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ICP 2017 generally asked Questions (FAQ) | HD0-200 Questions and Answers and Test Prep

what is the ICP?

The international assessment software (ICP) is among the world’s biggest statistical initiatives, coordinated by using the realm bank beneath the auspices of the United international locations Statistical commission and applied through a partnership of countries and multilateral corporations. on account that its inauguration 50 years ago, ICP 2017 is the ninth assessment overlaying 176 economies, producing outcomes for reference 12 months 2017. The subsequent ICP assessment will be performed for reference year 2021.

What does the ICP do?

The main objective of the ICP is to supply related volume measures of GDP and its expenditure components in keeping with deciding to buy energy Parities (PPPs). to meet this objective, the ICP coordinates the assortment and reporting of similar cost information for a common basket of goods and services the world over. unique expenditure values in native forex are also compiled from collaborating economies’ country wide debts. PPPs are produced according to the accumulated price data and compiled expenditure values.

Why should an economy take part within the ICP?

The ICP offers effective world financial information that assist economies compare their fee tiers, financial dimension and cloth well-being with those of other economies. An economy that participates in the ICP advantages from a wide range of ability-constructing activities that support build countrywide statistical means in the areas of rate records and national money owed, in addition to in information collection and exceptional assurance techniques.

how many economies participated in the ICP 2017 cycle?                       

The ICP 2017 cycle coated 176 collaborating economies. a few nonparticipating economies benefitted from ICP 2017 skill-building activities, so as to joining the ICP 2021 cycle.

Who oversees the ICP?
  • The governance constitution of the ICP offers an average framework for coordinating the international, regional, and national efforts to supply professional ICP results. The ICP governance framework includes the following bodies, each and every of which has distinctive roles and responsibilities:
  • The United international locations Statistical fee decides the frequency and operational modality of the application.
  • The ICP Governing Board units the concepts and policies governing the production of ICP outcomes.
  • The ICP Technical Advisory neighborhood develops the application‚Äôs methodology and assesses the usual great of ICP effects.
  • The ICP Inter-agency Coordination community coordinates activities throughout areas and develops general ICP specifications, guidelines, and protocols for all collaborating economies within the software.
  • The ICP international office on the World financial institution undertakes the usual coordination and implementation of the ICP and calculates and disseminates global ICP effects.
  • Regional imposing agencies coordinate and put in force the regional ICP comparisons and calculate and disseminate regional ICP results.
  • countrywide enforcing groups undertake the rate surveys and collect the countrywide accounts expenditure facts required for producing PPPs.
  • Who consists of out the survey and computation work for the ICP?

    ICP price collection surveys and compilation of national money owed expenditure records are performed by using national imposing businesses in collaborating economies. The regional enforcing groups compute regional outcomes.  The world office at the World bank, in conjunction with impartial experts on the ICP Computation task group, links regional consequences with Eurostat-OECD outcomes to supply a world set of outcomes.

    How does the ICP make sure that estimates are of excessive first-rate and free from political interference?

    The ICP follows most effective practices in official information and has a strong governance structure to make sure that estimates are calculated independently in line with normal, sound and clear methodology. ICP methods are developed and peer-reviewed by way of sought after certified and results are assessed for soundness by way of the ICP Technical Advisory neighborhood prior to their unencumber.

    Who funds the ICP?

    The ICP is financed via a consortium of international, regional and country wide development groups. The 2017 cycle was funded by way of united kingdom’s branch for international development, the world financial institution, the overseas fiscal Fund, and regional development banks and enforcing agencies.

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    What are deciding to buy vigour Parities (PPPs)?

    PPPs are each currency conversion components and spatial rate indexes. They convert different currencies to a typical forex and, in the technique of conversion, equalize their paying for energy through eliminating the modifications in rate stages between economies. They show, just about a base economic climate, the relative rate of a given basket of goods and features in each and every of the economies being in comparison.

    what is the conceptual framework of the ICP?

    The conceptual framework for an ICP assessment depends upon the overseas definition of GDP. The ICP 2017 cycle adopted the internationally agreed definition of GDP supplied by using the system of country wide debts (SNA) 2008 as its framework. The old 2005 and 2011 cycles used the definition of GDP offered by using SNA 1993. The SNA defines GDP from the expenditure aspect because the sum of expenditures on final consumption, gross capital formation, and web exports.

    what's the difference between the CPI and the ICP?

    PPPs calculated by using the ICP are spatial indexes wherein each and every merchandise priced by means of an financial system must be matched to a corresponding merchandise priced with the aid of one other economic system. A client expense index (CPI), nevertheless, is a temporal index during which the same merchandise need to be priced in every index length. The CPI basket of items and services contains handiest these of magnitude to that economic system. youngsters, the ICP’s basket of items and features is extra extensively based mostly to encompass items that may well be obtainable in most of the economies however important to most effective a couple of. The ICP pricing is also greater geographically consultant than is usually the case for CPIs. in many economies, expenditures for the CPI are gathered most effective in main cities or in capital cities, whereas the ICP encourages country-extensive collection of prices in each rural and urban areas in order that country wide annual common prices can also be estimated. although, the ICP goals to work inside an economic system’s CPI framework where feasible and national statistical offices are inspired to discover synergies between the two statistical workout routines anywhere feasible, to reduce expenses and to simplify data assortment and validation where possible, and to enhance statistical capacity.

    what's the difference between PPPs and PLIs?

    A PPP is a ratio of the price for an merchandise (or item community) between an economy and the reference economic system that preserves similar purchasing vigour. a vital measure according to PPPs is the fee degree index (PLI), which is the PPP divided via the nominal market trade expense for each economy relative to the reference economic climate or area (which usually has an index degree of one hundred). If an economic system’s PLI is less than that of one other economic climate, then its gadgets or expenditure aggregates are less expensive than these within the other economic system. Conversely, if an economic system’s PLI is larger than that of a different economic system, then its gadgets or expenditure aggregates are extra costly than these in the other financial system. When indexed to the identical reference economic climate or location, PLIs will also be used to directly evaluate cost stages across economies in contrast to PPPs.

    what is the change between true GDP in the temporal and spatial contexts?

    in the temporal context, real GDP (or GDP at constant costs) is a macroeconomic measure of the value of the output of an economy adjusted for temporal expense adjustments (i.e. inflation or deflation). it's used specifically to measure economic changes over time (either yearly or quarterly). within the spatial context reminiscent of that supplied via the ICP, precise GDP is a macroeconomic measure of the stage of financial output in distinct economies expressed in a standard forex and adjusted for spatial cost differences, i.e. by PPPs.

    what's the difference between the GDP implicit deflator and the PPP changes for GDP?

    transformations exist between GDP quantity growth fees as measured by way of the country wide money owed time collection and as implied by means of PPP benchmarks. the nature of these changes has been investigated because the initial phases of the ICP. Conceptually, it's unimaginable to hold complete consistency in PPPs concurrently throughout time and house, no depend which index number formulation are chosen for estimating each the time series expense indexes and the PPPs within the chosen years. The purpose is that index quantity formulas are designed both to measure price adjustments over time (i.e. CPI) or to measure expenditures degrees between economies (i.e. PPPs), but they can not measure each simultaneously. other than the conceptual complications, useful considerations also have an effect on the comparability of PPPs over time, including distinctive baskets of goods and functions used in estimating the countrywide bills deflators and PPPs, distinct computational strategies, and different weighting patterns.

    Can PPPs and ICP results for diverse reference years be without delay compared?

    Comparisons of the relative genuine expenditure level for pairs of economies or the positions of economies in world rankings for each reference year can be made.  youngsters, ICP effects may still no longer be used to investigate adjustments in any given economy’s GDP over time: the country wide accounts increase and incessant measures of every particular person economy provide the best statistics source for this purpose.

    Is it applicable to rank economies according to ICP consequences?

    Many users have an interest within the rankings of economies, even if with the aid of GDP (PPP) or GDP (PPP) per capita. despite the fact, because PPPs are statistical estimates and are discipline to sampling, measurement and classification error, it's frequently approved that adjustments of less than 5 % lie inside the margin of error of PPP estimation. This reality should still be kept I mind when ranking economies by using their GDP (PPP) or GDP (PPP) per capita.

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    What are the indicators produced through the ICP?

    The ICP produces, for every reference yr, purchasing vigor Parities (PPPs), cost stage indexes, and measures of PPP-primarily based GDP and its expenditure accessories, comparable to genuine individual consumption, particular person consumption expenditure with the aid of households, consumption expenditure with the aid of govt, and gross fastened capital formation, for all participating economies. The ICP 2017 results are available throughout the ICP web page and the world financial institution’s Databank and information Catalog. clients can observe for access to greater granular unpublished results and underlying statistics as set out in the ICP records entry and Archive coverage.

    Why have been 2011 outcomes revised?

    Revisions are a typical observe in authentic facts. Revisions of national accounts methodology and records bring on a need for PPP revisions. The ICP 2011 consequences were posted in 2014.  These effects have now been revised according to the ICP Revision policy the use of up to date 2011 expenditures, regional PPPs, population, and market change rate data.

    Will 2017 results be revised in the future?

    ICP 2017 outcomes should be revised and posted along with the ICP 2021 results. earlier than that, PPPs for 2018-2020 may be extrapolated annually from 2017 PPPs the usage of available period in-between deflators and cost indices and posted on the planet construction indicators (WDI).

    Can ICP 2017 results be in comparison with ICP 2011 effects?

    ICP 2017 used the same methodology as ICP 2011, however the set of participating economies a little bit differed between the two cycles. The regional nation composition modified, peculiarly in Latin the us and the Caribbean, OECD, and Western Asia, with some economies shifting from one region to an extra (e.g. Colombia and Costa Rica), losing from the ICP (e.g. Yemen), or joining the application (e.g. Argentina). accordingly, comparisons of the relative measurement of the economies and their rate degrees between 2011 and 2017 may also be made with some caution.

    Are annual PPPs calculated for the duration between 2011 and 2017?

    Annual PPPs had been calculated for 2012 to 2016 in keeping with the interpolation of PPPs from the two reference years 2011 and 2017.  These can be found through the ICP website and the world financial institution’s Databank and facts Catalog.

    Are PPPs imputed for nonparticipating economies?

    so as to deliver an entire view of the realm economy in PPP phrases, results are imputed for economies that do not participate in the benchmark endeavor. In ICP 2017, as in old ICP cycles, a regression method turned into used to impute PPPs for a selection of nonparticipating economies.

    Why do the GDP, inhabitants, and market trade fee statistics used by using the ICP vary from those published in WDI?

    The statistics for GDP, inhabitants, and market alternate costs used in the ICP had been provided directly by way of countrywide sources. For just a few economies they differ from the facts posted within the WDI as a result of changes in old or statistical methods.

    How do the ICP 2017 PPPs differ from 2017 PPPs extrapolated from 2011 PPPs on the earth development symptoms (WDI)?

    The ICP 2017 PPPs bring about new guidance on the area economies when in comparison with the 2017 PPPs extrapolated from 2011 PPPs in WDI. The ICP 2017 PPPs cannot converge with the extrapolated 2017 PPPs in the WDI for each conceptual and practical explanations (see Chapter 18 of the ICP book ‚ÄúMeasuring the real dimension of the area financial system‚ÄĚ). journey has proven that immense discrepancies can arise between PPPs from a new cycle and extrapolated PPPs from a old cycle, even when cycles are simplest a few years apart. consequently, a six-12 months gap between the latest ICP cycles resulted in some ameliorations between the ICP 2017 PPPs and the 2017 PPPs extrapolated from 2011 PPPs for some economies.

    How do 2017 PPPs produced through the ICP vary from these within the Penn World Tables?

    The Penn World Tables (PWT) attain their price enter information from the ICP but they process the information using a little diverse strategies: first, PWT doesn't use regional fixity, and second, in their version, the GDP is aggregated from its leading expenditure add-ons the use of an additive index quantity (a edition of the Geary-Khamis index). moreover, PWT sources its GDP and expenditure component statistics from the UN countrywide debts leading Aggregates Database. For more certain tips on the ideas and techniques used through the PWT, please check with the PWT web site.

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    what is a ‚Äėfundamental heading‚Äô and what's its significance in the ICP?

    A basic heading is the lowest (or most particular) degree of aggregation for which expenditure values are provided via taking part economies. The ICP divides expenditures on GDP into one hundred fifty five jointly exclusive basic headings in accordance with the ICP Classification of last Expenditure on GDP. These 155 simple headings cover all remaining bills on GDP, from meals, apparel and shoes to health center equipment and compensation of government employees, etc. moreover, it is on the primary heading degree that gadgets are chosen for pricing, that costs are accrued, and that PPPs are first estimated.

    How are basic heading expenditures compiled?

    ICP statistics requirements require that all participating economies report expenditure estimates for a hundred and fifty five simple headings in keeping with the ICP Classification of remaining Expenditure on GDP. within the absence of published or quite simply attainable estimates at that fundamental heading stage, bigger-stage aggregates have been required to be cut up the usage of statistics and indicators attainable from household expenditure surveys, executive money owed, and different most contemporary purchasable facts sources. collaborating economies have been also asked to allocate statistical discrepancy (if any) on the expenditure aspect to one or extra simple headings in response to their most appropriate judgment.

    What goods and services does the ICP cowl and how are regional changes accounted for?  

    costs are collected for particular person gadgets within each and every simple heading to compute national annual typical fees.  on the regional degree, every regional imposing agency works carefully with the national implementing agencies to enhance a listing of regional gadgets that are both representative of the economies’ consumption patterns as well as comparable across economies inside the vicinity. on the global stage, the global office works closely with the regional enforcing businesses to advance an inventory of international core items which are similar and representative throughout all areas and which are priced by using all taking part economies. The 2017 global core record for family final consumption expenditure covered 651 items, together with 7 for training and 13 for housing rents, whereas consumption expenditure via govt covered 34 executive occupations, and gross mounted capital formation lined a hundred sixty five construction objects, including substances, labor wages and machine employ, and 107 machinery and device gadgets. moreover, many economies sourced some of their ICP expenditures from their CPI, so records assortment for both statistical exercises could sometimes take place at the same time as.

    what's the geographical coverage of fee collection?

    ICP facts necessities stipulate that each one average expenditures mentioned by nations and utilized in PPP calculations be nationally representative annual commonplace prices. quick guidance on the survey framework for price assortment in each and every collaborating financial system is purchasable within the ICP 2017 document, and further details are available on the ICP website.

    What improvements were made in the ICP 2017 cycle?

    The 2017 cycle maintained the methods and strategies of the ICP 2011 cycle. The ICP 2017 reinforced records fine assurance processes and added a fully documented and greater transparent process for computing results at the global degree.

    How will the ICP continue to adapt to a changing economic climate?

    The ICP will continue to evolve and adapt to a changing economy, reflecting the swift alterations taking area internationally, not simplest in what people purchase however during which outlets and systems they make their purchases, and complementing common surveys with new information sources similar to scanner information and internet scraping. nation participation within the program will additionally boost to leave no country behind. here's very true for nations that are fragile and those which are affected by conflict and violence.

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    When are PPPs preferable to market exchange fees?

    Market trade rate-transformed GDP and its element costs do not precisely measure the relative sizes of economies and their stages of cloth smartly-being. significant differences in rate degrees exist across economies and market trade quotes don't invariably reflect the relative procuring energy of one foreign money in a further economic climate. usual price tiers are continually bigger in excessive-salary economies than they are in low-profits economies, normally on account of the massive variations in cost ranges between high-profits economies and low-revenue economies for non-traded items. If no account is taken of the larger expense degree transformations for non-traded items when changing GDP to a common currency, the dimension of high-salary economies with excessive cost levels could be overstated and the size of low-earnings economies with low price stages will be understated. No distinction is made between traded products and non-traded products when market trade fees are used to convert GDP to a typical forex: the price is the same for all products. PPP-transformed GDP doesn't have this bias as a result of PPPs account for the different expense stages of traded items and non-traded items. thus, PPPs are extra acceptable for evaluating the output of economies and the general cloth smartly-being of their inhabitants, with the aid of controlling for expense degree changes across economies.

    What should still PPPs no longer be used for?

    PPPs are designed exceptionally to make international comparisons of GDP and capture the transformations between the can charge of a given bundle of goods and capabilities in diverse economies. They aren't designed to compare funding flows, foreign exchange, foreign currency reserves or migrants’ remittances. These comparisons may still be made with market trade prices which balance the deliver and demand of overseas currencies.

    How are ICP outcomes and data used?

    ICP consequences are a world public decent and are used for research and analysis, indicator compilation, policy-making, and administrative purposes at the international, regional, and national degrees. they're used in warning signs to monitor growth towards attaining the Sustainable building desires (SDGs) and the world financial institution’s twin dreams of ending extreme poverty and promoting shared prosperity. The United international locations’ Human construction Index, the world economic forum’s global Competitiveness Index, the Gates basis’s Goalkeepers report, the international Labour organization’s global Wage file, and the realm bank’s international paperwork symptoms also count on ICP PPPs. both the overseas economic Fund and the OECD use PPPs in estimates of regional and world output and growth in their respective publications, World economic Outlook and financial Outlook. the eu commission makes use of them for the allocation of structural and concord money, while the overseas bank for Reconstruction and development and the overseas financial Fund each count on the GDP in PPP phrases of economies to examine their shareholding and drawing rights.

    How are PPPs used for the United Nation’s 2030 Agenda for Sustainable construction?

    PPPs underly symptoms used to video display progress in opposition t reaching the Sustainable development goals (SDGs). PPPs are used for monitoring how a long way the realm has are available in achieving no poverty (SDG 1), zero hunger (SDG 2), decent health and well-being (SDG 3), pleasant training (SDG 4), reasonable and clear energy (SDG 7), first rate work and financial growth (SDG eight), more desirable industry, innovation, and infrastructure (SDG 9), and reduced inequalities (SDG 10).

    Will the new 2017 PPPs be used to replace the foreign poverty line?

    ICP PPPs are one among 5 facts sources that are used to compute the incidence of poverty the usage of the ‚Äúdollar a day‚ÄĚ poverty line methodology. As of may additionally 2020, the realm bank is assessing the influences of 2017 PPPs on the international poverty line and international poverty measures, and should evaluate this towards the suggestions of the Atkinson commission record on global Poverty (2016).

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