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.
What is the international dollar?
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.
- What is the international dollar?
- What is the history of the International dollar? When was the concept first used?
- How do Gross National Income Figures (GNI) for 50 different countries compare, when expressed in International dollars?
- What further adjustments are sometimes made for international dollars figures to compensate for inflation?
What is the history of the international dollar? When was the concept first used?
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.
Note that the International dollar comparisons between countries will generally differ from comparisons based solely on currency exchange rates (so-called nominal, or exchange rate comparisons).
How do Gross National Income Figures (GNI) for fifty different countries compare, when expressed in International dollars?
Here, for example are World Bank GNI figures for 50 country economies, showing per capita gross national income (GNI)
expressed in international dollars (3rd column). As of early 2016, figures latest available figures are for 2014.Figures for and 2015 and 2016 are not yet available. Figures marked with * are for 2013. All figures in this table figures are based on the year 2011 base international dollar.
|Approx Rank Intl$|
|2013 GNI Per Capita|
Intl $ Basis
|3||United Arab Emirates||67,720|
|26||Republic of Korea||34,620|
|28||Trinadad and Tobago||31,970|
|42||Sst. Kitts and Nevis||22,600|
These per capita figures, of course, represent total country GNIs divided by each country's average population. The 2014 international dollar figures show, for example, that the average citizen of Norway was represented by slightly less than twice the economic output of the average Spanish citizen (Intl $66,330 vs. $34,700). .
International dollar figures may be expressed as current international dollars (as in the table above), in which case the exchange rate adjustments and PPP adjustments represent the stated year's exchange rates and buying power figures for each country.
What further adjustments are sometimes made for international dollars figures to compensate for inflation?
When comparisons are made between years, as well as between countries, the International dollar figures may be further adjusted to compensate for inflation. In that case, a base year will be specified, e.g., (2011 for the above table), and all figures between countries and between years will be expressed in constant international "2011 international dollars" or some constant dollars for some other base year.
In summary, those comparing economic figures from different countries and different times should be sure to understand carefully which adjustment or adjustments are reflected in the data:
- Population adjustments (In which case, figures represent per capita monies)
- Currency exchange rate adjustments (In which case, figures will be expressed in one currency unit (typically US$, 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).