:: wikimiki.org ::

Per Capita Income

Per capita income

The per capita income for a group of people may be defined as their total personal income, divided by the total population. Per capita income is usually reported in units of currency per year.

Per capita income as a measure of wealth

Per capita income is often used as a measure of the wealth of the population of a nation, particularly in comparison to other nations. It is usually expressed in terms of a commonly-used international currency such as the Euro or United States dollar, and is useful because it is widely known and produces a straightforward statistic for comparison. Particularly when comparing countries with substantially different levels of wealth, however, it has several weaknesses as a measurement.
- Economic activity that does not result in monetary income, such as services provided within the family, or for barter, are usually not counted. The importance of these services will vary widely between different economies, both between countries and among different groups within a country. See: Informal economy
- Per capita income gives no indication of the distribution of that income within the country, so a small wealthy class can increase the measured per-capita income far above that of the majority of the population. See: Income inequality metrics
- Differing currency exchange rates between countries mean that a given amount of money (for example, one US dollar) has differing values in different places. See: Purchasing power

Some national per capita income levels

Data on Per capita income based on a country's total personal income is very difficult to find. Much more commonly used due to its availability is the Gross domestic product (GDP). Total personal income is lower than the Gross domestic income. A ranking of the (probably) top ten countries by GDP per capita (in PPP): # Luxembourg $58,900 # United States $40,100 # Norway $40,000 # Jersey $40,000 # Guernsey, $40,000 # Bermuda $36,000 # San Marino $34,600 # Hong Kong, $34,200 # Switzerland $33,800 # Cayman Islands $32,300 The lowest-ranked is East Timor with a per capita GDP of $400 Source: CIA World Factbook, 2005

Total personal income

Total Personal Income is the value most often used to calculate per capita income. It equals the total value of income received by, or on behalf of, all residents of a particular area. Total personal income is calculated by adding total active income (earnings), passive income, and government transfers. Earned income includes money earned by individuals, such as wages, salaries, and profit of individual business owners. To accurately calculate per capita income, earned income is associated with an individual's place of residence, not their place of work. A high level of earned income reflects positively on an area's economic health. Passive income includes investment income, interest income, income from retirement plans and annuities, and rental income. A local economy does not necessarily benefit from a high level of passive income. Government transfers include payments to individual residents from various federal, state, and local government entitlement programs. These include 1) social security and disability programs, 2) medical payments, 3) income maintenance (welfare), 4) unemployment compensation, and 5) veterans benefits. From the ratio of the three components of Total Personal Income, certain characteristics of a local economy can be deduced. In the United States, areas which have government transfers greater than 20% of the TPI have a high retirement population, a distressed economy, or a combination of both. Category:Income

Finding Total Personal Income Data

Data for personal income levels for the USA are located at the Bureau of Economic Analysis ([http://www.bea.doc.gov/bea/dn/nipaweb/TableView.asp?SelectedTable=298&FirstYear=2002&LastYear=2004&Freq=Qtr USA Personal Income Data])

United States dollar

:USD redirects here. For other uses, see USD (disambiguation). The United States dollar, or American dollar, is the official currency of the United States. It is also widely used as a reserve currency outside the United States. Currently, the issuance of currency is controlled by the Federal Reserve Banking system. The most commonly used symbol for the U.S. dollar is the dollar sign ($). The ISO 4217 code for the United States Dollar is USD; the U.S. dollar is also referenced as US$ by the International Monetary Fund. In 1995, over $380 billion (380 G$) in U.S. currency was in circulation, two-thirds of it overseas. As of April 2004 nearly $700 billion [http://www.federalreserve.gov/boarddocs/speeches/2004/20040426/default.htm] was in circulation, with an estimated half to two-thirds of it still being held overseas [http://www.federalreserve.gov/paymentsystems/coin/default.htm]. The United States is one of many countries that use a currency known as a dollar. Several countries use the U.S. dollar as their official currency, and many others allow it to be used in a de facto legal capacity. See dollar. The colloquialism buck is often used to refer to a U.S. dollar. This term, dating to the 18th century, may have originated with the colonial fur trade. Grand, sometimes shortened to simply G, is a common term for the amount of $1,000. Banknotes' nicknames are usually the same as their values (such as five, twenty, etc.); however, the $1 bill is often called a single, and the $100 bill has gotten the nickname benjamin (after the portrait of Benjamin Franklin that it bears).

Overview

The U.S. dollar uses the decimal system, consisting of 100 cents (symbol ¢). In another division, there are 1,000 mills or ten dimes to a dollar; additionally, the term eagle was used in naming gold coins. However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the coin with the value of 10¢, while "eagle" and "mill" are largely unknown to the general public, though mills are sometimes used in matters of tax levies and gasoline prices. When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal Reserve notes. (Both one-dollar coins and notes are produced today, although the note form is significantly more common.) In the past, paper money was occasionally issued in denominations less than a dollar (Fractional Currency) and gold coins were issued for circulation up to the value of twenty dollars. U.S. coins are produced by the United States Mint. U.S. dollar banknotes have been printed by the Bureau of Engraving and Printing for the Federal Reserve since 1914. They began as large-sized notes. In 1928, they switched to small-sized notes, for reasons that have yet to be explained. A logical explanation would be to reduce costs in producing bills, by allowing more bills to be printed on the same amount of paper. small-sized note Notes above the $100 denomination ceased being printed in 1946 and were officially withdrawn from circulation in 1969. These notes were used primarily either in inter-bank transactions or by organized crime; it was the latter usage that prompted President Richard Nixon to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became unnecessary. Notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000 were all produced at one time; see large denomination bills in U.S. currency for details. See History of the American dollar for more info about the currency's history.

United States coins

Main article: United States coinage In normal circulation, there are coins in the denominations 1¢ (penny), 5¢ (nickel), 10¢ (dime), 25¢ (quarter), 50¢ (half dollar; uncommon), and $1 (uncommon). Dollar coins have not been very popular in the United States. Silver dollars were created from 1794 through 1935 with many gaps; then a copper-nickel dollar of the same large size was minted from 1971 through 1978. The Susan B. Anthony dollar coin was introduced in 1979; these proved to be unpopular because they were often mistaken for quarters, thanks to their nearly-equal size, their milled edge, and their similar color. Minting of these dollars for circulation ended in 1980 (collectors' pieces were struck in 1981), but, as with all past U.S. coins, they remain legal tender. As the number of Anthony dollars held by the Federal Reserve and dispensed primarily to make change in postal and transit vending machines had been virtually exhausted, additional Anthony dollars were struck in 1999. In 2000, a new $1 coin featuring Sacagawea was introduced, which corrected some of the mistakes of the Anthony dollar by having a smooth edge and a gold color, without requiring changes to vending machines which accept the Anthony dollar. However, this new coin has failed to achieve the popularity of the still-existing $1 bill and is rarely used in daily transactions. The failure to simultaneously withdraw the dollar bill (the Save the Greenback Act of 1995 banned its phasing out) and weak publicity efforts have been cited by coin proponents as primary reasons for the failure of the dollar coin to gain popular support. Some cynics also point out that the Federal Reserve makes more profit from dollar bills than dollar coins because they wear out in a few years, whereas coins are more permanent. As most vending machines are incapable of making change in banknotes, they commonly only accept $1 bills, though a few will give change in dollar coins. Also, some banks, such as Bank of America only distribute dollar coins through the same mechanisms as one would purchase foreign currency. Reaching into the past, the United States has minted other coin denominations since 1793: half-cent, two-cent, three-cent, twenty-cent, $2.50, $3.00, $4.00, $5.00, $10.00, and $20.00. Technically, all these coins are still legal tender at face value, though they are far more valuable today for their numismatic value, and for gold and silver coins, their precious metal value. The United States Mint also produces gold and platinum bullion coins, called "American Eagles", all of which are legal tender though their use in everyday transactions is virtually non-existent. The reason for this is that they are not intended for use in transactions and thus the face value of the coins are much lower than the worth of the precious metals in them. The American Silver Eagle bullion coin is only issued in the $1 (1 troy oz) denomination. The American Gold Eagle bulllion coin denominations (with gold content) are: $5 (1/10 troy oz), $10 (1/4 troy oz), $25 (1/2 troy oz), and $50 (1 troy oz). The American Platinum Eagle bullion coin denominations (with platinum content) are: $10 (1/10 troy oz), $25 (1/4 troy oz), $50 (1/2 troy oz), and $100 (1 troy oz). The silver coin is 99.9% silver, the gold coins are 91.67% gold (22 karat), and the platinum coins are 99.95% platinum. These coins are not available from the Mint for individuals, but must be purchased from authorized dealers. The Mint also produces high quality "proof" coins, intended for collectors, in the same denominations and bullion content, which are available for individuals. The largest denomation of currency currently printed or minted by the United States is the $100 bill and the $100 troy ounce Platinum Eagle.

International use

karat A few nations besides the United States use the U.S. dollar (USD) as their official currency. Ecuador, El Salvador, and East Timor all adopted the currency independently. The former members of the US-administered Trust Territory of the Pacific Islands, including Palau, the Federated States of Micronesia, Northern Mariana Islands and the Marshall Islands, chose not to issue their own currency after becoming independent. Additionally, the local currencies of Bermuda, the Bahamas, Panama, and a few other states can be freely exchanged at a 1:1 ratio for USD. The currency of Barbados is similarly convertible at a 2:1 ratio. Argentina used a fixed 1:1 exchange rate between the Argentine peso and the U.S. dollar from 1991 until 2002. In Lebanon, one dollar is equal to 1500 Lebanese pound, and is used interchangeably with local currency as a de facto legal tender. The exchange rate between the Hong Kong dollar and the United States dollar has also been linked since 1983 at HK$7.8/USD, and Pataca of Macau, pegged to Hong Kong dollar at MOP1.03/HKD, indirectly linked to the US dollar roughly at MOP8/USD. Several oil-producing Gulf Arab countries, including Saudi Arabia and Kuwait, also peg their currencies to the dollar, since the dollar is the currency used in the international oil trade. The renminbi used by the People's Republic of China had been informally and controversially pegged to the dollar since the mid-1990s at Y8.28/USD until July 21, 2005. Likewise, Malaysia had pegged its ringgit at RM3.8/USD since 1997. However, on July 21, 2005, both countries removed their respective pegs and adopted managed floats against a basket of currencies. The dollar is also used as the standard unit of currency in international markets for commodities such as gold and oil. Even foreign companies with little direct presence in the United States, such as the European company Airbus, list and sell their products in dollars, although some argue this is attributed to the aerospace market being dominated by US companies. At the present time, the U.S. dollar remains the world's foremost reserve currency, primarily held in $100 denominations. The majority of U.S. notes are actually held outside the United States. According to economist Paul Samuelson, the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate and the flow of trade to readjust. Not long after the introduction of the euro (€; ISO 4217 code EUR) as a cash currency in 2002, the dollar began to steadily depreciate in value on the international scene. After the euro started to rise in value in March 2002, the U.S. trade and budget deficits continued to increase. By Christmas 2004 the dollar had fallen to new lows against all major currencies, especially its rival the euro. The euro rose above $1.36 /€ (under 0.74 €/$) for the first time in late December 2004, in sharp contrast to its lows in early 2003 (rate of $0.87/€). Beginning in late May into early June though the Dollar rose sharply against the Euro as European states reported stagnation in the overall EU economy and doubts were raised over the EU Constitution which was voted down in two member states: France and The Netherlands. As unemployment rates rise in the Euro zone and economic growth slows the EU may see a drop in the value of the Euro against the Dollar for at least part of 2005 although the Euro is expected to maintain its strength, if in a slightly diminished manner.

Origin of the name dollar

The United States dollar derives from the Spanish 8 reales coin which was composed of just under one ounce of silver. This coin was popular among American colonists, who called it the Spanish dollar, the name having derived from a German coin of similar size and composition known as the thaler. The first dollar coins issued by the United States mint were of the same size and composition as the Spanish dollar and even after the American Revolutionary War the Spanish and U.S. silver dollars circulated side by side in the United States. Although private banks issued currency backed by Spanish and U.S. silver dollars, the federal government did not do so until the American Civil War. For further history of the name, see Dollar.

The dollar symbol

Main Article: Dollar sign There are various stories on origin of the "$" sign to represent "dollar." Because the dollar was originally the Spanish 8 reales coin, it is suggested that the 'S' derives from the number '8' which appeared on the coin. The most widely accepted explanation, according to the U.S. Bureau of Engraving and Printing, is that "$" is a corruption of the letters "PS" (for 'peso' or 'piastre' - especially the former, as each letter could represent each syllable of "Pe-So") written over each other in Spanish. Eventually, the 'P' was reduced to a vertical line - | - since the hump disappeared into the upper curve of the 'S' anyway. Examination of old manuscripts yields support for this theory. The "$" symbol was widely in use before formal adoption of the Spanish dollar as U.S. currency in 1785. The dollar sign is sometimes written with two vertical strokes. This is probably just a carry-over of the old habit of using three strokes to write the original sign: One stroke for the 'S' (it is physically easier to write the 'S' first, then the 'P'), a second stroke for the vertical line '|,' and then a third stroke for the hump of the 'P.' People in a hurry or who simply do not care about making a perfectly formed 'P' (especially as the 'hump' will disappear into the 'S' anyway), probably just made the third stroke a second vertical line. There are, however, a number of fanciful explanations for the second vertical line - ranging from superimposition of the letters 'U' and 'S' (the bottom of the 'U' disappearing into the bottom curve of the 'S,' effectively leaving two vertical lines that eventually merge into one as the sign '$'), to the very amusing but original idea that the dollar sign with two vertical lines represents the two pillars of the original Temple of Solomon at Jerusalem. Neither of these stories holds up, however, first because this version of the symbol pre-dates the founding of the United States (whence came the notion of 'U' superimposed over 'S'); and, second, because there is simply no evidence for the theory in the history of the Spanish coin. Rather, this theory seems to trace to the traditions of Freemasonry; and, indeed, some Masonic symbols do appear on U.S. currency - but they did not in 1785. A few people write the sign with one vertical stroke for small sums of money and two vertical strokes for large sums of money. ($5 with one stroke and $1,000,000 with two strokes) However, this is only a matter of style, and it certainly has little to do with the original variation. For further information about the symbol, see Dollar. See also Pieces of Eight.

Current USD exchange rates

[http://finance.yahoo.com/currency/convert?amt=1&from=AUD&to=USD&submit=Convert AUD] | [http://finance.yahoo.com/currency/convert?amt=1&from=CAD&to=USD&submit=Convert CAD] | [http://finance.yahoo.com/currency/convert?amt=1&from=EUR&to=USD&submit=Convert EUR] | [http://finance.yahoo.com/currency/convert?amt=1&from=GBP&to=USD&submit=Convert GBP] | [http://finance.yahoo.com/currency/convert?amt=1&from=INR&to=USD&submit=Convert INR] | [http://finance.yahoo.com/currency/convert?amt=1&from=NZD&to=USD&submit=Convert NZD] | [http://finance.yahoo.com/currency/convert?amt=1&from=BRL&to=USD&submit=Convert BRL] | [http://www.exchangerate.com Lots of exchange rates]

External links

- [http://www.moneyfactory.com/ US Bureau of Engraving and Printing]
- [http://www.treas.gov/topics/currency/index.html The U.S. Treasury's Coins & Currency portal]
- [http://www.frbsf.org/currency/ American Currency Exhibit at the San Francisco Federal Reserve Bank]
- [http://www.moneyfactory.com/section.cfm/4 U.S. Treasury page with images of all current banknotes]
- [http://www.friesian.com/notes.htm U.S. paper money]
- [http://misyte3.tripod.com/clipart/id47.html Presidential currency]
- [http://www.westegg.com/inflation/ The Inflation Calculator]
- [http://www.mabico.com Financial News] Analitics, Trading Info, and Forum
- [http://www.openforex.com Open Forex] Forecasts Dollars
- [http://www.forex.dj Forex] First dollar guide
- [http://www.currencyworld.biz/acecalc/ Ace Currency Calculator]
- [http://www.wheresgeorge.com/ The Where's George? Currency Tracking Project]
- [http://www.coolnumbers.com Cool Numbers] analyzes patterns of dollar-bill serial numbers and other types of numbers. Dollar, US ja:アメリカ合衆国ドル simple:United States dollar th:ดอลลาร์สหรัฐ

Income inequality metrics

Income inequality metrics or income distribution metrics are techniques used by economists to measure the distribution of income among members of a society. In particular these techniques are used to measure the inequality, or equality of income within an economy. These techniques are typically categorized as either absolute measures or relative measures.

Absolute income criteria

Absolute measures define a minimum standard, then calculate the number (or percent) of individuals below this threshold. These methods are most useful when determining the amount of poverty in a society. Examples include:
- Poverty line - This is a measure of the level of income necessary to subsist in a society and varies from place to place and from time to time depending on the cost of living and peoples' expectations. It is usually defined by governments and calculated as that level of income at which a household will devote two-thirds (to three-quarters) of its income to basic necessities such as food, water, shelter, and clothing.
- Poverty index - This index was developed by Amartya Sen. It takes into account both the number of poor and the extent of their poverty. Sen defined the index as: :I = (P/N)(B − A)/A where: :P = number of people below the poverty line :N = total number of people in society :B = poverty line income :A = average income of those people below the poverty line

Relative income criteria

Relative income measures compare the income of one individual (or group) with the income of another individual (or group). These measures are most useful when analyzing the scope and distribution of income inequality. Examples include:
- Percentile distributions - One percentile is compared to another. For example, it might be determined that the income of the top ten-percentile is only slightly more than the bottom forty-percentile. Or it might be determined that the top quartile earns 45% of the society's income while the bottom quartile has 10% of society's income. The interquartile range is a standard percentile range from 25% to 75%.
- Lorenz curve - This is a graphic device used to display the relative inequality in a distribution of income values. A society's total income is ordered according to income level and the cumulative total graphed.
- Gini coefficient - This is a summary statistic used to quantify the extent of income inequality depicted in a particular Lorenz curve.
- Robin Hood index - Mathematically related to the Gini coefficient, it measures the portion of the total income that would have to be redistributed in order for there to be perfect equality.
- Theil index - This is also a summary statistic used to measure income inequality, based on information entropy. It is similar to, but less commonly used than the Gini coefficient.
- Standard deviation of income - This measures income dispersion by assessing the squared variance from the mean. This metric is seldom seen, its use limited to occasional reference in academic journals.
- Relative poverty line - This is a measure of the number or proportion of people or households whose level of income is less than some given fraction of typical incomes. This form of poverty measurement tends to concentrate concern on the bottom half of the income distribution and pay less attention to ineqalities in the top half. See poverty line for details.

Defining income

Both of the above measures use income as the basis for evaluating poverty. However, 'income' is here understood different than a common understanding: It means the total amount of goods and services that a person receives, and thus there is not necessarily money or cash involved. If a poor subsistence farmer in Uganda grows her own grain it will count as income. Services like public health and education are also counted in. Often expenditure or consumption (which is the same in an economic sense) is used to measure income. The World Bank uses the so-called living standard measurement surveys ([http://www.worldbank.org/lsms/ LSMS]) to measure income. These consist of questionaires with 200+ questions. Surveys have been completed in most developing countries.

Criticisms of income inequality metrics

# It is not clear how income should be defined. Should it include capital gains, imputed house rents from home ownership, and gifts? If these income sources are ignored (as they often are), how might this bias the analysis? How should non-paid work (such as parental childcare) be handled? Wealth or consumption may be more appropriate measures in some situations. Broader metrics of human well-being might be useful. # Should the basic unit of measurement be households or individuals? The Gini value for households is always lower than for individuals because of income pooling and intra-family transfers. The metrics will be biased either upward or downward depending on which unit of measurement is used. #These income inequality metrics ignore life cycle effects. An individual tends to start life with little or no income, gradually increase income till about age 50, after which incomes will decline, eventually becoming negative. This will have the effect of significantly overstating inequality. It has been estimated (by A.S. Blinder in The Decomposition of Inequality, MIT press) that 30% of measured income inequality is due to the inequality an individual experiences as they go through the stages of life. #Absolute measures often give very different results than relative measures. For example, in measuring inequality changes due to the development of less developed countries, absolute measures typically show improvements as the general income level rises, but it is also common for relative measures to deteriorate as the new wealth becomes concentrated in the hands of the upper percentiles. The diverging results can be a problem if they are used inappropriately or interpreted incorrectly. #Should real or nominal income distributions be used? What effect will inflation have on absolute measures? Do some groups (eg., pensioners) feel the effect of inflation more than others? #How do we allocate the benefits of government spending? How does the existence of a social security safety net influence the definition of absolute measures of poverty. Do government programs support some income groups more than others? #Income inequality metrics are seldom used to quantify and examine the causes of income inequality. The main causes are: life cycle effects (age), inherited characteristics (IQ, talent), willingness to take chances (risk aversion), the leisure/industriousness choice, inherited wealth, economic circumstances, education and training, discrimination, and market imperfections. These criticisms helps to understand the problems caused by the improper use of inequality measures. However, they do not render inequality coefficients invalid. If inequality measures are computed in a well explained and consistent way, they can provide a good tool for quantitative comparisons of inequalities at least within a research project.

External links

- [http://www.census.gov/hhes/income/histinc/ie6.html Inequality data using various metrics, from the US Census Bureau, 1967-2001]
- [http://www.statistics.gov.lk/samplesurvey/inex/ Survey data from the government of Sri Lanka]
- Software
- Users of the [http://www.r-project.org/ R] data analysis software can install the "ineq" package which allows to compute a variety of inequality metrics including Gini, Atkinson or Theil. Category:Welfare economics

Purchasing power

In economics, purchasing power refers to the amount of goods and services a given amount of money — or, more generally, liquid assets — can buy. As Adam Smith noted, having money gives one the ability to "command" others' labor, so purchasing power to some extent is power over other people. If money income stays the same, but the price of most goods go up, the effective purchasing power of that income falls. Falling purchasing power can thus be part of inflation. However, inflation does not always imply falling purchasing power of one's income, since one's money income may rise faster than inflation. In inflation, there are some winners and some losers.

Total personal income

Finding Total Personal Income Data

Gross domestic product

Gross Domestic Product (GDP) is the total value of final goods and services produced within a country's borders in a year. It is one of the measures of national income and output. It may be used as one indicator of the standard of living in a country, but there may be limitations with this view. GDP is often abbreviated as Y.

Definition

GDP is defined as the total value of goods and services produced within a territory during a specified period (or, if not specified, annually, so that "the UK GDP" is the UK's annual product). GDP differs from gross national product (GNP) in excluding inter-country income transfers, in effect attributing to a territory the product generated within it rather than the incomes received in it. Whereas nominal GDP refers to the total amount of money spent on GDP, real GDP adjusts this value for the effects of inflation in order to estimate the actual quantity of goods and services making up GDP. The former is sometimes called "money GDP," while the latter is termed "constant-price" or "inflation-corrected" GDP -- or "GDP in base-year prices" (where the base year is the reference year of the index used). See real vs. nominal in economics. GDP measures only final goods and services, that is those goods and services that are consumed by their final user, and not used as an input into other goods. Measuring intermediate goods and services would lead to double counting of economic activity within a country. This distinction also removes transfers between individuals and companies from GDP. For instance, buying a Renoir doesn't boost GDP by $20m. (If it did, buying and selling the same painting repeatedly to a gallery would imply great wealth rather than penury.) Note that the Renoir purchase would affect the GDP figure, but not as a $20m receipt, the auctioneer's fees would appear in GDP as consumption expenditure, because this is a final service. The most common approach to measuring and understanding GDP is the expenditure method: : GDP = consumption + investment + exports − imports Consumption and investment in this equation are the expenditure on final goods and services. The exports minus imports part of the equation (often called net exports) then adjusts this by subtracting the part of this expenditure not produced domestically (the imports), and adding back in domestic production not consumed at home (the exports). Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector spending. Two advantages of dividing total consumption this way in theoretical macroeconomics are:
- Private consumption is a central concern of welfare economics. The private investment and trade portions of the economy are ultimately directed (in mainstream economic models) to increases in long-term private consumption.
- If separated from endogenous private consumption, Government consumption can be treated as exogenous, so that different government spending levels can be considered within a meaningful macroeconomic framework. Therefore GDP can be expressed as: : GDP = private consumption + government + investment + net exports : (or simply GDP = C + G + I + NX)

The components of GDP

Each of the variables C, I, G, and NX :
- C is private consumption (or Consumer expenditures) in the economy. This includes most expenditures of households such as food, rent, medical expenses and so on.
- I is defined as business investments in capital. Examples of investment by a business include construction of a new mine, purchase of software, or purchase of machinery and equipment for a factory. 'Investment' in GDP is meant very specifically as non-financial product purchases. Buying financial products is classed as saving in macroeconomics, as opposed to investment (which, in the GDP formula is a form of spending). The distinction is (in theory) clear: if money is converted into goods or services, without a repayment liability it is investment. For example, if you buy a bond or share the ownership of the money has only nominally changed hands, and this transfer payment is excluded from the GDP sum. Although such purchases would be called investments in normal speech, from the total-economy point of view, this is simply swapping of deeds, and not part of the real economy or the GDP formula.
- G is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the millitary, and any investment expenditure by a government. It does not include any transfer payments, such as social security or unemployment benefits. The relative size of government expenditure compared to GDP as a whole is critical in the theory of crowding out, and the Keynesian cross.
- NX are "net exports" in the economy (gross exports - gross imports). GDP captures the amount a country produces, including goods and services produced for overseas consumption, therefore exports are added. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign supply as domestic. It is important to understand the meaning of each variable precisely in order to:
- Read national accounts.
- Understand Keynesian or neo-classical macroeconomics.

Examples of GDP component variables

Examples of C, I, G, & NX: If you spend money to renovate your hotel so that occupancy rates increase, that is private investment, but if you buy shares in a consortium to do the same thing it is saving. The former is included when measuring GDP (in I), the latter is not. However, when the consortium conducted its own expenditure on renovation, that expenditure would be included in GDP. If the hotel is your private home your renovation spending would be measured as Consumption, but if a government agency is converting the hotel into an office for civil servants the renovation spending would be measured as part of public sector spending (G). If the renovation involves the purchase of a chandelier from abroad, that spending would also be counted as an increase in imports, so that NX would fall and the total GDP is unaffected by the purchase. (This highlights the fact that GDP is intended to measure domestic production rather than total consumption or spending. Spending is really a convenient means of estimating production.) If you are paid to manufacture the chandelier to hang in a foreign hotel the situation would be reversed, and the payment you receive would be counted in NX (positively, as an export). Again, we see that GDP is attempting to measure production through the means of expenditure; if the chandelier you produced had been bought domestically it would have been included in the GDP figures (in C or I) when purchased by a consumer or a business, but because it was exported it is necessary to 'correct' the amount consumed domestically to give the amount produced domestically. (As in Gross Domestic Product.).

Difference from Aggregate expenditure

An alternative measure of the economy to GDP is the Aggregate expenditure measure, which is identical to GDP except that it excludes items produced but not purchased (net inventory/stock level growth). If the economy produces more goods than are sold, the increase in inventory would generally be included in the GDP figure (as "Investment"). GDP counts these changes in inventory levels as investment.

The GDP Income account

Another way of measuring GDP is to measure the total income payable in the GDP income accounts. This should provide the same figure as the expenditure method described above. The formula for GDP measured using the income approach, called GDP(I), is: : GDP = Compensation of employees + Gross operating surplus + Gross mixed income + Taxes less subsidies on production and imports
- Compensation of employees (COE) measures the total remuneration to employees for work done. It includes wages and salaries, as well as employer contributions to social security and other such programs.
- Gross operating surplus (GOS) is the surplus due to owners of incorporated businesses. Often called profits, although only a subset of total costs are subtracted from gross output to calculate GOS.
- Gross mixed income (GMI) is the same measure as GOS, but for unincorporated businesses. This often includes most small businesses. The sum of COE, GOS and GMI is called total factor income, and measures the value of GDP at factor (basic) prices.The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the Government has levied or paid on that production. So adding taxes less subsidies on production and imports converts GDP at factor cost to GDP(I).

Measurement

International Standards

The international standard for measuring GDP is contained in the book System of National Accounts (1993), which was prepared by representatives of the International Monetary Fund, European Union, Organisation for Economic Co-operation and Development, United Nations and World Bank. The publication is normally referred to as SNA93, to distinguish it from the previous edition published in 1968 (called SNA68). SNA93 sets out a set of rules and procedures for the measurement of national accounts. The standards are designed to be flexible, to allow for differences in local statistical needs and conditions.

National Measurement

Within each country GDP is normally measured by a national government statistical agency, as private sector organisations normally do not have access to the information required (especially information on expenditure and production by governments).
- Australia: Australian Bureau of Statistics (ABS).
- Austria: [http://www.statistik-austria.at Statistik Austria].
- Canada: Statistics Canada (StatCan).
- Russia: [http://www.gks.ru/eng/ Federal State Statistics Service]
- United States: Bureau of Economic Analysis (BEA). GDP can measure spending on all goods and services. GDP can also measure all income earned.

Interest rates

Net interest expense is a transfer payment in all sectors except the financial sector. Net interest expenses in the financial sector is seen as production and value added and is added to GDP..

Cross-border comparison

The level of GDP in different countries may be compared by converting their value in national currency according to either
- current currency exchange rate: GDP calculated by exchange rates prevailing on international currency markets
- purchasing power parity exchange rate: GDP calculated by purchasing power parity (PPP) of each currency relative to a selected standard (usually the United States dollar). The relative ranking of countries may differ dramatically between the two approaches.
- The current exchange rate method converts the value of goods and services using global currency exchange rates. This can offer better indications of a country's international purchasing power and relative economic strength. For instance, if 10% of GDP is being spent on buying hi-tech foreign arms, the number of weapons purchased is entirely governed by current exchange rates, since arms are a traded product bought on the international market (there is no meaningful 'local' price distinct from the international price for high technology goods).
- The purchasing power parity method accounts for the relative effective domestic purchasing power of the average producer or consumer within an economy. This can be a better indicator of the living standards of less-developed countries because it compensates for the weakness of local currencies in world markets. The PPP method of GDP conversion is most relevant to non-traded goods and services. There is a clear pattern of the purchasing power parity method decreasing the disparity in GDP between high and low income (GDP) countries, as compared to the current exchange rate method. This finding is called the Penn effect. For more information see measures of national income.

GDP and standard of living

GDP per capita is often used as an indicator of standard of living in an economy. While this approach has advantages, many criticisms of GDP focus on its use as an indicator of standard of living. The major advantages to using GDP per capita as an indicator of standard of living are that it is measured frequently, widely and consistently. Frequently in that most countries provide information on GDP on a quarterly basis, which allows a user to spot trends more quickly. Widely in that some measure of GDP is available for practically every country in the world, which allow crude comparisons between the standard of living in different countries to be compared. And consistently in that the technical definitions used within GDP are relatively consistent between countries, and so there can be confidence that the same thing is being measured in each country. The major disadvantage of using GDP as an indicator of standard of living is that it is not, strictly speaking, a measure of standard of living. GDP is intended to be a measure of particular types of economic activity within a country. Nothing about the definition of GDP suggests that it is necessarily a measure of standard of living. For instance, in an extreme example, a country which exported 100 per cent of its production would still have a high GDP, but a very poor standard of living. The argument in favour of using GDP is not that it is a good indicator of standard of living, but rather that (all other things being equal) standard of living tends to increase when GDP per capita increases. This makes GDP a proxy for standard of living, rather than a direct measure of it. There are a number of controversies about this use of GDP.

Controversies

Although GDP is widely used by economists, its value as an indicator has also been the subject of controversy. Criticisms of GDP include:
- GDP doesn't take into account the black economy, where the money spent isn't registered, and the non-monetary economy, where no money comes into play at all, resulting in inaccurate or abnormally low GDP figures. For example, in countries with major business transactions occurring informally, portions of local economy are not easily registered. Bartering may be more prominent than the use of money, even extending to services (I helped you build your house ten years ago, so now you help me).
- Very often different calculations of GDP are confused among each other. For cross-border comparisons one should especially regard whether it is calculated by purchasing power parity method or current exchange rate method.
- Quality of life is determined by many other things than physical goods (economic or not).
- In 'poor' countries, it may just be that everything is cheap, except for a few western goodies. So one may have little money, but if everything is cheap that evens out nicely. Thus, the standard of living may be quite reasonable, it's just that there are, say, fewer TV-sets, meaning people have to share them (which may actually increase the quality of life in a social sense).
- If many products are of low quality in terms of durability then people will have to (unnecessarily) buy them again and again, thus boosting GDP without increasing their satisfaction. (On the other hand, if products were very durable then that would hamper innovation because people would be less inclined to buy new products, giving producers less of an incentive to develop them.) Similarly, if many products are of low quality in terms of usability and people don't know beforehand which products are the best choice for them, then they will either have to make do with an inferior product or buy again and again until they find something more satisfying. Furthermore, if products have a short lifespan in the market (eg because of fast innovation or fashion) then this process starts all over again when people need a replacement. Note that in a capitalist society these factors working together can easily cause a very high GDP combined with low customer satisfaction.
- GDP doesn't measure the sustainability of growth. A country may achieve a temporary high GDP by over-exploiting natural resources or by misallocating investment. Oil rich states can sustain high GDPs without industrializing, but this high level will not be sustainable past the point that the oil runs out. Economies experiencing a housing bubble or a low private saving rate tend to grow faster due to higher consumption, at the expense of reduced pensions in future.
- GDP counts work that produces no net change. For instance, a hurricane destroying thousands of homes would not be counted by GDP, but the rebuilding of those homes would be. A good recent example would be the aftermath of 2005 Katrina hurricane, which is poised to become the most expensive hurricane in history. GDP would capture the rebuilding activity and suggest a rising living standard, but we're only working toward restoring what was lost for the most part. Therefore, GDP growth would over-estimate the increase in the standard of living. See Negative externalities.
- As a measure of actual sale prices, GDP does not capture the economic surplus between the price paid and subjective value received.
- the annual growth of real GDP is adjusted by using the "GDP deflator", which tends to underestimate the objective differences in the quality of manufactured output over time. (The deflator is explicitly based on subjective experience when measuring such things as the consumer benefit received from computer-power improvements since the early 1980s). Therefore the GDP figure may underestimate the degree to which improving technology and quality-level are increasing the real standard of living.
- Some economists such as Herman Daly consider GDP to be a poor measure even of material well being, especially in developed countries. They argue that GDP only measures production and consumption, not however the level of utility people gain from producing and consuming. This idea is expressed in the theory of uneconomic growth, which states that GDP growth above a certain "economic limit" actually decreases material well being. An extreme example of this is a major war. Historically, GDP growth was often boosted in war time while material living standards fell considerably.
- GDP does not take inequality into account. Some economists have attempted to create a replacement for GDP called the Genuine Progress Indicator (GPI), which attempts to address many of the above criticisms.

Lists of countries by their GDP

- List of countries by GDP (nominal)
- List of countries by GDP (PPP)
- List of countries by GDP (nominal) per capita
- List of countries by GDP (PPP) per capita
- List of African countries by GDP
- List of Asian countries by GDP
- List of European countries by GDP

External links

- [http://www.wie.org/business Frank Dixon from Innovest Partners writes about Why Gross National Happiness is a better indicator of National Happiness and the failures of GNP and Western Economic Systems]
- [http://www.abs.gov.au/Ausstats/abs@.nsf/66f306f503e529a5ca25697e0017661f/3f880ee1d366198cca2569a400061616!OpenDocument Australian Bureau of Statistics Manual on GDP measurement]
- [http://perso.wanadoo.fr/pgreenfinch/eoblpib.htm GDP-indexed bonds]
- [http://www.bea.doc.gov/bea/dn/home/gdp.htm Bureau of Economic Analysis GDP data]

Data

- Complete listing of countries by GDP: [http://aol.countrywatch.com/includes/grank/globrank.asp?TBLS=PPP+Method+Tables&vCOUNTRY=17&TYPE=GRANK Purchasing Power Parity Method] and [http://aol.countrywatch.com/includes/grank/gdpnumericcer.asp?TYPE=GRANK&TBL=NUMERICCER&vCOUNTRY=17 Current Exchange Rate Method ]

Articles

- [http://dieoff.org/page11.htm What's wrong with the GDP?]
- [http://ingrimayne.saintjoe.edu/econ/Measuring/GNP2.html Limitations of GDP Statistics by Schenk, Robert.]
- [http://pages.stern.nyu.edu/~nroubini/MEASURE.HTM whether output and CPI inflation are mismeasured, by Nouriel Roubini and David Backus, in Lectures in Macroeconomics]
- [http://william-king.www.drexel.edu/top/prin/txt/EcoToC.html Ch. 22. Measuring the National Economy, by Dr. Roger A. McCain] Category:Economic indicators Category:Macroeconomics Category:Socioeconomics ko:국내총생산 ja:国内総生産 simple:Gross Domestic Product th:ผลิตภัณฑ์มวลรวม

Purchasing power parity

In economics, purchasing power parity (PPP) is an estimate of the exchange rate required to equalise the purchasing power of different currencies, given the prices of goods and services in the countries concerned. PPP exchange rates are used for a number of purposes, most notably to compare the standard of living of two or more countries. It is necessary because comparing the gross domestic products using market exchange rates does not accurately measure differences in income and consumption. Market exchange rates fluctuate widely, and the purchasing power parity hypothesis suggests that the long run equilibrium value is that which yields purchasing power parity. Estimation of purchasing parity is complicated by the fact that countries do not simply differ in a uniform price level; rather, the difference in food prices may be greater than the difference in housing prices or in the opposite direction of the difference in entertainment prices. Therefore, it is necessary to compare the cost of baskets of goods and services using a price index. This is a difficult task, since purchasing patterns and even the goods available to purchase differ across countries. It is necessary to make complex adjustments for differences in the quality of goods and services, a task undertaken by the International Comparisons Project. Additional statistical difficulties arise with multilateral comparisons when (as is usually the case) more than two countries are to be compared. The differences between PPP and real exchange rates can be significant. For example, GDP per capita in China is about USD 1,400, while on a PPP basis, it is ca. USD 6,200. At the other extreme, Japan's nominal GDP per capita is ca. USD 37,600, but its PPP figure is only USD 31,400.

Explanation

PPP Spot exchange rates between the US and UK should be : S = P$ / P£ ($/£) If the actual spot rate is > S, it would mean that the £ is over-valued and the $ is undervalued, relative to PPP If the actual spot rate is < S, it would mean that the $ is over-valued and the £ is undervalued, relative to PPP Eg. :S (per PPP) = 1.5 $/£ :S (Actual spot rate) = 1.8 $/£ This would indicate that PPP suggests, 1 £ should buy you only 1.5 $. However in the actual market you can buy 1.8 $ (i.e., more $s) using 1 £. Thus, the £ is over-valued(i.e., the £ is giving you more $s, than is suggested by the PPP) vs. the $, OR the $ is under-valued vs. the £

Method

The PPP method considers a bundle of goods, then calculates the price of this bundle in each country (using the country's local currency.) To calculate the exchange rate between two currencies, one takes the ratio of the prices. A simple example of a measure of absolute PPP is the Big Mac index popularised by The Economist, which looks at the prices of a Big Mac burger in McDonald's restaurants in different countries. If a Big Mac costs USD 4 in the US and GBP 3 in Britain, the PPP exchange rate would be £3 for $4. In the same way, if a Big Mac or any basket of goods costs $4 in the US, the PPP exchange rate is always GBP£3 for $4. The Economist does not attach any special significance to the Big Mac, beyond it being a well-known good whose price is easily tracked in many countries.

Relative PPP

Relative PPP is concerned with change of price levels over different periods, also known as inflation rate. The equation looks like

\frac=\frac

, where

S_t

is the spot rate and

P_t

is the price in period t (foreign values are marked by an asterisk). The change in the exchange rate is determined by price level changes in both countries. For example, if prices in the United States rise by 3% and prices in the European union rise by 1% the PPP of the USD has to depreciate by 2% compared to the PPP of the EUR (or alternatively the EUR will appreciate by 2%).

PPP equalization and the law of one price

The law of one price states that prices of traded goods will equalize in the absence of tariffs, other barriers to trade and prohibitively high shipping rates. The naïve PPP hypothesis is that free trade of goods should revert exchange rates to their PPP values. However, econometric analysis rejects this hypothesis, and gives a better prediction of the PPP/exchange rate relationship (the CPI) based on relative GDPs. Neo-classical economics includes Balassa-Samuelson effect theory, which explains the PPP model adjustment giving the equilibrium CPI. For more discussion, see discussion and clarification of PPP.

Application

A common measure of the standard of living is the per capita Gross Domestic Product, which is calculated by dividing the GDP of a country by its population. In order to compare the standard of living in two nations, one first needs to express these numbers in the same currency. Using actual exchange rates when making these comparisons can give a very misleading picture of living standards. The PPP method is used to as an alternative. For example, if the value of the Mexican peso falls by half compared to the US dollar, the Gross Domestic Product measured in dollars will also halve. However, this exchange rate results from international trade and financial markets. It does not necessarily mean that Mexicans are any poorer; if incomes and prices measured in pesos stay the same, they will be no worse off assuming that imported goods are not essential to the quality of life of individuals. Measuring income in different countries using PPP exchange rates helps to avoid this problem. PPP exchange rates are especially useful when official exchange rates are artificially manipulated by governments. Countries with strong government control of the economy sometimes enforce official exchange rates that make their own currency artificially strong. By contrast, the currency's black market exchange rate is artificially weak. In such cases a PPP exchange rate is likely the most realistic basis for economic comparison.

Examples

West and Central African Franc

During 2003 the US Dollar bought on average about 550 CFA franc. Because of a difference in the perceived "purchasing power parity" within some of the regions using the CFA franc, their purchasing power parity exchange rate differed like this (lower is stronger parity): Cameroon 240, Central African Republic 166, Chad 172, Republic of the Congo 677, Equatorial Guinea 114, Gabon 413, Benin 273, Burkina Faso 167.

GDP of China

The CIA uses the purchase power parity method in its calculations of Gross National Product [http://www.cia.gov/cia/publications/factbook/fields/2001.html]. By this measure the People's Republic of China has the second largest economy in the world, at $7.262 trillion (2004 est.) ([http://www.cia.gov/cia/publications/factbook/docs/notesanddefs.html CIA methodology for PPP]).

PPP: clarification and discussion

The main reasons why PPP does not perfectly reflect standards of living are
- PPP numbers can vary with the specific basket of goods used, making it a rough estimate.
- Preferences and choices can vary from country to country. Goods then differ in their contribution to welfare.
- International competitiveness is mainly affected by the exchange rate and not by PPP.
- Differences in quality of goods are not sufficiently reflected in PPP. PPP calculations are often used to measure poverty rates. For problems with this methodology, see [http://www.columbia.edu/~sr793/count.pdf How Not To Count The Poor].

Range and quality of goods

The goods that the currency has the "power" to purchase are a basket of goods of different types: # Local, non-tradable goods and services (like electric power) that are produced and sold domestically. # Tradable goods such as non-perishable commodities that can be sold on the international market (e.g. diamonds). The more a product falls into category 1 the further its price will be from the currency exchange rate. (Moving towards the PPP exchange rate.) Conversely, category 2 products tend to trade close to the currency exchange rate. (For more details of why, see: Penn effect). More processed and expensive products are likely to be tradable, falling into the second category, and drifting from the PPP exchange rate to the currency exchange rate. Even if the PPP "value" of the Chinese currency is five times stronger than the currency exchange rate, it won't buy five times as much of internationally traded goods, but non-traded goods like housing, services ("haircuts"), and domestically produced rice. The relative price differential between tradables and non-tradables from high-income to low-income countries is a consequence of the Balassa-Samuelson effect, and gives a big cost advantage to labour intensive production of tradable goods in low income countries (like China), as against high income countries (like Switzerland). The corporate cost advantage is nothing more sophisticated than access to cheaper workers, but because the pay of those workers goes further in low-income countries than high, the relative pay differentials (inter-country) can be sustained for longer than would be the case otherwise. (This is another way of saying that the wage rate is based on average local productivity, and that this is below the per capita productivity that factories selling tradable goods to international markets can achieve. This is sometimes called exploitation.) An equivalent cost benefit comes from non-traded goods that can be sourced locally (nearer the PPP-exchange rate than the nominal exchange rate in which receipts are paid). These act as a relatively cheaper factor of production than is available to factories in richer countries.

Difficulties with PPP comparisons in welfare economics

While using PPP exchange rates for income comparison is an improvement over using nominal (currency) exchange rates, it is still imperfect, and comparisons using the PPP method can still be misleading. Comparing standards of living using the PPP method implicitly assumes that the real value placed on goods is the same in different countries. In reality, what is considered a luxury in one culture could be considered a necessity in another. The PPP method does not account for this. (This is not primarily a flaw in the exchange rate methodology, as cultural and interpersonal differences in utility functions are a more fundamental microeconomic problem.) A PPP exchange rate varies depending on the choice of goods used for the index (CPI). Hence, it is possible to deliberately or accidentally bias a PPP exchange rate by the choice of a bundle. Indeed, it may be hard to construct equivalent representative bundles for the consumption habits of very different societies. PPP could also have difficulty accounting for differences in quality between goods in one country and equivalent goods in another, see: consumer price index. Even if a good PPP is used, GDP per capita is still a measure of the economic output of the whole economy, not a direct measure of the mean or median person's quality of life. Other factors such as the standards of homes and schools, access to public services, the extent of pollution, and strength of consumer protection laws are hard to quantify and generally not fully reflected in the GDP. Even a PPP-adjusted measure of GDP per capita must be used with caution, for all the usual reasons that the GDP figure itself is limited (for instance, its inability to capture the surplus between subjective value and payment price). For example, in 2002, the nominal GDP per capita in Japan was about US$40,000, while the equivalent PPP into a US goods basket was estimated at $27,000. In the US, GDP per capita was about $36,400 (nominal and real if based on 2002 dollars). This means that the average US citizen could enjoy slightly more consumption than the average Japanese (vastly more if private saving is removed from consumption income). However, it does not necessarily follow, that this implies a "higher standard of living" in the sense of "enjoying life" more; the US has higher crime rates and less social cohesion than Japan, while Japan has much less physical space per person and arguably less individual freedom. Ultimately, the quality of life will depend on subjective judgement and individual preferences. Per capita income also does not take into account inequalities in wealth distribution.

Difficulties with PPP in country comparisons

The ability of PPP-adjusted GDP to describe economy's ability to trade is limited by differences in:
- Infrastructure
- Barriers to trade; e.g., Tariffs, sanctions and duties
- Transportation costs
- The difference in the PPP exchange rate and the nominal (see: Penn effect.)

Clarification to PPP Numbers of the IMF

The GDP number for all reporting areas are one number in the reporting areas local currency. Therefore, in the local currency the PPP and market (or government) exchange rate is always 1.0 to its own currency, so the PPP and market exchange rate GDP number is always per definition the same for any duration of time, anytime, in that areas currency. The only time the PPP exchange rate and the market exchange rate can differ is when the GDP number is converted into another currency. Only because of different base numbers (because of for example "current" or "constant" prices, or an annualized or averaged number) are the USD to USD PPP exchange rate not 1.0, see the IMF data here: [http://www.imf.org/external/pubs/ft/weo/2004/02/data/dbcoutm.cfm?SD=1980&ED=2005&R1=1&R2=1&CS=3&SS=2&OS=C&DD=0&OUT=1&C=111&S=NGDP_R-NGDP-NGDPD-NGDPRPC-NGDPPC-NGDPDPC-PPPWGT-PPPEX-PPPPC&CMP=0&x=59&y=15]. The PPP exchange rate is 1.023 from 1980 to 2002, and the "constant" and "current" price is the same in 2000, because that's the base year for the "constant" (inflation adjusted) currency.

Clarification to PPP equalization

PPP equalization fails on many counts. The exchange rate only reflects traded goods in contrast to non-traded ones. Also, currencies are traded for purposes other than trade in goods and services, e.g., to buy capital assets whose prices vary more than those of physical goods. Also, different interest rates, speculation, hedging or interventions by central banks can influence the foreign-exchange market.

External links

- [http://www.economist.com/markets/Bigmac/ Big Mac Index] (The Economist)
- [http://www.economist.com/countries/ Countries] (The Economist)
- [http://fx.sauder.ubc.ca/PPP.html Explanations from the U. of British Columbia]
- [http://www.imf.org/external/pubs/ft/weo/2004/02/data/dbcoutm.cfm?SD=2003&ED=2003&R1=1&R2=1&CS=3&SS=2&OS=C&DD=0&OUT=1&C=914-446-612-666-614-672-311-946-213-137-911-962-193-674-122-676-912-548-313-556-419-678-513-181-316-682-913-684-124-273-339-921-638-948-514-686-218-688-963-518-616-728-223-558-516-138-918-353-748-196-618-278-522-692-622-694-156-142-624-449-626-564-628-283-228-853-924-288-233-293-632-566-636-964-634-182-238-453-662-968-960-922-423-714-935-862-128-716-611-456-321-722-243-965-248-718-469-724-253-576-642-936-643-961-939-813-644-199-819-184-172-524-132-361-646-362-648-364-915-732-134-366-652-734-174-144-328-146-258-463-656-528-654-923-336-738-263-578-268-537-532-742-944-866-176-369-534-744-536-186-429-925-178-746-436-926-136-466-343-112-158-111-439-298-916-927-664-846-826-299-542-582-443-474-917-754-544-698-941&S=NGDP-PPPEX&CMP=0&x=61&y=16 PPP US dollar exchange rates (IMF)]
- The most widely used PPP exchange rate come from the Penn World Tables at the [http://pwt.econ.upenn.edu Center for International Comparison] in Pennsylvania, USA. Category:Economic indicators Category:International trade Category:International economics ko:구매력평가 ja:購買力平価説

Luxembourg

The Grand Duchy of Luxembourg is a small country in the north-west of continental Europe, bordered by France, Germany and Belgium.

History

Main article: History of Luxembourg The recorded history of the Grand Duchy of Luxembourg begins with the construction of Luxembourg Castle in the year 963. Around this fort a town gradually developed, which became the center of a small but important state of great strategic value. In 1437 the ruling family had no rightful heirs to assume the throne. In the following centuries, Luxembourg's fortress was steadily enlarged and strengthened over the years by its successive occupants, the Bourbons, Habsburgs, Hohenzollerns and the French, among others. Even after the defeat of Napoleon in 1815, when the Congress of Vienna gave formal autonomy to Luxembourg, the country was disputed between Prussia and the Netherlands. Luxembourg's independence was confirmed in 1839, but it was not formally ratified until 1867. The king of the Netherlands remained head of state until 1890, when Luxembourg gained a grand duke of its own. William III left the Dutch throne to his daughter while Luxembourg (at that time restricted to male heirs (see Salic Law)) passed to a distant cousin. The country was invaded and occupied by Germany during World War I and World War II. During World War II, Luxembourg abandoned its policy of neutrality, when it joined the Allies in fighting Germany. The government exiled to London set up a small group of volunteers, who participated in the Normandy invasion. It became a founding member of NATO and the United Nations. In 1957, Luxembourg became one of the six founding countries of the European Economic Community (later the European Union), and in 1999 it joined the euro currency area. Several European agencies are located in Luxembourg. In 2005 a referendum on the EU treaty establishing a constitution for Europe was held in Luxembourg.

Politics

Main article: Politics of Luxembourg Luxembourg has a parliamentary form of government with a constitutional monarchy by inheritance. Under the constitution of 1868, executive power is exercised by the Grand Duke and the cabinet, which consists of a prime minister and several other ministers. The Grand Duke has the power to dissolve parliament and reinstate a new one. Legislative power is vested in the Chamber of Deputies, directly elected to 5-year terms. A second body, the "Conseil d'État" (Council of State), composed of 21 ordinary citizens appointed by the Grand Duke, advises the Chamber of Deputies in the drafting of legislation.[http://www.ce.etat.lu/structure.htm]

Justice

Main article: Justice of Luxembourg The Grand Duchy has three lower tribunals (justices de paix; in Esch-sur-Alzette, in Luxembourg and in Diekirch), two district tribunals (Luxembourg and Diekirch) and a Superior Court of Justice (Luxembourg), which includes the Court of Appeal and the Court of Cassation. There is also an administrative tribunal (Luxembourg) and an Administrative Court (Luxembourg),as well as a Constitutional Court (Luxembourg).

Geography

Diekirch Main article: Geography of Luxembourg Luxembourg is one of the smallest countries in Europe. It is ranked 167th in size of all the countries of the world. The country is about 2,586 km² in size. In the west it borders the Belgian province of Luxembourg, which is (at 4,443 km²) nearly twice the size of the country. The north of the country, part of the Ardennes, has hills and low mountains, with the Buurgplaatz as the highest point at 559 m. The rest of the country is also hilly. Luxembourg's eastern border is formed by three rivers, the Moselle, the Sauer/Sûre and the Our.

Administrative subdivisions

Main article: Administrative subdivisions of Luxembourg The country is divided in 3 districts, 12 cantons and 118 communes. 12 communes have city status, whereof Luxembourg, the capital, is the largest city in the country.

Economy

Main article: Economy of Luxembourg Stable, high-income economy features moderate growth, low inflation, and low unemployment. The industrial sector, until recently dominated by steel, has become increasingly more diversified to include chemicals, rubber, and other products. During the past decades, growth in the financial sector has more than compensated for the decline in steel. Services, especially banking, account for a growing proportion of the economy. Agriculture is based on small family-owned farms. Luxembourg has especially close trade and financial ties to Belgium and the Netherlands, and as a member of the EU, enjoys the advantages of the open European market. Luxembourg possesses the highest GDP per capita in the world ($77,595 as of 2005). Unemployment was 4.4% of the labour force as of July 2005.

Language

Main article: Language of Luxembourg The linguistic situation in Luxembourg is characterized by the practice and the recognition of three official languages: French, German and Luxemburgish, a Franconian language of the Moselle region similar to German. Roughly 10% of the population is of Portuguese extraction and speaks Portuguese.
Culture
94 percent of Luxembourg's population is Roman Catholic.
- Cinema of Luxembourg
- Radio Luxembourg
- Foreign relations of Luxembourg
- Grand Ducal Family of Luxembourg
- Communications in Luxembourg
- Military of Luxembourg
- Transportation in Luxembourg
External links

- [http://www.gksoft.com/govt/en/lu.html Governments on the WWW: Luxembourg]
- [http://www.gouvernement.lu/ Official Governmental Site]
- [http://www.luxembourg.lu/ Official Website for Luxembourg]
- [http://www.ont.lu/ Luxembourg National Tourist Office] Category:European Union member states Category:Monarchies Category:NUTS 2 Statistical Regions of Europe Category:NUTS 1 Statistical Regions of Europe Category:Landlocked countries als:Luxemburg zh-min-nan:Luxembourg ko:룩셈부르크 ms:Luxembourg ja:ルクセンブルク simple:Luxembourg th:ประเทศลักเซมเบิร์ก

United States

:For alternative meanings, see the disambiguation page for US, USA, United States, or American. The United States of America is a federal democratic republic situated primarily in central North America. It comprises 50 states and one federal district, and has several territories. It is also referred to, with varying formality, as the United States, the U.S., the U.S.A., the States, or simply and most commonly, America. The official founding date of the United States is July 4, 1776, when the Second Continental Congress—representing thirteen British colonies—adopted the Declaration of Independence. However, the structure of the government was profoundly changed in 1788, when the states replaced the Articles of Confederation with the United States Constitution. The date on which each of the fifty states adopted the Constitution is typically regarded as the date that state "entered the Union" (became part of the United States). Since the mid-20th century, following World War II, the United States has emerged as a dominant global influence in economic, political, military, scientific, technological, and cultural affairs.

Geography and climate

The United States shares land borders with Canada (to the north) and Mexico (to the south), and territorial water boundaries with Canada, Russia, the Bahamas, and numerous smaller nations. It is otherwise bounded by the Pacific Ocean and the Bering Sea, in the west; the Arctic Ocean, in the northernmost areas; and the Atlantic Ocean, the Gulf of Mexico, and the Caribbean Sea, in the eastern and southeastern areas. Forty-eight of the states are in the single region between Canada and Mexico; this group is referred to, with varying precision and formality, as the continental or contiguous United States, sometimes abbreviated CONUS, and as the Lower 48. Alaska, which is not included in the term contiguous United States, is at the northwestern end of North America, separated from the Lower 48 by Canada. The archipelago of Hawaii is in the Pacific Ocean. The capital city, Washington, District of Columbia is a federal district located on land donated by the state of Maryland. (Virginia also donated land, but it was returned in 1847.) The United States also has overseas territories with varying levels of independence and organization. When inland water is included in the total area, only Russia and Canada are larger than the United States; if inland water is excluded, China ranks third and the U.S. ranks fourth. The United States' total area is 3,718,711 square miles (9,631,418 km²), of which land makes up 3,537,438 square miles (9,161,923 km²) and water makes up 181,273 square miles (469,495 km²). The United States' landscape is one of the most varied among those of the world's nations: among its many features are temperate forestland and rolling hills, on the east coast; mangrove, in Florida; the Great Plains, in the center of the country; the Mississippi–Missouri river system; the Great Lakes, four of the five of which are shared with Canada; the Rocky Mountains, west of the Great Plains; deserts and temperate coastal zones, west of the Rocky Mountains; and temperate rain forests, in the Pacific northwest. Alaska's tundra, and the volcanic, tropical islands of Hawaii add to the geographic diversity. Hawaii The climate varies along with the landscape, from tropical in Hawaii and southern Florida to tundra in Alaska and atop some of the highest mountains. Most of the North and East experience a temperate continental climate, with warm summers and cold winters. Most of the South experiences a subtropical humid climate with mild winters and long, hot, humid summers. Rainfall decreases markedly from the humid forests of the Eastern Great Plains to the semi-arid shortgrass prairies on the high plains abutting the Rocky Mountains. Arid deserts, including the Mojave, extend through the lowlands and valleys of the southwest, from westernmost Texas to California and northward throughout much of Nevada. Some parts of California have a Mediterranean climate. Rainforests line the windward mountains of the Pacific Northwest from Oregon to Alaska.

History

American history started with the migration of people from Asia across the Bering land bridge approximately 12,000 years ago following large animals that they hunted into the Americas. These Native Americans left evidence of their presence in petroglyphs, burial mounds, and other artifacts. It is estimated that 2-9 million people lived in the territory now occupied by the U.S. before European contact, and the subsequent introduction of foreign diseases such as small pox that greatly diminished the native populations. Some advanced societies were the Anasazi of the southwest, who inhabited Chaco Canyon, and the Woodland Indians, who built Cahokia, located near present-day St Louis, a city with a population of 40,000 at its peak in AD 1200. Vikings first visited North America around 1000, but did not settle permanently. Following the discovery voyages of Christopher Columbus around 1492, other Europeans began to explore and settle there. During the 1500s and 1600s, the Spanish settled parts of the present-day Southwest and Florida, founding St. Augustine, Florida in 1565 and Santa Fe (in what is now New Mexico) in 1607. The first successful English settlement was at Jamestown, Virginia, also in 1607. Within the next two decades, several Dutch settlements, including New Amsterdam (the predecessor to New York City), were established in what are now the states of New York and New Jersey. In 1637, Sweden established a colony at Fort Christina (in what is now Delaware), but lost the settlement to the Dutch in 1655. This was followed by extensive British settlement of the east coast. The British colonists remained relatively undisturbed by their home country until after the French and Indian War, when France ceded Canada and the Great Lakes region to Britain. Britain then imposed taxes on the 13 colonies, widely regarded by the colonists as unfair because they were denied representation in the British Parliament. Tensions between Britain and the colonists increased, and the thirteen colonies eventually rebelled against British rule. British Parliament, George Washington (1789-1797).]] In 1776, the 13 colonies split from Great Britain and formed the United States, the world's first constitutional and democratic federal republic, after their Declaration of Independence of that year, and the Revolutionary War (1775 to 1783). The original political structure was a confederation in 1777, ratified in 1781 as the Articles of Confederation. After long debate, this was supplanted by the Constitution in 1789, forming a more centralized federal government. Prior to all these was the Albany Congress in 1754, in which a union was first seriously proposed. From early colonial times, there was a shortage of labor, which encouraged unfree labor, particularly indentured servitude and slavery. In the mid-19th century, a major division occurred in the United States over the issue of states' rights and the expansion of slavery. The northern states had become opposed to slavery, while the southern states saw it as necessary for the continued success of southern agriculture and wanted it expanded to the territories. Several federal laws were passed in an attempt to settle the dispute, including the Missouri Compromise and the Compromise of 1850. The dispute reached a crisis in 1861, when seven southern states seceded¹ from the Union and formed the Confederate States of America, leading to the Civil War. Soon after the war began, four more southern states seceded. During the war, Abraham Lincoln issued the Emancipation Proclamation, mandating the freedom of all slaves in states in rebellion, though full emancipation did not take place until after the end of the war in 1865, the dissolution of the Confederacy, and the Thirteenth Amendment took effect. The Civil War effectively ended the question of a state's right to secede, and is widely accepted as a major turning point after which the federal government became more powerful than state governments. Thirteenth Amendment). The title of the painting, from a 1726 poem by Bishop Berkeley, was a phrase often quoted in the era of Manifest Destiny, expressing a widely held belief that civilization had steadily moved westward throughout history. [http://americanart.si.edu/t2go/1lw/1931.6.1.html (more)] ]] During the 19th century, many new states were added to the original 13 as the nation expanded across the continent. Manifest Destiny was a philosophy that encouraged westward expansion in the United States. As the population of the Eastern states grew and as a steady increase of immigrants entered the country, settlers moved steadily westward across North America. In the process, the U.S. displaced most American Indian nations. This displacement of American Indians continues to be a matter of contention in the U.S. with many tribes attempting to assert their original claims to various lands. In some areas American Indian populations were reduced by foreign diseases contracted through contact with European settlers, and US settlers acquired those emptied lands. In other instances American Indians were removed from their traditional lands by force. Though some would say the U.S. was not a colonial power until the Spanish-American War when it acquired Puerto Rico, Guam and the Philippines, the dominion exercised over land in North America the United States claimed is essentially colonial. The Philippines became independent in 1946. During this period, the nation also became an industrial power. This continued into the 20th century, which has been termed "the American Century" because of the nation's overriding influence on the world. The US became a center for innovation and technological development; major technologies that America either developed or was greatly involved in improving include the telephone, television, computer, the Internet, nuclear weapons, nuclear power, aviation, and aeronautics. In addition to the Civil War, another major traumatic experience for the nation was the Great Depression (1929 to 1939). The nation has also taken part in several major foreign wars, including World War I and World War II (in both of which the US later joined the Allies). During the Cold War, the US was a major player in the Korean War and Vietnam War, and, along with the Soviet Union, was considered one of the world's two "superpowers". With the collapse of the Soviet Union, the US emerged as the world's leading economic and military power. Beginning in the 1990s, the United States became very involved in police actions and peacekeeping, including actions in Kosovo, Haiti, Somalia and Liberia, and the first Persian Gulf War driving Iraq out of Kuwait. After attacks on the World Trade Center and the Pentagon on September 11, 2001, the United States and other allied nations found themselves involved in what has come to be called the "War on Terrorism," which has primarily encompassed military actions in both Afghanistan and Iraq.

Government

Iraq

Per capita income