Building the Business Case
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International Dollar, Geary-Khamis Dollar Explained
Definitions, Meaning, Calculation, Usage, and Examples

Business Encyclopedia, ISBN 978-1-929500-10-9. Revised 2014-08-01.

Goods and services prices in different countries and different currencies can be effectively compared by converting the converting currencies to the International Dollar.  

The prices of goods and services in different countries and different currencies can be compared by converting currencies to the International Dollar. These conversions are based on measured purchasing power parity.

The International dollar (also known as the Geary-Khamis dollar) is a currency unit used by economists and international organizations to compare the values of different currencies. International dollar comparisons between countries have been adjusted to reflect currency exchange rates, but also adjusted to reflect purchasing power parity (PPP) and average commodity prices within each country.

International dollars for a single year are typically presented as the current international dollar—reflecting the current year's exchange rates and current PPP adjustments. When figures are compared across years, they may also be adjusted for inflation so as to represent currencies in constant (international) dollars for a base year, such as 2000.

The International dollar was first proposed by Roy C. Geary, an Irish statistician, in 1958.  It was further developed and promoted in the 1970s by Salem Hanna Khamis, a Palestinian economic statistician. In the last few decades, various forms of the international dollar have become the metric of choice for organizations such as the International Monetary Fund (IMF) and World Bank, for comparing wealth and individual earnings between nations.

International dollar comparisons between countries will generally differ from comparisons based solely on currency exchange rates (so-called nominal, or exchange rate comparisons).  Here, for example are World Bank 2012 figures for 25 country economies, showing per capita gross national income (GNI) expressed in international dollars (3rd column). Figures marked with * are for 2011

Approx Rank Intl$
Basis

Country
GNI Per Capita
Intl $ Basis
1 Norway 66,960
2 Luxembourg 65,190
3 Singapore 61,100
4 United States 50,610
5 Sweden 44,150
6 Austria 44,100
7 Netherlands 43,620
8 Denmark 43,340
9 Australia 43,300
10 Canada 42,530
11 United Arab Emirates 41,980*
12 Germany 41,890
13 Belgium 40,170
14 Finland 38,630
15 United Kingdom 36,880
16 France 36,720
17 Japan 36,290
18 Ireland 35,870
19 Iceland 33,840
20 Italy 32,870
21 Spain 32,545
22 New Zealand 29,960*
23 Greece 28,490
24 Israel 28,070*
25 Equatorial Guinea 18,880

These per capita figures, of course, represent total country GNIs divided by each country's average population. The 2012 international dollar figures show, for example, that the average citizen of Norway was represented by slightly more than twice the economic output of the average Spanish citizen (Intl $66,960 vs. $32,545). Figures in both GDP columns are thus adjusted to show "wealth" or economic output in the country, per individual.

International dollar figures may be expressed as current international dollars (as in the table above), in which case the exchange rate adjustments and PPP adjustments represent the stated year's exchange rates and buying power figures for each country. 

When comparisons are made between years, as well as between countries, the International dollar figures may be further adjusted to compensate for inflation. In that case, a base year will be specified, e.g., 2000, and all figures between countries and between years will be expressed in constant international "2000 international dollars" or some constant dollars for some other base year.

In summary, those comparing economic figures from different countries and different times should be sure to understand carefully which adjustment or adjustments are reflected in the data:

  • Population adjustments (In which case, figures represent per capita monies)
  • Currency exchange rate adjustments (In which case, figures will be expressed in one currency unit (typically US$,  International $, € £ or ¥)
  • Purchasing power parity adjustments and/or average commodity prices (in which case, figures are typically expressed as International $)
  • Inflation adjustments (in which case, figures have been adjusted, based on changes in an inflation index such as the consumer price index, to represent currency for a "base" year, such as 2000).

By Marty Schmidt. Copyright © 2004-

 

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