CHILD POVERTY AND INEQUALITY: THE WAY FORWARD

Table 4. Poorest and Richest Countries in the World, 2007

(or latest available) in constant 2000 U.S. dollars

Poorest 10 percent Richest 10 percent

Country GDP per capita Population Country GDP per capita Population

Congo, DRC 94 62,522,787 Monaco 106,466 32,620
Burundi 110 7,837,981 Bermuda 72,296 64,000
Guinea-Bissau 140 1,541,040 Luxembourg 56,625 479,993
Liberia 144 3,627,285 Norway 41,901 4,709,153
Malawi 148 14,439,496 Japan 40,707 127,770,75
Eritrea 151 4,781,169 United States 38,701 301,580,00^0
Niger 171 14,139,684 Iceland 38,166 311,566^0
Ethiopia 176 78,646,128 Switzerland 37,935 7,551,117
Tajikistan 231 6,727,377 Qatar 34,960 1,137,553
Cen. Afr. Rep. 231 4,257,403 Hong Kong 34,041 6,925,900
Source: Authors’ calculations using World Bank (2011)

1.B. PPP exchange rates

The earlier set of findings for the global accounting model was

based on market exchange rates. But what happens if we compare

national income estimates using PPP-adjusted exchange rates?

(^)
Box 1. Two Different Benchmarks for Measuring GDP or
Income^
There are two main methods of comparing national income estimates
across countries. The first uses the market exchange rate, which is the
actual rate in the foreign exchange market. And the second uses the
PPP exchange rate—the rate at which the currency of one country
would have to be converted into that of another country to buy the
same amount of goods and services in each country. The pros and
cons of using PPP-adjusted exchange rates to estimate national
income are briefly summarized below.
Drawbacks of PPP: The biggest downside to using PPP rates is that they
are much harder to measure than market-based rates. The
International Comparisons Program (ICP) was established by the
United Nations and the University of Pennsylvania in 1968 to generate
PPPs, which involves gathering national average prices for 1,000
closely specified products in participating countries (the previous
round was held from 2003-06 and covered 146 countries). Apart from
the vast amount of work, there are methodological questions regarding