LIVING STANDARDS.(Economic Indicators)(Brief Article)

Economist (US), The, March, 2001

Tiny Luxembourg heads the table of GDP per head among OECD countries, and Turkey brings up the rear. The Irish Republic ranks fifth, up from 19th in 1996, a tribute to the success of the Celtic tiger. Living standards in Britain are just higher than in the euro area. The OECD 's ranking uses purchasing-power-parity exchange rates to convert GDP into a common currency.

PPP exchange rates, which equalise the cost of buying a common basket of goods and services across countries, avoid the distorting effects of short-term fluctuations in the market values of currencies. They therefore produce a more accurate comparison of living standards than market exchange rates. PPP rates also take into account non-tradable services that are relatively cheap in poorer countries.