Sorry for the silly title. That's a quote from one of the articles below, and I chuckle every time I read it.
A few classes ago I suggested that there are very few things that are either "all good" or "all bad". One of the first and most important lessons from economics is that just about everything in life has tradeoffs. Absolutes are rare. Opportunity costs are ever-present. Even the most well-intended policies will result in costs imposed on some sectors of society. Of course, for every rule there is an exception. The education of girls as a means to fight poverty is probably one of the true unequivocal "win-win" prescriptions that we know of.
Below are some recent stories from the popular press. We'll get into more academic analysis of the issues later in the term. Can anyone come up with a good gapminder graph to help us take a look at these issues?
One thing to note about PPP exchange rates is that they are typically not reported in an easy to use fashion like official exchange rates. Most often, what is reported is a PPP "conversion factor", which is the ratio of the PPP exchange rate to the official exchange rate.
Let's do an example... Consider the nation of Barbados....
2009 per capita GDP was approximately $27,720 Barbados dollars
The official (fixed) exchange rate is 1USD = 1.98 BD
This implies that per capita GDP is $14,000 USD
But, prices of non-traded goods are different in Barbados than there are here at home, so this may be an inappropriate estimate of average earnings. According to the World Bank, the PPP conversion factor for Barbados is 0.70.
This means PPP xrate/official xrate = 0.70
PPPxrate/1.98 = 0.70
which implies that the PPPxrate = 1.386 BD to 1 USD (or 1 BD = 0.721 USD)
Hence, the per capita GDP of Barbados in purchasing power terms is really 20,000 USD.
For fun, go to gapminder world and plot GDP per capita against GDP per capita in PPP terms.
Notice that for most countries, PPP GDP > GDP. Identify a country for which the PPP GDP < GDP.
What does this mean?