for differences in price levels between economies. They provide a measure of what an economy’s local currency can buy in another economy. PPP-based comparisons of economic output differ from market exchange rate-based comparisons as the latter do not distinguish between the relative price levels of different items in economies. PPP-based comparisons are also less impacted by the potential volatility of market exchange rates.
PPPs are calculated by the ICP based on the prices of items within a common basket of goods and services and expenditure shares, used as expenditure weights, on groups of items in each of the participating economies. These data are benchmarked to a reference year for each comparison cycle. The most recent ICP results are available for the ICP 2017 cycle, with the ongoing cycle benchmarked to 2021.
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So, the figures driveway provided may be correct in terms of straight dollar measurements without consideration of purchasing power parity, but they're not the best GDP measurements for doing comparisons of the actual economic contributions of nations that have very different pricing levels, as we have in the case of BRICS and the US +EU. The ICP produced GDP figures are a better measure of what we're actually talking about.