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Improvements in ICP Methodologies

The 2011 ICP round leveraged the successful implementation of the 2005 round: the scope of the exercise was broadened; quality assessment processes were streamlined; and several methodological improvements were introduced. In addition to the improved method of linking regional PPPs and computing global PPPs, additional improvements were introduced:

1-     Calculating basic heading PPPs. In 2005 basic heading PPPs were calculated using the CPD method without assigning any weight at the product level. In 2011 it was decided that products would be classified as important or less important and that weights of 3:1 would be used in computing basic heading PPPs at the intra-region level and also in estimating linking factors. Thus basic heading PPPs were calculated using the CPD-W method. The classification and weighting of products by their relative importance will affect the 2011 PPPs compared with those from the2005 ICP round.

 

2-     Dwellings. In 2005 Africa and the CIS used the dwelling stock approach, Latin America the rental approach, and Asia and the Pacific the reference volume approach, whereas Eurostat-OECD and Western Asia used a combination of rental and dwelling stock data. The regional results were linked using the dwelling stock data. In 2011 the Africa, Latin America, Caribbean, and Western Asia regions calculated PPPs using rental data collected for the global list of dwelling types; Asia and the Pacific used the reference volume approach; the CIS used dwelling stock data; and Eurostat-OECD used a combination of rental and dwelling stock data. Linking was carried out in stages. The Africa, Latin America, Caribbean, and Western Asia regions were linked using the same rental data that went into the estimation of their intra-region PPPs. For Asia and the Pacific, the CIS, and Eurostat-OECD, dwelling stock data were used to link them to each other and then to the rest of the world.

 

3-     Government. In 2005 government consumption estimates were adjusted for productivity differences between economies in three of the six regions—Africa, Asia and the Pacific, and Western Asia—but the regional linking factors were computed without any productivity adjustments. In 2011 the Africa, Asia and the Pacific, Latin America, and Caribbean regions used productivity adjustments when computing their regional results, but no productivity adjustments were applied in the Eurostat-OECD, CIS, and Western Asia regions. The linking factors for all regions were computed with productivity adjustments to produce the global results.

 

4-     Construction. The method used to estimate construction PPPs changed completely in 2011 and is not comparable with that used in 2005. In ICP 2005, construction PPPs were estimated using the BOCC approach. Because of the difficulties encountered in implementing this approach, a simplified input method based on the prices of basic materials, labor, and machinery was adopted for ICP 2011.

 




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