absolute PPP, and relative PPP. Absolute PPP is based on the assumption that the
exchange rates between two economies will be stable and this will result in equiv-
alent purchasing power for each currency. Relative PPP attempts to account for
differences in the relative inflation rates and exchange rates between the two cur-
rencies being compared.
When calculating PPP, economists will select a so-called basket of goods, or in
some cases, a single good that is available in all economies in the calculation and
that is produced using the same inputs. A famous example of the latter technique is
used by the British news magazine theEconomist, called the “Big Mac Index,”
which has been published yearly in the journal since the 1980s. This is in reality
a calculation of absolute PPP and is based on the cost of the famous sandwich in
various economies. Although there are some shortcomings to this methodology,
it is a simplified way of analyzing PPP. Critics of the concept of PPP point out sev-
eral weaknesses in the methodology and theory. First, the “basket of goods” must
be comparable in the economies used in the calculation. Perhaps the most common
criticism of the “Big Mac Index,” for example, is that while a Big Mac may be
commonly purchased in developed countries in the United States or Western
Europe as “fast food,” in other economies such as China or Mexico this purchase
is considered more of a luxury and, accordingly, made much less frequently by
the average consumer. It is essential that the basket of goods be composed of the
same goods in each economy, and that these goods are similar in quality. Despite
some flaws, many economic geographers regard PPP as the most accurate means
of comparing economic wealth, development, and other characteristics among
countries.Push-Pull Concept
A theory that attempts to identify the motivational factors that drivemigration.
The concept was introduced by Everett Lee in his article, “ATheory of Migration,”
first published in 1966, in which Lee attempted to codify the various considera-
tions that a potential migrant might take into account as a basis for relocation.
Lee based his ideas on the earlier work of Ernest Ravenstein, a British geographer
who in the late 19th century articulated a series of “laws” of migration. Ravenstein
was the first scholar in the industrial age to attempt a systematic study of migratory
flows, both within countries and across internationalboundaries. Ravenstein
focused much of his study on the actual movement of people and less on the forces
that convinced them to shiftlocation, however, and Lee sought to address the cau-
sation of migration. He divided the array of pressures to migrate into two broad270 Push-Pull Concept